The decision to become a whistleblower is never easy. Though many people feel compelled to report illegal and unethical behavior, there are a variety of concerns that prevent people from doing so. Whistleblowers often face adversity as a result of their courage. Although there are a variety of laws designed to protect whistleblowers, many face job loss, retaliation, and alienation from colleagues and employers. This is especially true for internal whistleblowers because they receive fewer legal protections than external whistleblowers. A recent Fraud Magazine article titled, “Navigating the Choppy Waters of Internal Whistleblowing,” by Carolyn Conn, Stephen M. Kohn, and Grace Schepis, discusses this issue in great detail. In the following, we will summarize key ideas and takeaways from this article.
Internal and External Whistleblowers Defined
Whistleblowers are individuals who report illegal and unethical activities that are occurring within an organization. Whistleblowers can be employees, vendors, contractors, or even customers. Whistleblowers have a variety of means in which they can report concerns. For example, they may alert supervisors, HR personnel, compliance/regulatory agencies, or law enforcement, and can do so in person or through an anonymous hotline. Broadly speaking, whistleblowers can be categorized as internal whistleblowers, external whistleblowers, or both.
Internal whistleblowers are individuals who report unethical behavior through channels that are within the involved organization. For example, an employee may alert their employer’s HR department of harassment occurring between a supervisor and a lower-level employee. On the other hand, external whistleblowers are individuals who report unethical behaviors through channels that are outside the involved organization. For example, a contractor may report unsafe working conditions directly to OSHA. In many cases, whistleblowers begin by reporting concerns internally. When their concerns are not properly addressed, they may turn to external channels.
Lack of Support and Protections for Internal Whistleblowers
There are a wide range of laws in place to protect whistleblowers. That said, many apply to specific circumstances, and it can be difficult for potential whistleblowers to sort through all the requirements in order to ensure their protection. Doing so is especially difficult for internal whistleblowers because there are fewer federal laws granting their protection.
The article states, “The laws designed to protect whistleblowers who report to external entities, such as the SEC, DOL or law enforcement, generally do not provide comparable protection to whistleblowers who report only internally,” adding, “More than two dozen laws are on the books, yet barely half contain provisions that protect internal whistleblowers.”
In addition to receiving few legal protections, internal whistleblowers are often ignored or mistreated by their organization. According to the article, organizations may respond improperly to an internal whistleblower’s concerns due to a lack of respect for the whistleblower, fear of reputational damage, costs associated with addressing the issue, or in order to willfully cover-up illegal practices. When potential whistleblowers lack support and protection, they are less likely to speak up. This leads to larger problems and costs down the road.
The Value of Protecting Internal Whistleblowers
While whistleblowers are often perceived as troublemakers by those within the offending organization, they are vital for an organization’s wellbeing. The article lays out the following benefits of protecting internal whistleblowers:
- Encouraging and protecting internal whistleblowers can empower individuals to report concerns sooner rather than later. This means that issues can be addressed before they become more serious. This can significantly reduce losses.
- Organizations that encourage employees to report unethical behavior have been found to face fewer government fines and losses from lawsuits.
- Internal whistleblowers are often high-quality employees who want what is best for their organization. A lack of support for whistleblowers can drive out highly skilled and talented employees.
- Encouraging whistleblowers to speak up and properly addressing concerns is the legal and ethical thing to do.
Nobody wants to find out that their organization is involved in illegal and unethical practices. That said, whistleblowers do a great service to their organization by bringing misconduct to light.
What Can be Done to Protect Internal Whistleblowers?
Given their importance for an organization’s wellbeing, the article closes with the recommendation to “encourage and protect internal whistleblowers.” All organizations should have clearly defined procedures for reporting concerns internally. These procedures should be explicitly taught during training and should be reviewed frequently. Those in positions of leadership must spread the expectation that employees speak up against illegal and unethical behavior.
When designing and implementing procedures for internal reporting, decision makers must consider the fact that many potential whistleblowers have understandable hesitations about coming forward. Procedures should provide whistleblowers with peace of mind and the knowledge that they will not face retaliation. Implementing the use of a whistleblower hotline that offers anonymity is one way to provide the support that whistleblowers need. Internal whistleblowers act to protect their organization and those impacted by an organization’s practices. Consider what you can do to protect the whistleblower.
Want to avoid the need for internal whistle-blowing? Learn more about promoting ethical behavior here.