In the global challenge to maintain good corporate standards and ethics, internal reporting is usually seen as a strong touchstone, exceeding internal audit, for example, as a far more useful tool for routing out improper behavior at an organization. Which is why the results of the latest 2011 National Business Ethics Survey® (NBES®), Retaliation: When the Whistleblowers Become the Victim is so concerning.
The report considered American workers at domestic and international companies, including both for-profit and not-for-profit organizations. Among its findings:
- While nearly half (45%) of employees observe misconduct each year, and the majority (65%) report it, unfortunately, more than one in five (22%) employees who reports what they believe to be misconduct at the organization, perceive retaliation for doing so.
- Even more concerning is that whistleblowers whose reports are substantiated are equally likely to perceive that they have experienced retaliation as those whose claims are not.
In terms of the seriousness and magnitude of these results, the survey reveals that the percentage of workers perceiving retaliation has been increasing: from 15% in 2009 to the 22% (or 2.3 million individuals) in 2011.
Upping the Ante
Perceived retaliation doubles the trouble: A second form of alleged misconduct now presents itself. Even if the original questioned behavior is disproven, the retaliation, if real, has legal and operational consequences of its own, as retribution against an internal whistleblower can create an environment that is seen as not supportive of ethical conduct. (Since, as a 2005 study reported, “Nearly half (46%) of those who choose not to report observed misconduct cite fear of retaliation as the cause.”)
Fore warned is fore armed. If employees of U.S.-listed companies feel internal tipping is dangerous, they have a particularly attractive alternative: external reporting to the U.S. Securities and Exchange Commission, which now pays “bounties” of 10 – 30% of recoveries over $1 million that result from new information provided to the Commission. Most organizations, one would think, would prefer to hear internally about potential concerns rather than have the SEC come a calling.
For Whom the Bell Tolls
Strikingly, the study finds that employees in management positions are more likely to perceive retaliation for reporting company misconduct than employees in non-management positions, with senior management experiencing the greatest jump in retaliation among those surveyed.
Other results found retaliation rising sharply among some surprising groups. Retaliation is up among employees in positions of greater job security (e.g., unions and management); those with increased power (higher levels of management); and employees with increased personal security.
- In 2011, the percentage of union employees experiencing retaliation doubled, resulting in a 25% point difference between union and nonunion workers.
- Whistleblowers who report to higher management and to internal reporting hotlines were found to be significantly more likely to say they experienced retaliation: 27% of employees who first report to higher management reported experiencing retaliation, and 40% of whistleblowers who go first to a hotline reported experience retaliation.
- 52% of whistleblowers who feel pressure to compromise standards in the course of their job perceived retaliation after reporting. But only 12% of reporters without such pressures perceived retaliation.
- Employees in companies with mergers and/or acquisitions over the previous 2 years perceived themselves at far greater risk of experiencing retaliation. At companies in transition, one in three (34%) reporters experienced retaliation—more than double the number seen in more stable workplaces, where 16% of whistleblowers perceive experiencing retaliation.
Fighting the Tide
The good news is that the Study confirms that ethics and compliance programs, strong ethical cultures, high standards of accountability that are consistently applied, and positive management behaviors are all linked to a reduced likelihood of whistleblowers experiencing retaliation. In fact, retaliation rates were found to decline steadily as the corporate compliance programs improved. In organizations where employees agree that top management would not get away with breaking the rules, perceived retaliation was far less common (17% vs. 42%) than in those with weak accountability. This is a study with many interesting insights and well worth reading.