Whistleblowing is a big issue in big business - and WhistleB founding partner Gunilla Hadders argues that organisations need a system to deal with it
With more than 25 years of experience in the fields of compliance and corporate sustainability, WhistleB provides a whistleblowing service for businesses, authorities and organisations. Its solutions are used in more than 150 countries. Gunilla Hadders, founding partner and senior advisor at WhistleB, breaks down the advantages of having a whistleblowing system within an organisation.
In April 2019, a new EU Whistleblower Protection Directive was approved, aimed at protecting the rights of whistleblowers.
One of the outcomes of the new law is that all organisations in the EU with more than 50 employees will be obliged to provide safe reporting channels within two years.
At the same time, fighting corruption, discrimination and harassment has risen to the top of management and board agendas globally.
Whether an organisation is looking at whistleblowing systems as a matter of compliance, as a risk management hygiene factor or as a way to give its people a voice, the role played by its management team and board is decisive for the whistleblowing results to be successful and valuable.
“With the new law, whistleblowers will be protected even if they decide to report externally to the organisation in question,” says Gunilla Hadders, co-founder and partner at WhistleB.
“Our advice to management teams and boards is therefore to do everything they can to encourage internal reporting.
“After all, it is better to deal with a wrongdoing internally, than risk sensitive information ending up in the public domain.”
Whistleblowing in business benefits you might not expect
While the key purpose of any whistleblowing system is to enable companies to detect and act on misconduct before it causes too much damage – today, organisations are seeing wider benefits from such systems.
- Whistleblowing helps to build trust: In WhistleB’s 2019 customer survey on organisational whistleblowing, some 50% of the responses stated that building trust was the main benefit of having a whistleblowing system in place. This indicates that organisations value the wider impact of being open to whistleblowing. Namely, that as part of the organisation’s ethics work, a whistleblowing system helps to build trust in the organisation as it underlines a commitment to transparency and openness.
- Whistleblowing reduces the losses from fraud and corruption: According to the Association of Certified Fraud Examiners’ 2018 Report to the Nations, fraud losses are 50% smaller in organisations with whistleblowing hotlines than those without. Organisations without hotlines are more than twice as likely to detect fraud by accident or by external audit.
- Whistleblowing helps to detect a wide range of irregularities earlier: Another finding of WhistleB’s 2019 customer survey is that financial irregularities, harassment and discrimination account for more than half of the whistleblowing reports received. Health and safety, and workplace-related issues, were each the subject of some 13% of reports received. This highlights how important whistleblowing systems are for detecting all kinds of misconduct as soon as possible.
The critical role of leadership
Implementing a whistleblowing system is not simply a matter of buying a service and then switching it on.
Nor should it merely be delegated to your legal and compliance department.
As indicated by recent legislation, there are serious requirements of boards and management teams in conjunction with implementing a whistleblower system.
Create an environment of trust
Senior management should communicate clearly about the purpose and value of whistleblowing and the system.
Leaders should also set the whistleblowing system in the context of the organisation’s expected behaviours as detailed in its code of conduct.
Potential whistleblowers need to know and trust that they are not going to be penalised for reporting an incident in good faith and that they can remain completely anonymous.
Allow anonymous reporting for whistleblowing in a business
Implementing truly anonymous channels increases the likelihood of receiving business critical reports on serious misconduct and hence having the chance to minimise damage.
This is because people fear retaliation, and allowing them to remain anonymous in reporting, follow-up dialogue and any investigation will increase their confidence to report.
Safeguard company data
Leaders should ensure they control their organisation’s data.
Insist on a whistleblowing system that has the most secure data management and is compliant with all applicable data protection laws.
Select a system that undergoes regular professional penetration and information security testing.
Think through your organisation for whistleblowing in business
Leaders need to ensure that the organisation’s processes can handle whistleblowing cases correctly.
Carefully consider how whistleblower reports should be received and investigated, and by whom.
Appoint an internal team that creates trust and has the competence to deal with and investigate cases in a compliant, respectful and secure way.
The team should include non-operational individuals, such as members of the board and internal audit as well as managers from a range of functions.
Take responsibility for investigations
Having opened up the organisation to whistleblowing, management and board members have the ultimate responsibility for investigations and their consequences.
This involves ensuring the right system, skills and routines are in place for investigations.
Investigations must take place with the utmost confidentiality and with respect for both the whistleblower and the person accused.
Processes also need to be in place for any action plans needed based on the outcome of the investigations.
Investigations can be complex and require very specialist skills, which leaders may need to source externally.