“What is the best defense against a Whistleblower?” & Three Questions with Dick Dube

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This week’s question is “What’s the best defense against a whistleblower?” 

A few years ago, the SEC announced their bounty program and there was much discussion about it. Is this a good idea for organizations? Does this stop an individual from coming forward with reports? We’ll discuss the reasons I am against financial compensation.

What happens to the company culture when you have a whistleblower? Let’s look at Cortland Kelley, head of GM’s inspection program, who raised alarms about the Cavalier and Cobalt vehicles. How did this affect the culture at GM?

So, what is the first thing an organization can do to respond to the potential for a whistleblower?  What questions does your organization need to be asking?  You will need to to measure the perception of the culture from the perspective of the employees and  look at all levels of your organization, especially middle management.

One last thought about responding to potential whistleblowers is to consider very specifically your retaliation within the organization. This is key to avoidance of whistleblowers and can be key to addressing how you encourage people to come forward internally. This goes hand in hand with working on the culture and also encouraging managers to be primary communicators about all of these issues.

THE UPSHOT

 Invest in middle management and understand the perception of retaliation in your organization these three things overlap and there are vitally important to keeping people reporting inside your organization.

Three Questions with Dick Dube,  EVP – Chief Audit Executive & Ethics Officer at Old National Bancorp

Read Full Transcript

This week's question is “What's the best defense against a whistleblower?”

A few years ago, the SEC announced its bounty program and there was much discussion about it. At that time, I was working with an organization which was seriously discussing offering an internal reward to individuals who come forward with reports. Wisely, this organization decided not to move forward with the offer. I think there are two good reasons for this decision. One is very practical—how could an internal body match the financial value in some of the recent FCC settlements. The second reason is that it really sends the wrong message. Most organizations have focused on reporting and open communication, wanting a culture that speaks up. We want to make sure that everybody is comfortable coming forward, asking questions and making reports when they feel necessary. I really think that's key in answering the question—how you respond to a whistleblower? The Global Business Ethics Survey, formerly called the National Business Ethics Survey, by the Ethics and Compliance Initiative, actually has data on this. They have been looking at this issue for many years now. One particular metric that's come up repeatedly is that individuals that find themselves in weak or weak leaning cultures are much less likely to report as opposed to those that perceive a strong or strong leaning culture.

Cortland Kelley was a 3rd generation GM employee and had been the head of GM’s inspection program when he raised the alarm about issues with the Cavalier and the Cobalt vehicles. He repeatedly raised concerns and felt like no one seemed to be concerned and there were no actions taken. It got to the point that he actually became a whistleblower, he filed suit in 2002. GM denied the wrongdoing and the case was dismissed, the allegations contained therein later turned out to be true. But at the time GM had a victory and Mr Kelly's career as was reported in Bloomberg went into “hibernation.” Eventually, The CEO of GM was called to speak to Congress about these issues. The interesting thing is that when the people responsible for the safety program were questioned, they said they were too afraid to insist on safety concerns. They had seen their predecessors “pushed out the door.” My point here is even if the culture had changed from the perspective of management, it had not changed from the the perception of those employees. They still felt that if they were to speak up or make waves they would be retaliated against.

So, what is the first thing an organization can do to respond to the potential for a whistleblower? First, you need to measure the perception of the culture from the perspective of the employees. Find out how comfortable your employees are or uncomfortable as the case may be about speaking up. How do they feel about organizational justice? How do they feel about their avenues of reporting, asking questions or raising concerns? By measuring this information it gives you a baseline to have an understanding of where your needs are and where you need to address resources to try to change that perception. This leads to a second major area to address—the focus on the middle. I was speaking with a chief compliance officer who's responsible for an international, sophisticated, well-documented program. It included quarterly certifications from the regional managers about their compliance with certain aspects of the program. While discussing the overall tenor of the program, the culture of the organization and tone from the middle, the CCO brought up the certifications as proof that he had strong tone from the middle. These managers certified on a regular basis, they were doing the things that were prescribed in their programs. But in actuality, while many managers were doing the things that they needed to do, many were not and yet were still certifying. And if you talk to some of the people that were in their business units they didn't necessarily feel like they could approach those managers about compliance issues, concerns and questions. The point is that you can't measure tone from the middle based solely on the representations of the middle. The effectiveness of tone from the middle is measured at the rank and file. People that you're ultimately trying to reach through the management. If you're trying to determine the success or failure of tone, you have to measure that from the bottom. Are your messages getting through this middle level? Are they reaching the employees? And are concerns and questions from employees getting back up the chain of command in an appropriate way? It’s important to get buy-ins from managers, hey need to be educated about their roles. Give them resources and arm them to do a good job as ambassadors for the culture of the organization. They need to create an environment where people can come forward and ask questions and hopefully not become whistleblowers. But you can't simply assign the duty to the managers and not measure the effectiveness of that attempt.

One last thought about responding to potential whistleblowers is to consider very specifically your retaliation within the organization. The ECI has found that those who experience retaliation are much more likely to report outside the organization as whistleblowers. In fact they're nearly 50% more likely to go outside the organization. They also noted that whistleblowing is more likely to happen when management is involved in the misconduct. Need to address both actual retaliation and fear of retaliation. This is key to encouraging people to come forward and report. Its important to understand that retaliation can come in many ways. It can be the perception that you're not getting a promotion, that you've been reassigned or demoted. Be aware of this perception, this is key to avoidance of whistleblowers and can be key to addressing how you encourage people to come forward internally. This goes hand in hand with working on the culture and also encouraging managers to be primary communicators about all of these issues.

THE UPSHOT

Invest in middle management and understand the perception of retaliation in your organization these three things overlap and there are vitally important to keeping people reporting inside your organization.

3 Questions with Dick Dube, EVP - Chief Audit Executive & Ethics Officer at Old National Bancorp

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1 Comment

  1. LKRenfro on 10/16/2016 at 6:40 PM

    Subject well presented.

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