How to use wistleblower complaints
General Counsel find themselves centrally positioned in the inner circle of people who are informed of confidential whistleblower reports. In addition to adequately responding to a complaint or whistleblower allegation GC should consider creating momentum for moral activation.
Following the policy is important – but not enough
By empowering the workforce to speak up in cases of (perceived) wrongdoing an organization sends a powerful message to the workforce: we listen if you talk.
When an employee files a complaint, your organizations whistleblower policy will dictate procedural next steps such as how to maintain independence and confidentiality and how to communicate with whistleblowers and other stakeholders. In high impact cases, you will face the challenge of balancing the consequences of (in)action with among others reputational risk, financial costs, potential litigation and business interests.
All of these responses are aimed at the incident itself. Rightfully so, because every report needs to be given the appropriate attention and follow-up. However as an organization you might have missed an opportunity to learn from this experience. In other words: although the incident has been appropriately handled, it does not reduce the possibility of it to happen in the future.
Add moral activation to your hard controls
So the question is, how can a reactive approach be used to activate a proactive work force? Obvious loopholes in policies or control frameworks should be fixed by creating or amending ‘hard controls’. Without the right moral mindset, however, employees will continue to make morally undesirable decisions or behave in such a way that either creates an environment for others to make morally debatable decisions.
The key to change this is moral activation. Moral activation is aimed at the – somewhat cliché – ‘doing the right thing, even when no one is watching’. It is the difference between employees knowing the values of the organization and employees living the values of the organization. So, what’s the role for the General Counsel in this?
- Next to the proper disciplinary measures for the employees involved, look for ways to express gratitude to the employees who spoke up against the undesired behavior.
- Actively challenge leadership on their responsibility in the existing environment which enabled the irregularities.
- Identify ways to communicate about irregularities without breaching confidentiality. Acknowledging that something went wrong, and clearly voice tone at the top in these circumstances is pivotal for the credibility of the efforts.
Whistleblowing reports are more than potential legal issues. In a healthy organization they are one of the most tangible kinds of feedback from the workforce, identifying potential (structural) issues. In order to learn from the experience, and improve the organization, GCs play a critical role in challenging those charged with governance to aligning all actions after the reported complaint towards reaching moral activation of its employees.
Background: a new EU Directive in 2021
In 2021, a new EU directive for the protection of whistleblowers will have to be implemented in all EU member states. All companies in the private sector that employ at least 50 employees or are active in the financial sector as well as legal entities in the public sector will need to have a functioning whistleblowing system in place where individuals can confidentially and anonymously submit a report. Similarly EU nation states need to have an independent organization in place that is able to receive, give feedback and follow up on reports. For The Netherlands this will mean an increased focus on the position of whistleblowers, since the Dutch House for Whistleblowers Act that entered into effect in 2016.
About the author
Michel Grummel, partner at EY brings more than 24 years of experience. He has advised (supervisory) boards, corporations and stakeholders to help resolve high stakes financial, regulatory and legal issues. He has designed and implemented improvements in culture, governance, process & procedures including behavioural changes.
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