Whistleblowing
Whistleblowing occurs when an employee reports what they perceive to be unethical, immoral or illegal corporate activity to an outside third party. The third party may be the media (i.e. newspaper, radio, television, etc.). It may be a governmental agency accountable for regulating the corporation’s activities. Or the outside party could even be interested groups and citizens in the community the corporation operates in. Our society and culture craves access to instant information. Technological advancements have made it easy. The Internet, YouTube™, Facebook™ and Twitter® serve as instant outlets for reporting positive and negative information—along with accurate and inaccurate information—on corporate behavior and activity. This article discusses the whistleblowing activity and future career prospects of employees who follow their conscience and report corporate behavior to outside third parties.
Minimizing the risk of employee whistleblowing
According to Rue & Byars (2009), organizations can minimize whistleblowing by giving employees an avenue to share concerns and express dissenting viewpoints on the company’s activities. This can be done in a manner where issues can be discussed and resolved within the company instead of outside the company. Whereas this may curtail whistleblowing of perceived unethical corporate behavior, it will not (nor should) deter whistleblowing of illegal activity.
Illegal activity and non-compliance of governmental regulations warrant notification to other parties, preferably authoritative and regulatory entities. Examples of activities that should be reported include:
- A manufacturing company’s attempts to minimize the expense of managing and properly disposing of waste material by dumping its waste into landfills or in a nearby lake, river, or other large body of water;
- A food company’s attempts to minimize operational expenses by “cutting corners” in governmental safety rules for sanitation and maintenance of equipment used in processing and/or packaging food;
- A company’s intentional misrepresentation of financial statements in order to maximize profitability and shareholder value.
An ethical dilemma
There are no “gray areas” in the examples listed above. However, there are numerous scenarios where a perceived wrongdoing by one employee may not be viewed in the same manner as another employee. In this situation, one’s personal values and beliefs come into play. One employee may feel it is unacceptable for a lending institution to charge exorbitant interest rates to its customers. Another employee may feel it is good business sense to charge as much as legally possible.
Another example would be corporate offshoring. Many U.S. companies now offshore a part of their operations to other countries where labor costs are lower. A question of ethical behavior centers on normalization of employee salaries. Should a company pay the same rate and offer the same benefits to employees in other countries as they offer to employees in the U.S.?
U.S. corporations specifically state one of the reasons for offshoring is to take advantage of a qualified, yet cheaper labor market in other countries. However, this management strategy is done at the expense of U.S. workers, arguably contributing to forcing U.S. citizens into poverty (Huffington Post, 2010). A degree of “right or wrong” can be found in the reactions of the organization’s various stakeholders. Further, the magnitude of reaction may be determined by who is doing the whistleblowing. Typically, this activity is done by a disgruntled employee. And their audience may be dissatisfied consumers.
Nonetheless, if the organization is paying lower salaries to employees in other countries, the company is chastised for contributing to the U.S. unemployment statistics. If the organization is paying equal (or higher) salaries to employees in other countries, the company is chastised by shareholders and the investment community for not maximizing their potential profitability.
Future implications
Debate around the benefits and shortcomings of whistleblowing will continue in the foreseeable future. On the one hand, consumers and organizational stakeholders should be informed about corporate practices that may cause harm to the public. On the other hand, so-called “watchdogs” or disgruntled employees may be sending erroneous or inaccurate reports of corporate wrongdoing, which incites the public, but has minimal basis for further investigation.
There is one final point on whistleblowing. If one reviews any cases of an employee publicizing unethical, immoral, or illegal corporate activity during the past 10-15 years, you will find very little has been reported about the current career or professional life of the employee who reported the incident (if in fact the whistleblower has been successful in finding/maintaining a similar type of position).
A question to ponder: Can a whistleblower expect to have a career in an organization (any organization) after publicizing corporate wrongdoing (Sayers, 2009)?
More information on corporate leadership behavior can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).
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References
Rue, L.W. & Byars, L.L. (2009). Management: Skills and application (13th Ed.) Boston: McGraw-Hill Irwin.
Sayers, K. (2009). Is blowing the whistle on poor standards of care worth losing a career? Journal of Perioperative Practice, 19(7), 204. Retrieved from MEDLINE with Full Text database.
