Governance and whistleblowing: Encouraging a Speak Up culture

As Director of the Institute of Business Ethics, Philippa Foster Back, CBE, is responsible for implementing strategy, leading the team and ensuring that the Institute meets its charitable aims of raising awareness and spreading best practice in the field of business ethics.

When Sepp Blatter, former president of football’s governing body, was interviewed by David Conn, author of The Fall of the House of FIFA, Conn was struck when Blatter sneered: “’Because if you are a whistleblower, it’s not correct as well.’”

Conn asked him to clarify; “was he saying whistleblowers are not correct?

‘No,’ he confirmed. ‘At school, if you had somebody who was a whistleblower towards the tutor, then…’ and he trailed off, as if it was obvious.

‘Do you still think that?’ I asked.

‘Yes.’

‘That they are like a snitch in school?’

‘Yes, yes,’ he said.”

Sepp Blatter is not alone in his view of whistleblowers. The work of Protect highlights the continued negative perception of those who speak up about wrongdoing. From the tattle-teller at nursery to the snitch at school or mafia super-grass, the cultural narrative is that those who speak up are sneaks and spoilsports to be vilified. Whistleblowing is seen as a breach of confidentiality, a conflict between private and public, a betrayal of the tribe, disloyal, and only done by trouble-makers.

This seems perverse, as many who raise concerns do so out of loyalty, compelled by a sense of justice and a desire to ‘do the right thing’. Effective Speak Up arrangements assist with good governance and can act as an early warning system for potential risks. It makes good business sense that those who lead organisations should welcome and encourage employees to do so.

The terms ‘whistleblowing’ or ‘Speak Up’ are often used interchangeably and can cover disclosure of a wide range of legal and ethical issues. But at the IBE, we differentiate between the two terms. ‘Blowing the whistle’ externally can be considered a last resort, occurring when concerns have not been listened to or acted upon internally. Speaking up implies raising a concern internally so that it can be remedied, hopefully before it becomes a bigger problem.

The IBE prefers the term Speak Up as it has more positive and constructive connotations for organisations. This change of language can mark the beginning of fostering an ‘open’ culture, one where employees feel confident that their concerns will be taken seriously and handled sensitively internally.

Recent scandals, such as the collapse of Carillion, highlight the need for appropriate oversight by boards seeking to ensure the stabililty and sustainability of the businesses they run. Indeed, the new UK Corporate Governance Code cites this as a core principle:

“The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned.”

The IBE recently undertook some research asking boards how they were currently assuring themselves that they understood their corporate culture. At number one position was Speak Up and whistleblowing data, highlighting its importance as a significant potential source of information about behaviour, culture and fraud.

Reliable Speak Up arrangements are an important support for a board and senior management. However, it is not always easy to tell whether the arrangements are effective. In terms of raw data, the number of calls to the system may fluctuate for a number of reasons.

Increased anxiety by employees that they may face reprisals for speaking up will cause the volume of calls to fall, but the same effect might be felt as a result of a more open culture, when employees did not feel the need to call the hotline and issues were dealt with satisfactorily by local management. The volume of calls may fluctuate in line with employee familiarity with and confidence in the process, or in response to an awareness campaign.

The level of data which boards examine varies from number of calls and how many were substantiated to information about investigations and the number of dismissals or disciplinary outcomes. Some boards only require information about the most serious cases, while others ask for more granular details – for example, the proportion of allegations versus enquiries, how many were anonymous or the job level of those implicated. An engaged board will analyse this data and use it to improve the effectiveness of the Speak Up policy and procedure.

Leading organisations are developing dashboards to monitor reporting levels, for example per 1,000 people across different locations country by country or site by site. The organisations use this data to benchmark the performance of their regions or sites. The data from, for example, the number of ethics contacts; the number of grievances and HR investigations and/or the number of safety incidences can all be looked at together to develop a holistic picture of the ethical health of the organisation. Comparative data also provides the opportunity to talk to local management about why their numbers may differ from that of other sites or regions.

It is important, however, to look behind the figures. A key question for boards to ask is how Speak Up arrangements are organised and managed, as well as the use being made of them. An important point to make is that monitoring culture frequently involves oversight of processes, not just outcomes. Boards need to know if their Speak Up arrangements are fit for purpose and whether they are operating in the intended way. This involves a qualitative judgement as well as a selection of quantitative indicators. Directors need periodically to gain some first-hand experience as part of their site visits and other familiarisation exercises. Without that, it is very difficult to judge the data the board receives.

Every three years, the IBE surveys employees in the UK and across Europe about their experiences of ethics at work. In 2018, consistent with previous years, a third of employees have witnessed some form of misconduct.  The 30% of respondents in Europe who have been aware of misconduct in the workplace were asked whether they raised – or decided to speak up about – any of their concerns directly to management, to another appropriate person or through any other mechanism. On average, only 54% did so, while 43% did not.

In each country surveyed just under half or more of those who have been aware of misconduct decided to report their concerns, which represents an improvement compared to 2015. Employees in the UK are more likely to have reported misconduct than those in any other country (67%) whilst respondents in Portugal are least likely to have done so (49%).

In order to explore further what the barriers might be to speaking up, those respondents who said they had not raised their concerns about misconduct were asked what had stopped them. The most prominent reasons given were that they did not believe that corrective action would be taken (28%), closely followed by they felt they might jeopardise their job (27%). Only 7% did not know who to contact.

These two reasons have significant implications for any organisation wishing to establish an effective Speak Up culture. Employees are now more aware than ever of the means at their disposal to raise concerns. However, it was also clear that three parts of the process – effective protection for those that speak up and monitoring of potential retaliations; robust investigations and communication of outcomes – still need attention if Speak Up processes are to be considered credible.

Reporting concerns can require courage, particularly in an unsupportive environment. Employees won’t take the risk if they believe that nothing will be done about it. Where local whistleblowing protection is poor or lacks definition in legal terms, it is good practice for organisations to establish their own higher protections for employees who Speak Up, whatever the local legal requirements. Ethics starts where the law ends and as more organisations realise the benefits of encouraging an open culture, they are looking into better ways to protect those who speak up from detriment.

As Oscar Wilde said: “No good deed goes unpunished” and this is no more true than when it comes to whistleblowers. Despite explicit assurances by companies that retaliation against those who speak up will not be tolerated, fostering an open culture where employees are able to voice their concerns confidently and without fear of reprisal remains a challenge for many organisations.

Retaliation can take many forms and is not always easy to identify. From failing to be promoted to being ignored in the canteen, it can manifest as the kind of low-level bullying that often falls under the radar of Audit and HR. Retaliation may spill out of the workplace and into the pub, the school playground and the community.

Practical steps in the Speak Up process can go some way to protect those who raise concerns, for example by ensuring that as few people as possible have access to reports and by preserving confidentiality in investigations and anonymity where requested. Companies are beginning to do more to monitor detriment by examining career paths of those who speak up, keeping in touch periodically with those who raise concerns and introducing care plans and welfare checks. Those who are found to retaliate should face misconduct and disciplinary proceedings.

The journey to establishing an open culture is a long one and it requires commitment and leadership. The implementation of a Speak Up programme can be part of a culture change that, although positive, may be considered as threatening to the status quo.  Staff may feel cynical about a new initiative if there is little trust within the organisation, while managers may view those who speak up as undermining their authority. Top management do not always recognise the role of staff in guarding corporate reputation and can be susceptible to the ‘say/do’ gap where they say one thing but do another.

An example is that of Jes Staley, CEO of Barclays Bank. In June 2016, two anonymous letters had been sent from the US to some Barclays’ board members about a senior executive. Barclays’ compliance team treated them as a whistleblowing matter and set about investigating the letters. Staley, instructed the bank’s information security team to investigate the author of the anonymous letters that made allegations about a long-term associate whom Staley had brought to the Bank. Staley admitted wrongdoing, his bonus was cut, and he was fined by the regulator. However, despite his attempts to unmask the whistleblower, he was thwarted, which showed the robustness of Barclays’ Speak Up system. Anecdotally, his poor leadership in this regard has only served to improve the reputation of the bank’s procedure, and calls to their hotline have gone up.

As part of financial regulations in the UK, financial services companies must appoint a ‘whistleblowers’ champion’ – a non-executive director with responsibility and oversight for Speak Up within their firm. The aim of these rules is to encourage a culture within financial services where individuals feel able to raise concerns and challenge poor practice and behaviour.

The appointment of a non-executive director to be a ‘Speak Up Champion’ is not limited to financial services and this model is being replicated in other industries. Some organisations, such as aerospace firms UTC and Lockheed Martin, have an organisational ombudsman who provides a neutral and impartial listening ear and helps resolve conflicts and concerns in an informal way. The ombudsman is distinctive from a Speak Up helpline as they are neutral; independent of all management structures; guarantee confidentiality and are available to any stakeholder (for example employees, customers, suppliers, contractors and shareholders).  Unlike with a Speak Up line, the ombudsman provides coaching and support to the individual who raises a concern. The ombudsman does not have the authority to overturn managerial decisions but is there to outline the options and develop potential solutions.

This is a particularly helpful model for smaller organisations, where an independent non-executive director who is perceived to have a level of impartiality can champion the Speak Up programme and employee concerns.

A key element in encouraging a Speak Up culture is to observe key trends and to continuously review performance.  Using data in this way helps organisations apply pattern recognition to spot potential issues and underlying concerns, even if those concerns have not been fully substantiated. In this way, the Speak Up process can help organisations mitigate risks and improve internal controls before there is a serious problem.

The freedom to raise concerns is a core component of an ethical business culture where employees are confident they will be supported to ‘do the right thing’. Effective Speak Up procedures help boards to understand and improve organisational culture and as such they are useful tools in the bid to follow the principles of the new UK Corporate Governance Code.

A Speak Up procedure provides a mechanism for employees to raise concerns about anything they find unsafe, unethical or unlawful.   If companies do not offer this support to their employees, or only pay nominal lip service to it, concerns that are not dealt with may become a crisis, threatening the stability – and profitability – of the organisation.

It is one thing asking employees to speak up, but quite another to listen to what they are saying. If employees repeatedly speak up and don’t feel heard, they might stop talking. And that silence can be dangerous.

DONATE TO PCAW
TEXT 70070

WITH THE WORDS PCAW01 AND STATE THE AMOUNT (UP TO £10) YOU WISH TO GIVE, OR

DONATE NOW VIA

BT MYDONATE

"PCAW IS A UNIQUE AND IMPORTANT RESOURCE FOR PEOPLE IN MY POSITION."

Advice Line client, who uncovered malpractice in the care home where he worked.

READ FULL CASE STUDY

NEWSLETTER

Previous Newsletters

For news on PCaW, sign up to our newsletter.