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Companies must recognise whistleblowing benefits

Corporate governance experts at ICAEW have set out why whistleblowers are so important, detailing benefits and action plans for senior management and boards

June 2019

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Whistleblowing is central to the numerous checks and balances that allow businesses to thrive. In its latest “Connect And Reflect” report, How whistleblowing helps companies, ICAEW spells out the importance of effective whistleblowing and provides essential guidance for boards on how to create environments that encourage it.

Whistleblowing can be of enormous value to companies, but still many organisations do not promote a culture or provide policies that encourage employees to report deficiencies. The guide captures how companies can benefit from whistleblowing and provides a five-point action plan for boards on how to create systems and environments to support whistleblowers.

Elizabeth Richard, ICAEW’s Head of Corporate Governance, said: “Whistleblowing is a very contentious topic. If it helps to increase profits or prevent financial loss, whistleblowing is praised and applauded but if it exposes other kinds of deficiencies it is often scorned. This separation needs to stop.

“Whistleblowing offers companies a chance to get honest feedback which is not corrupted by self-interest or personal motivations and it should be seen as an opportunity for improvement - irrespective of the deficiency exposed.”

Five-point action plan:

  • Overcome resistance: explain why whistleblowing is consistent with core values;
  • Mean business: the certainty provided by a clear process should encourage the recipients of reports to treat whistleblowers with dignity and respect;
  • Be prepared: a written procedure detailing how to blow the whistle should include a definition and outline the subsequent process;
  • Align incentives: It may not be possible to match the benefits of whistleblowing for companies with benefits of whistleblowing for whistleblowers. However, it is possible for companies to address potential whistleblowers’ major disincentive: the fear of victimisation, and allied to that, the fear that their identity could be revealed;
  • Keep at it: companies will need determination and persistence to succeed, and whistleblowers and their supporters need the same qualities.

"While directors cannot be aware of all operational details of the companies they lead, they are expected to ensure that problems are identified so that they can be dealt with,” Richard said. “For this reason and many others, it should be in the directors’ and senior managers’ interest for whistleblowing to be a key tool towards effective management and strong corporate governance."

“But there needs to be a supportive environment and operational system in place that encourages employees to speak up about deficiencies and problems they observe without fear of potential consequences.”

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