How whistleblowing helps companies

Whistleblowing is central to a company’s system of checks and balances, It can help businesses to mitigate their risks, improve their culture, and ultimately increase their performance, argues ICAEW chief executive Michael Izza.

It often takes great courage for a whistleblower to report information which companies – along with their customers and investors – need to hear.
The decision to blow the whistle can be difficult, and will often involve a weighing up of what is to be gained and what could be lost from doing so. It’s important that companies apply the same mindset – carefully considering what whistleblowers are saying, why they are saying it, and what can be gained from engaging constructively with them.

Connect and Reflect

The latest report in our ‘Connect and Reflect’ series, How whistleblowing helps companies, examines this in more detail and explores five benefits for companies of whistleblowing. In summary, these are:

• The revelation of inconvenient truths;
• The promotion of structured learning;
• Empowering people;
• Providing a unique insight into a company;
• A sign of excellence and sophistication.

The report goes on to offer a five-point action plan for boards, to help them better understand whistleblowing, engage constructively with it and harness it for the greater good.

We address some difficult questions, such as whether whistleblowers’ identities can or should be kept confidential longer-term, how to investigate reports, the rights of the accused party and how whistleblowers should be treated.

Stigma

Unfortunately, whistleblowing is still surrounded by stigma. It’s crucial that this is tackled, and that businesses and society at large recognise the value that this practice can and often does play.

Therefore, as part of this report, we undertook some research into the origins of this ingrained negativity – and concluded that it is likely formed in childhood.

Children are taught mixed messages about whether or not they should ‘tell tales’. They are encouraged to report predatory behaviour by adults, but also conditioned to value loyalty, obedience and self-reliance – with transgressions from the latter being punished.

There’s also a contradiction within the press; journalists rely on whistleblowers for scoops, but also sensationalise stories where blowing the whistle has damaged an individual’s personal and professional life.

We want boards to take a measured and pragmatic approach towards whistleblowers, and not to rely on the stereotypes of them as self-interested and prone to exaggeration.

In reality, most whistleblowers’ identities are never known, and once they have reported, most resume their roles with minimal fuss.

New thinking

I hope this report encourages refreshed thinking around whistleblowing. Directors need reassurance that there is a process by which problems in their company can surface and subsequently be addressed. It is in their own interests for whistleblowing to be effective – and to be recognised as a key tool towards effective management and strong corporate governance.