New findings by the Ethics Resource Center (ERC) examines what constitutes a "whistleblower." For years, the term has been used to describe those employees who go outside their company to report wrongdoing. They may do so because they do not trust their company to handle the issue appropriately or because they are angry or frustrated after their attempts at internal reporting proved to be futile.
According to "Inside the Mind of a Whistleblower," a supplemental report to the ERC's 2011 National Business Ethics Survey® (NBES), whistleblowers almost always make some effort to root out wrongdoing internally before going outside the organization with their concerns. The new report said that only 2 percent of employees go solely outside their companies to report misconduct.
The study provides additional analysis of data collected through the ERC's 2011 NBES released in January, made possible by donations from Dell Inc. and URS Corporation.
The research also found that employees generally turn to the government or other outside sources because the violation is substantial and the company has been slow to respond, not because of financial incentives. ERC's researchers suggest that executives reconsider their characterizations of "whistleblowers" as disloyal, self-serving employees. Instead, organizations might consider how they motivate and assure workers that the internal response mechanisms are effective.
"We tend to think that whistleblowers go outside the company because they do not trust their employer," ERC President Patricia Harned said. "But in most cases, employees actually turn to their management first. Many see whistleblower as a derogatory term for a disloyal employee, but we've found that the whistleblower is often forced to go outside, either by fear, inaction, or both.
"The best strategy for management is to respond quickly and effectively when employees report misconduct," Harned added
ERC researchers have found the vast majority of workers are predisposed to report misconduct. The full 2011 NBES found that a record 65 percent of workers who witnessed rules violations in 2011 reported them. But even at that high rate, some 20 million workers stayed silent when learning of misconduct.
In addition to insights about employees who take problems to outside sources, the report provides looks at employees who report only internally through company channels. Among the key findings:
- Of those who reported misconduct, 56 percent took their reports to someone they know and trust inside the company, such as a direct supervisor.
- Across almost all demographic groups, only about one in 20 individuals (5 percent) would be motivated to report outside the company by a monetary reward.
- Reporting numbers are higher at companies that are showing signs of recovering from the recession than those that are still struggling. At companies demonstrating no signs of recovery, 63 percent of those who witnessed wrongdoing reported it. That number goes up to 77 percent at companies where five or more signs of recovery are evident. This suggests that employees are reluctant to add to company problems at a time of financial difficulty.
"Employees who have the courage to raise their hand and report wrongdoing form the front line of a culture of compliance," said Dell Chief Ethics and Compliance Officer Michael McLaughlin,. "At Dell, we ask our team members to act as owners and speak up when they see things that aren't in line with our core values of winning with integrity and doing the right thing each time, every time. And we applaud them when they do."
"URS is pleased to co-sponsor this important National Business Ethics Survey research project by the Ethics Resource Center," said Randy Wotring, URS Federal Services Division President. "The NBES and its supplemental studies are invaluable in supporting our firm commitment to maintain an ethical corporate culture at URS."
Most Employees Want to Fix Problems
The study shows that reporting rates are higher at companies with strong ethics programs. The ERC recommended that companies can stimulate reporting by clearly defining misconduct and teaching how to report it, demonstrating that reporting has an impact, standing behind employees who come forward, and acknowledging the reporter's courage. Effective rewards can be as simple as a handwritten note of thanks or recognition of the report during the employee's annual performance review.
When Ethical Conduct Is Appreciated, Reporting Increases
The supplemental study said that more than seven in 10 (72 percent) of workers who believe their company rewards ethical conduct reported wrongdoing, compared to 57 percent who did not believe ethical conduct was recognized.
The belief that reporting wrongdoing has an impact is a powerful motivator. Among those who believe they are "influential" in their workplace, more than three quarters (76 percent) reported misconduct, compared to 52 percent who believed their voice is unlikely to be heard. A sense of personal security also makes a difference—74 percent of those who said they could question management without fear of retaliation reported misconduct, compared to 51 percent who feared retaliation.
Employees prefer to keep the resolution of company violations inside the company; 82 percent of initial reports of misconduct were directed either to the immediate supervisor (56 percent) or to a more senior manager (26 percent).
Monetary incentives are more likely to motivate workers who have experienced recent financial disappointment. Also, 13 percent of workers whose salaries had declined in the last 2 years said they would report wrongdoing to government only if there was a chance for substantial financial reward.
To download the full supplemental report, go to http://ethics.org/nbes.