Article by John Joy, Managing Attorney, FTI Law, with contributions from corporate leaders Emily Cooper, Olivia Tan, Fahran Advani and David Reid.
In 2021, the SEC revealed in its annual report that it received over 12,000 tips from whistleblowers, which brings the total tips received by the SEC to over 50,000.
We often talk about whistleblower rewards and reporting crime to the authorities but this week we reached out corporate leaders around the globe to get their perspective on how corporations can best handle whistleblower complaints. Here are the tips from the top.
Take the Compliant Seriously And Empathize With The whistleblower
One of the overarching themes we heard from corporate leaders is that whistleblowers need to have their concerns taken seriously. Emily Cooper, founder of Oliver Wicks notes that organizations cannot let any complaints, no matter how small, go unnoticed. “Whenever an employee decides to become a whistleblower, it is important to take them seriously. Every complaint matters, and a clear investigation plan must be put into action. Interviews must be conducted, and the top management must be ready to address the issues raised in the complaint.”
One of the best ways to handle whistleblowers in a corporate setting is to understand the challenges faced by the whistleblowers, says Olivia Tan, the co-founder of CocoFax. “Reporting potential misconduct committed by your coworkers takes courage and should be viewed as a sign of loyalty to the organization. Nonetheless, internal whistleblowers frequently face questions about their motives, open themselves up to criticism from their colleagues, and risk their reputation and livelihoods. Often, whistleblowers who report compliance concerns to their managers are looking for reassurance that they did the right thing by raising their concerns and an acknowledgment of their courage in speaking out.” In order to encourage genuine whistleblowers to come forward, you have to show them that they will be taken seriously and empathize with the challenges they are facing.
A universal piece of advice for companies dealing with whistleblowers is to ensure that the whistleblowers have anonymity. This is a principle which is built into the SEC’s whistleblower rewards program but should also be a part of a corporate reporting channel according to Farhan Advani, Director Marketing at Buy Here Pay Here. Advani notes that “while it is ultimately the whistleblower’s choice to remain anonymous, whistleblowing anonymously allows people who are not actively involved in the fraud to raise concerns without having to expose themselves.” This is critical to ensuring that whistleblowers feel comfortable reporting.
Understand That Retaliation Takes Many Forms
One of the most daunting prospects of becoming a whistleblower is facing retaliation. Despite written policies claiming to protect internal whistleblowers, many internal whistleblowers suffer some form of workplace retaliation explains Olivia Tan, the co-founder of CocoFax. Tan notes that “retaliating against internal whistleblowers is not just wrong, but it also sends a clear signal to all future whistleblowers that they too might suffer retaliation if they report compliance concerns.”
Similarly, retaliation can work against a company. As David Reid, Sales Director at VEM Tooling explains, by punishing the employee, you back them into a corner and make it a virtual certainty that the employee will try to take action against the company to defend themselves. Retaliation leads to a lose-lose situation for both the company and the whistleblower.
Focus On Management
One common complaint by whistleblowers is that regardless of policies in place, their superiors don’t respect people who raise concerns. “Organizations should train frontline managers on the challenges that internal whistleblowers face and how to respond to whistleblowers who express a fear of retaliation” says Olivia Tan of CocoFax. Tan advises companies to “train frontline managers on the challenges that internal whistleblowers face to make them better equipped to respond effectively if and when someone approaches them with a compliance concern.”
Similar advice was on hand from Burke Files, President Financial Examinations & Evaluations, Inc. Files explained that management are a key part of whistleblower process:
“It comes down to management style. Managers who understand people make mistakes and sometimes those mistakes are compounded until they get out of hand – embrace whistleblowers. It allows management to address mistakes while they are small, and long before they blow up into what I call a red-face moment.”
Make Sure You Have The Right Expertise
Many whistleblowers are frustrated by their experience of speaking out, particularly somebody is listening to them, but they are not being heard. This often happens when a whistleblower hotline is staffed by people who don’t have the technical expertise to understand the wrongdoing being reported. This was an insight we received from Cindy Corpis, CEO of SearchPeopleFree, who gave the following example:
“If a whistleblower has concerns regarding anesthesia billing, it is helpful if the individual engaging with them has prior expertise and knowledge in that area, as this will allow them to better grasp the whistleblower’s concerns and offer sensible follow-up questions.”
Create an Ombudsman
Bina Patel, Founder of Transformational Paradigms takes a different approach when it comes to handling whistleblowers. While some companies use external reporting lines, Patel suggests that organizations should establish an internal office of the Ombudsman, which can act as a kind of regulator within the organization:
“The best solution for all organizations is to establish an organizational Ombudsman office. This is a neutral body that is confidential, independent, and impartial. The Ombudsman may be obligated by policy to report whistleblower complaints, but they can go with the employee and report it together so that the whistleblower has an ally when speaking to legal or compliance.”
Get Counsel Involved Early In The Process
Daniela Sawyer, Founder of FindPeopleFast.net advises companies to get legal advice early in the process. “Take advice from professionals as early as possible, as it will help you understand clearly the risks involved and the complexity of the issues.” Not only can good legal advice help navigate complex employment issues, but experienced counsel will also have a wealth of practical experience that can give you an idea of likely outcomes.
Have Clear Policies
“It is important for a company to create a clear whistleblowing policy” explained Kim Chan, CEO of Docpro. Chan notes that “a whistleblowing policy is a guideline that informs a company’s employees of their procedures in handling illegal and unethical conduct. This guideline can provide assurance to employees that they will be protected and set out the expectations, rights and obligations of both the whistleblower and the company.”
Treat The Whistleblower Professionally and Take The Concerns Seriously
“As a business leader, you must be prepared to address the whistleblower’s concerns” advises Harriet Chan, Co-Founder and Marketing Director of CocoFinder. “Interview the whistleblower and treat them professionally, as this will help identify and correct the flaws in the business process.”
These sentiments were echoed by Stephen Curry, CEO at CocoSign who says “the best way to handle whistleblowers and people who have reported wrongdoing within the company is to make sure that they feel like they can speak up without fear of repercussions, and to take their complaints seriously. Make sure that your employees know about your whistleblower policy, which should be easily accessible on your website or in the workplace.”
Olga Voronkova, Marketing director at KeyUA. Voronkova explains that a “company should develop a culture where employees are not afraid to express themselves in front of the members of management.”
Marilyn Gaskell, Founder of TruePeopleSearch, similarly notes that “employers should do their best to make sure that employees feel free and encouraged to come forward with any information regarding wrongdoing in the workplace. Protect and strengthen your company’s ethical backbone through compliance programs and employee education solutions, such as a robust whistleblower policy. Because whistleblowers are vital to the success of any company, several strategies are necessary for dealing with and creating workplace loyalty.”
These are excellent insights for corporate leaders looking to develop their whistleblower programs, but if you are an employee considering becoming a whistleblower, make sure you speak to experienced counsel before doing so. This will ensure you have a full picture of all the options available to you and advice on any protections you may be entitled to.