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HR’s poor record on whistleblowing

International law firm Freshfields Bruckhaus Deringer is urging HR professionals to move whistleblowing up their risk agendas as a global survey* of more than 2,500 middle and senior managers reveals high levels of corporate complacency.

A survey found that more than a third (36 percent) of senior or middle managers in HR would consider blowing the whistle, and 12 percent have considered doing so in the past. However, only five percent say whistleblowing is currently an important issue for their organisation and almost a quarter (23 percent) say that their company actively discourages whistleblowing, a greater proportion than in any other industry sector. This lack of preparedness is seen across a wide range of sectors and markets – on average, less than one in ten (seven percent) say whistleblowing is currently an important issue for their organisation and more than half (53 percent) say their companies either don’t have a whistleblowing policy or fail to publicise it if there is one.

Commenting on the study, Caroline Stroud, global practice group leader for Freshfields’ employment, pensions and benefits group and a member of the firm’s global investigations team, said: “Despite a recent spate of high-profile whistleblowers and an increase in the number of instances leading to global investigations and fines, companies are ill-prepared to deal with concerns raised by their employees. Corporates need to adopt sufficient internal reporting systems to recognise and manage these matters more effectively. Given the high-level nature of whistleblowers’ issues such as financial mismanagement, corruption or criminal activities, and the related major reputational risks, adequate whistleblowing procedures are clearly a board-level issue.”

The survey data also shows that HR professionals continue to fear reprisal for blowing the whistle, more so than employees in other sectors. Almost three quarters (73 percent) of all HR professionals surveyed believe senior management at their organisation would either treat them less favourably or look for ways to terminate their employment if they blew the whistle. Caroline Stroud further commented: “It’s surprising that employees continue to fear unfavourable treatment. In many countries, including the UK, the right to blow the whistle on particular violations without suffering detriment is protected by law. Boards need to create a culture in which employees are not only protected but genuinely encouraged to make disclosures to their superiors.”

HR employees were the least likely to be complacent about reporting wrongdoing – only one percent said they would never report a suspected wrongdoing if they were aware of it. Yet managers in HR were the most likely to encourage employees to report a wrongdoing directly to the regulator (23 percent), or to an external organisation (9 percent), rather than trying to resolve the issue internally. A further 14 percent would advise their employees to go straight to the media. Adam Siegel, Freshfields’ US regional managing partner and co-head of the firm’s global investigations practice, said: ‘Robust whistleblowing policies bolster a company’s argument that it has implemented adequate procedures to guard against bribery. They also make it more likely that concerns will be raised internally rather than falling under the scrutiny of  external regulators or damaging a company’s reputation.”

“Furthermore, whistleblowing policies are required in various countries. In the US, for example, public companies must have procedures for employees to submit concerns about accounting or auditing matters without fear of suffering reprisal. In other countries where there is no legal requirement for whistleblowing policies regulators still expect companies to have appropriate policies in place,” Adam added.

Cathy James, chief executive of whistleblowing charity Public Concern at Work, also commented on the report: ‘As an organisation that seeks to support whistleblowers as well as encourage organisations to see that this is in their own best interests, the fact that whistleblowing is overlooked in so many businesses is a depressingly familiar story. Getting this right can make the difference between damage prevented or disaster averted.  We need to challenge the perception that to speak up requires courage because of the risks, or is somehow futile. A good starting point would be to champion and celebrate those who question wrongdoing, risk and malpractice. While this requires some imagination and a bit of work, it is not expensive or difficult.  Just having a policy is not enough though. If boards of organisations started to ask themselves whether their arrangements are working in practice and sanctioned those who treat whistleblowers badly, then we might see a shift in attitudes.’

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