Can You Hear the Whistle Blow?
Whistleblower policies aren’t extremely common for smaller businesses in the SMB space, but they should be.
Case in Point
A client recently shared with me a tale of fraud in their organization. One of the managers created fake accounts to pad their department’s sales numbers and drive up sales compensation. The individual was discovered and released back into the wild. Additionally, safeguards were implemented to ensure this type of fraud couldn’t be replicated. Problem solved, right?
The bigger issue was that several departmental employees knew or suspected something unethical was occurring but didn’t feel empowered to report the activity. That’s when I asked the President about their whistleblower policy. They answered, “We had one at my last organization, but we don’t have one here. We need to fix that.”
Yes…Yes, you do.
A Little Whistleblower History
The idea of protecting (and encouraging) whistleblowing has been around for a long time. In the U.S., the 1912 Lloyd-La Follette Act protected government employees who reported waste, fraud, and abuse. Additional notable U.S. milestones include 1989’s U.S. Whistleblower Protection Act, 2002’s Sarbanes-Oxley Act, and 2010’s Dodd-Frank Wall Street Reform and Consumer Protection Act. Yet history only gets us so far. At this point, you’re likely wondering what goes into a whistleblower policy.
Key Components of a Whistleblower Policy
While the specifics may vary depending on the organization and the legal requirements in the jurisdiction, some standard components of a whistleblower policy are:
- Purpose: A statement outlining the reasons for the whistleblower policy and the importance of promoting a culture of transparency, accountability, and ethical behavior.
- Scope: A description of the types of conduct or wrongdoing covered by the policy, which may include fraud, waste, abuse, corruption, safety violations, discrimination, harassment, or other forms of misconduct.
- Reporting Procedure: A clear and detailed explanation of how whistleblowers can report suspected misconduct, including information on who to contact, how to submit a report, and the steps that will be taken to investigate and address the report.
- Confidentiality and Non-Retaliation: A commitment to protecting the confidentiality of the whistleblower’s identity to the extent possible and prohibiting retaliation against whistleblowers. This may include provisions for anonymous reporting or protections against retaliation toward employees who report misconduct.
- Investigation and Resolution: A description of the process for investigating and addressing reports of misconduct, including the roles and responsibilities of those involved, the steps that will be taken to gather evidence and assess the credibility of the report, and the actions that may be taken in response to the findings.
- Training and Communication: A commitment to providing training and communication to employees on the whistleblower policy, including information on how to report misconduct, the protections available to whistleblowers, and the importance of reporting suspected misconduct.
- Monitoring and Review: A commitment to ongoing monitoring and review of the whistleblower policy and procedures to ensure they are effective and up to date.
These components are designed to provide a clear and comprehensive framework for reporting misconduct and protecting whistleblowers. They are essential for promoting transparency, accountability, and ethical behavior within organizations.
Now that we’ve reviewed the key components, let’s see how they might look in practice via a sample policy.
Sample Whistleblower Policy
Purpose: The purpose of this policy is to provide a framework for employees to report concerns about unethical, illegal, or improper conduct within the organization without fear of retaliation.
Scope: This policy applies to all employees of [Company Name] and its subsidiaries.
Reporting Procedure: Employees who have concerns about unethical, illegal, or improper conduct should report their concerns to their immediate supervisor, the Human Resources department, or the designated whistleblower hotline. Reports can be made anonymously or non-anonymously.
Investigation: All reports will be taken seriously and investigated promptly and thoroughly by the appropriate personnel. Investigations will be conducted in a fair and objective manner and with respect for the confidentiality of all parties involved.
Protection Against Retaliation: [Company Name] prohibits retaliation against employees who report concerns about unethical, illegal, or improper conduct. Retaliation is any adverse action taken against an employee because they have made a report in good faith, and it is strictly prohibited. Employees who experience retaliation for making a report should immediately report the retaliation to the Human Resources department.
Confidentiality: All reports of concerns will be treated confidentially, to the extent possible, and only disclosed on a need-to-know basis. Employees are encouraged not to discuss their concerns with anyone other than the appropriate personnel.
Non-Retaliation: No employee who in good faith reports a violation of the Code shall suffer harassment, retaliation, or adverse employment consequence. Any employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment.
Disciplinary Action: Employees who engage in unethical, illegal, or improper conduct will be subject to disciplinary action, up to and including termination of employment.
Conclusion: This policy is intended to promote a culture of ethics, integrity, and accountability within [Company Name]. Employees are encouraged to report any concerns about unethical, illegal, or improper conduct to the appropriate personnel without fear of retaliation.
The above sample is not intended to be a one-size-fits-all policy, but it can get you started if you do not currently have a policy.
When you’re drafting a policy, I highly encourage you to consult with your legal counsel and/or HR specialists. They’ll point you in the proper direction and ensure all the i’s are dotted and t’s crossed. Finally, below are several links to a few resources that can assist you in your whistleblower journey.
Other Sample Policies & Resources
- Society for Human Resource Management (SHRM)
- Corporate Finance Institute (CFI)
- National Whistleblower Center (NWC)
Wrap-Up and Final Thoughts
Whistleblower policies might seem like something only larger — or publicly traded — organizations should concern themselves with. Yet wherever human beings are found, so too are fraud and malfeasance. It’s an unfortunate — yet all too real — part of the human (and business) experience. Whether your organization is small, medium, or large, it’s not immune.
Adopting a whistleblower policy and ensuring that ALL employees know they have the ability to report illegal and unethical behavior will go a long way toward ensuring your organization’s core values are more than just a poster on a wall.
Got a question about whistleblowing? Blow a few sharp whistle blasts in my direction, and together we’ll figure out what needs to be done.