Setting up an internal reporting program

Employees should be properly informed of what types of issues to report
By Hilary Davies
|Canadian HR Reporter|Last Updated: 11/28/2016

In Canada, whistleblowers often only come to public attention when the reporting is external and a sensational story hits the news. At this point, the reputational damage to an organization is already done and the opportunity to mitigate the effects may have disappeared.

External reporting also frequently involves illegal or unethical activity that may have been occurring for a long period of time. The reporting of malfeasance within an organization may be external because the organization does not have an effective internal reporting mechanism.

There are definitely skeptics who question why anyone would want to encourage whistleblowing. But looking at recent stories in the news, in the financial and pharmaceutical industries, for example, it’s easy to see the value of an internal program that can identify and mitigate a problem before it becomes public.

 “Whistleblowing” is the act of reporting suspected wrongdoing, mismanagement and unethical conduct in an organization. It is one of the best methods for identifying activities that could potentially cause harm to an organization, the public interest, or the health and safety of the environment. The information gained from encouraging employees to report issues or concerns can be invaluable to employers seeking to prevent potential damages.

For these and other reasons, government bodies, corporations and non-profit associations are looking for ways to proactively encourage a “speak-up” culture that enables employees to voice any concerns, according to the 2014 International Handbook on Whistleblowing Research and the 2012 article “Measuring the Cost of Fraud: An Opportunity for the New Competitive Advantage” in the Journal of Financial Crime.

Having an effective ethical reporting system that encourages employees or clients to report wrongdoing is an important component of overall corporate governance. International research has shown that whistleblowing activities are one of the best mechanisms for organizations to detect internal wrongdoing and improve overall organizational effectiveness, according to the Journal of Financial Crime article.  A workplace culture that promotes speaking up and reporting of wrongdoing can empower employees to take an active role in their workplace, improve shareholder confidence and help create an environment where employees feel free to contribute to the advancement of the organization.

Early detection of potentially harmful behaviour, whether it is intentional or not, can help an organization stop the behaviour early on and prevent it from reoccurring. Even minor incidents that occur and are ignored can lead to much bigger issues and cause more harmful behaviour. Organizations that ignore harmful behaviour are risking financial loss, legal liabilities, reputational damage and even blacklisting.

Setting up a system

Developing an effective whistleblowing system can be a difficult process but with the right tools and plan in place, the results can make a big difference. The first step is to establish the overall goals and objectives of the system. The system should be a fair process that seeks to eliminate potential bias and is seen as impartial by all levels of the organization.

A well-planned and executed system should be guided by effective and professional management in its daily operations, and include an oversight process that helps to ensure the goals and objectives are achieved. When necessary, outside expertise should be considered to remove any appearance of bias. Creating a program that is arm’s length from management and executives will help to create trust and credibility.

Employers that are committed to cultivating a positive, speak-up culture should clearly define what people should look for and report. This requires direction and a clearly defined scope and procedures for employees to follow.

Often, organizations will define and articulate a code of conduct that helps define acceptable behaviour and provides guidance to employees. Employees should be properly informed of what types of issues to report, where they can go for advice and information about ethical behaviour, and how they can make a report. Establishing and clearly articulating the expectations will help create a foundation for the program.

One of the most important components of a successful system is that the employees believe it will work. Employees are more likely to pass along information if they have confidence that by reporting wrongdoing, their concerns will be taken seriously, and their actions will make a positive change.

This belief begins at the top with the support and active demonstration of ethical behaviour from senior executives. The executives must clearly show their support of the program, promote and display ethical behaviour, and ensure there is awareness among employees of how the program works, the procedures involved, and the protections put in place for any whistleblower.

A main concern for many whistleblowers is the potential for reprisal. There have been well-documented cases of reprisal against whistleblowers including loss of their job, financial hardship and psychological harm. Employees who fear they may experience retaliation from fellow employees or the organization’s leadership are less likely to report instances of wrongdoing.

As a result, organizations must help ensure retaliation does not take place and that the system itself is evaluated periodically to give insight into its effectiveness to avoid any potential issues. Offering a confidential method of reporting can alleviate these concerns. It is also important to review each case and help ensure any negative behaviour toward a whistleblower is addressed immediately and stopped. 

Although the elements of a whistleblowing system may vary depending on an organization’s size and business, there are common critical elements and recommendations for an appropriate implementation approach. Whistleblowing systems can become a valuable part of a comprehensive occupational health and safety management strategy that promotes accountability and gives workers a voice and influence within their workplace.

Ultimately, an effective internal reporting system can help both the organization and its employees. It allows an organization to proactively address any behaviour that is contrary to the policies and procedures of the organization, and gives employees confidence that their concerns will be appropriately addressed.

Hilary Davies is project manager, environment and climate change, at CSA Group in Ottawa.

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