Eighteen years after the UK Public Interest Disclosure Act was introduced to encourage employees to raise concerns about issues they have experienced, this still remains a challenge for management in all types of organisations.
Hardly a week goes by without some reference to a major illegal or unethical lapse in the way an organisation does its business. Indeed, if you really want to engage an audience while speaking about a business topic, citing a media report on the most recent corporate malpractice will always help you to gain attention!
The reputation risk to businesses of such media exposure is always present. It is not possible to insure against it; it therefore comes down to self-insurance. While we can assume that nine out of ten employees generally wish to behave properly, there will always be a tenth person who will not naturally conform to what is considered to be the cultural norm of the organisation.
How then, do you self-insure against the risk of losing your reputation and the trust of your customers and suppliers because of the actions of a minority of staff? There is no quick or easy answer to this question. But there are practical preventive measures that any organisation can take to minimise the risk of corporate irresponsibility.
These revolve around the adoption of clear ethical and business values and adopting a means to help employees at all levels to apply them. This includes a method of “speaking up” about matters that concern them.
According to a 2016 survey by the Institute of Business Ethics, whilst one in five British employees were aware of misconduct in their organisation, almost half of them (45%) did not report their concerns. This data indicates that much still needs to be done if staff are to be encouraged and feel supported in speaking up.
Furthermore, companies can gain tangible business benefits if they ensure such mechanisms are in place—and ensure that they work. It is now generally accepted to be good practice for employees (and other stakeholders) to be made aware of a practical means by which to raise their concerns about unethical, unsafe or unlawful practices. “Employees being able to speak out about company wrongdoing” consistently ranks highly on lists of business ethics issues that the British public feel companies need to address.
While IBE research has found that the use of Speak Up phone lines is increasing, it is still worrying that most employees are unaware of the means available to them to raise concerns, and that the protection of those who do so is seen as very important. Indeed, fear of some form of retaliation is a principle reason why employees are hesitant to speak up.
Why is a Speak Up policy and procedure important?
Most organisations may have been, or will be, the victim of a fraud or theft by one or more of their own employees. A recognisably effective Speak Up procedure encourages employees to discuss their concerns internally (starting with a colleague and then the line manager), before going outside, either to the media or the relevant regulator.
With developments on the internet and, particularly, social networking sites, it is now easier than ever for employees to make their concerns public before raising them internally. A well-publicised mechanism for employees to speak up could help minimise this. A Speak Up policy sends a strong message to all levels of an organisation that bad practice will not be tolerated. It can also reassure employees that their concerns are important, and encourage them to bring their problems to the attention of management.
An effective Speak Up policy and procedure can help to protect employees from health and safety issues or bullying and harassment from other members of staff. A working environment in which it is made clear that bullying, harassment and discrimination will not be tolerated leads to fewer payouts at employment tribunals.
Another benefit could be that good employees are retained, with increased staff morale and loyalty. Perhaps the most compelling reason is that it makes for a happier and more productive workforce if they believe and see that a culture of mutual trust exists.
Customers and the public need to be protected from the effects of malpractice: for example, breaches of health and safety procedures or a failure to comply with hygiene standards. Staff often have knowledge which, if disclosed, may help to avoid disasters.
In order to tap into this knowledge, organisations need to ensure that their Speak Up procedures are effective, and that staff are reassured that any form of retaliation will not be tolerated. This presents a considerable challenge. Among other useful sources of information are: answers to questions in annual appraisals, and exit interviews, which can provide indications of where latent problems exist.
Increased calls: but is it enough?
The systems that organisations have in place to deal with concerns are given a variety of names, with many terms used interchangeably. Examples include: Whistleblowing, Speak Up, OpenTalk, Rightcall, and Hotline.
Of the FTSE 350 respondents to the 2016 IBE Survey of Corporate Ethics Policies and Programmes, 93% listed a Speak Up line for reporting misconduct as one of the main elements of their company’s ethics programme. All respondents said that they have a formal mechanism for employees to raise ethical concerns confidentially.
Over recent years, the number of reports to corporate Speak Up lines has generally increased. A similar trend is also reported by the Financial Conduct Authority (FCA), which saw a 72% increase in the number of investigations into the conduct of regulated financial companies as a result of a tip-off from a whistleblower.
Increased use of Speak Up mechanisms is generally considered to be a good thing, with several organisations using this as a metric for the effectiveness of, and confidence in, their Speak Up process. It also allows more concerns to be identified before they become serious.
Ethics is everybody’s business
The main reason employees gave in the IBE survey for not reporting their concerns was that it “might jeopardise my job” (30%). Some managers and supervisors may view whistleblowers as a threat to their authority.
While most large companies have a formal mechanism through which concerns can be voiced, the message still appears not to be getting through: that ethics is everybody’s business. It is imperative that organisations raise awareness of their Speak Up programme on a continual basis, beyond merely posting guidance on the company intranet.
Effective Speak Up arrangements will facilitate the creation of an open culture, where employees have the confidence to speak up. Consequently, organisations are enabled to operate with higher ethical standards, thus helping to avoid integrity risks, by helping with early detection and even prevention of misconduct.
Employees also need to know how and where to obtain guidance and support on what is expected with regard to the way the business of their organisation should be done. If organisations have the courage to be open about the positive outcomes of raising ethical concerns, this can help give staff the confidence to share their concerns with each other and with the company.
Given these challenges, it is important that company policy on this issue—and the reasons for it—are endorsed by the board and communicated throughout the organisation. This would complement a code of ethics, and would provide guidance for staff to determine what is the right thing to do in their place of work.
Simon Webley is research director at the Institute of Business Ethics (IBE). “Speak Up”, the latest briefing from the IBE, is available from www.ibe.org.uk.