I have always been troubled by the notion of anyone feeling the need to be a formal whistleblower. I would sense I would not be the only non-executive of the view that, with the right culture in an organisation, surely there is nothing that could not be raised with HR, then dealt with sensibly and proportionately without lasting damage to working relationships?

But a chance remark at the end of a conversation with Jack, one of the executive directors, raised real concerns that there might be a problem with my attitude to such issues.

“Did you know that the CEO and CFO were both at the trade conference? There was a rumour about the CEO: an employee bonding session had got out of hand.”

“Has this been followed up and dealt with?” I said, and Jack replied: “I think it was raised through the CFO to the CEO, but I am not sure it was fully investigated.”

I was very troubled that I was unaware of any allegations, but more so that these apparently related to an event taking place some months ago. I asked Jack who else knew about this. He said: “The sales director, Richard, mentioned it to me, just the other day. I sense he is quite uncomfortable. He was there but not party to the alleged incident. I think you should call him.”

“Perhaps you might ask him to call me?” I suggested.

And so it was that I took a call which was excruciating and awkward, but so necessary. It was awkward because, whatever the truth of the allegations, it was clear the CFO had set out to close down any semblance of an investigation. This was no doubt in an attempt to save the CEO from challenge and embarrassment or worse.

Last resort

In my conversation with Richard, I realised that the company, of which I was a long standing non-executive director, had mishandled the whole sorry episode. I was jolted into realising that those who resort to whistleblowing do so only when other means have failed. They have to have courage and conviction and can so easily put their own personal positions on the line.

I quickly raised the issue with the chairman, who briefed the other non-executives. In view of the possible direct involvement of the CEO, an independent HR specialist was appointed to look into the allegations. Even so, one sensed there may have been a degree of reticence on the part of those asked to provide information to this investigation.

During the process, one senior employee left of her own volition. She made no claim against the company, although one suspected there might have been grounds for her to do so.

If somewhat contrite about his actions at the conference, the CEO retained his role and was never formally disciplined. Sometime after the event, it had proved difficult to piece together precisely what went on at the trade conference.

It was not the board’s finest hour. I hope I would be more alert in future to pick up signs, but there is no avoiding that the culture has been tainted by how this was handled. The energy directed by the CFO and CEO to close down an early investigation leaves a bad taste in the mouth as to the values key members of the executive hold dear.

Encourage courage

Above all, I am left troubled that I might never have known about this. Although he was a senior director, Richard had—with hindsight—lacked the necessary courage to pursue the matter, even though he was clearly troubled and thought the issue had not been well handled.

There are well-publicised instances of chief executives seeking to identify and follow up on whistleblowers to try to protect their own reputation or that of the organisation. What a trap that turns out to be.

I now realise that any instances of whistleblowing are most likely a trailing indicator of a poor culture. This board needs to ensure that whistleblowing is not just understood and tolerated but is encouraged.

Richard’s lack of courage left the issue to fester and meant those brave enough to raise the initial complaint were isolated and enveloped in a painful process. The board must ensure that whistleblowing is supported and not undermined by power and position.

I am left wondering about whether we now have the right CEO and CFO duo; the financial results may be good, but behaviour matters.

The Secret NED has served on the boards of a number of public and private companies.