One of the challenges for boards is how to gain insights into the culture of their organisations, including whether staff are acting in line with the organisation’s stated values. There is no single mechanism that directors can rely on but we at Protect believe that effective whistleblowing arrangements can help.
Protect is the UK’s whistleblowing charity and our goals are neatly captured in the phrase “Speak Up, Stop Harm”. We were founded nearly 30 years ago and have accumulated unrivalled experience of whistleblowing. Our activities fall into three categories:
• We help organisations across the private, public and third sectors to reduce their exposure to unwanted risks by improving the effectiveness of their whistleblowing arrangements. We currently have around 220 members.
• We advise actual or potential whistleblowers as to how best they can have their workplace concerns addressed, whilst protecting themselves from retaliation. We advise around 3,000 individuals each year and have advised nearly 50,000 individuals since our foundation.
• We campaign for reforms to the legal and regulatory framework for whistleblowing. There are significant gaps in the framework, including some that directly affect NEDs.
What’s in it for the board?
Directors face the very considerable challenge of making their organisations successful, whilst meeting an increasing variety of societal expectations such as avoidance of environmental damage. There are lots of things that can go wrong, causing damage to the organisation and exposing directors to legal or reputational risk.
The board is expected to be aware of what is happening in the organisation; however, it is difficult in practice for directors to know what is going on. Non-executive directors are substantially dependent upon what is reported to them by their executive director colleagues, who may not be fully transparent. And even executive directors who are committed to transparency are substantially dependent on middle managers who may not be fully transparent to their bosses.
The business case for having effective whistleblowing arrangements is straightforward: if there are potentially harmful actions taking place, then it is in the best interests of the organisation—and its directors, personally— to learn about them at the earliest possible moment so that they can be nipped in the bud. Ordinary members of staff are likely to spot signs of trouble earlier than quality assurance teams, compliance staff or internal auditors.
Whistleblowing is good for business—it can enable the early detection of fraud, deter wrongdoing, reduce the costs of litigation and save reputational damage, all of which can impact on the bottom line.
Common myths
There are some beliefs about whistleblowing which are seriously misplaced. For example:
• “Whistleblowing involves making public information about what is happening inside organisations.” In our experience, most whistleblowing cases involve raising concerns within organisations. Cases which go external are only the small tip of a very large iceberg… and most whistleblowers only resort to this if their organisations have not taken their concerns seriously.
• “Whistleblowers are badly motivated trouble-makers.” Although Protect has encountered whistleblowers with unattractive motivations, most whistleblowers are genuinely concerned about what they are seeing and hearing at work. Directors should think of whistleblowers as trouble-spotters rather than trouble-makers.
• “If our whistleblowing policy is clear, there is nothing more that the board needs to do.” We have found many organisations fail to pay sufficient regard to the factors that discourage staff from speaking up. Fortunately, there are steps that boards can take to make their whistleblowing arrangements more effective.
How to assess whistleblowing
Directors need to create an environment in which staff believe it is safe for them to speak up. Unfortunately, too many organisations are reluctant to listen to bad news and have a tendency to shoot the messenger. In many cases, whistleblowers have found their position to be untenable because the raising of concerns had irretrievably damaged their relationships with their managers or colleagues.
Protect’s experience gives us a unique insight into the effectiveness of whistleblowing arrangements. We have developed a benchmarking tool, allowing organisations to assess the efficacy of their arrangements.
Protect’s benchmarking tool includes: governance arrangements relating to whistleblowing; operational procedures for receiving and investigating workers’ concerns; and staff engagement in relation to the whistleblowing arrangements – do staff have confidence that they will not suffer adverse consequences if they speak up?
More than 100 organisations have used our benchmarking tool and the feedback we have received is that many of them have identified opportunities to improve their practices.
Organisations regulated by the Financial Conduct Authority or Prudential Regulation Authority must appoint a “whistleblowing champion” to ensure “the integrity, independence and effectiveness of the firm’s policies and procedures on whistleblowing”, including how whistleblowers are protected from victimisation. Appointing a board champion is good practice that other sectors may choose to follow.
Legal duty
Directors can be held personally liable for their own treatment of whistleblowers, as the case of Timis v Osipov revealed. Alexander Osipov was the CEO of International Petroleum Ltd and was dismissed for raising governance concerns. As the employer was insolvent, Osipov brought claims against the individual NEDs who had taken the decision to dismiss him. He won and the two directors personally had to compensate him around £2m for the losses flowing from their decision.
Board-level whistleblowing
Finally, directors may themselves want to raise concerns about their organisations. NEDs will need to tread carefully here, as they do not fall within the legal definition of “worker” for the purposes of protection against detriment or dismissal. Protect’s legal reform campaign calls for the scope of whistleblowing protection to be broadened to include NEDs and trustees.
Everyone in the workplace—from the shop floor to the boardroom—should be encouraged to speak up to stop harm.
Paul Boyle is the chair of trustees and Elizabeth Gardiner is CEO, both at Protect