There have been an increasing number of research studies that have informed us that whistleblowing is the most effective way to identify wrongdoing in our organisations.
The most impressive is a recent study of whistleblowing in the Australian public sector. This research comprised eight surveys across the public service, the largest of which sent out 23,177 questionnaires to public servants in 118 agencies. 7663 public servants responded. The research was organised by fourteen state and the federal government ombudsman and anti-corruption agencies, along with five universities. The evidence that whistle-blowing is the most effective approach to identifying wrongdoing came from the surveys sent to managers and ethics case handlers. Some 765 respondents rated reporting of wrongdoing by employees as more effective than any other method for identifying wrongdoing, including routine internal controls, audits, or even management observation.
Surveys on fraud in the private sector conducted by the big accounting companies confirm that whistleblowing is the most effective way to stop wrongdoing. For instance, Price Waterhouse Cooper’s 2007 survey on economic crime, based on interviews in over 5,400 companies located in 40 countries found that whistleblowers reported 43% of fraud identified in companies. Professional auditors were able to detect only 19%. A 2006 survey by KPMG found that 46% of fraud is reported by employees rather than by internal controls and audits.
Researchers at the Chicago Graduate School of Business and the Universities of Toronto and Michigan have drawn up a “top ten” of the most active fraud detectors.
The study analysed 230 cases of alleged corporate fraud in U.S companies between 1996 and 2004. Topping the list of fraud detectors were employees, followed by the media, then non-financial market regulators, analysts, auditors, strategic players, the Securities and Exchange Commission (in the U.S), shareholders, professional service firms and, lastly, short sellers.
The willingness of people to report fraud does not necessarily tell us that wrongdoing by the organisation itself, if reported, will be acted on, But it does tell us that there are people in organisations willing to speak out. Such a conclusion is readily acceptable, not only from the above empirical evidence but also from research that has found that most of us value working for ethical organisations. Delany and Sockell found in a 1992 survey of over 1000 respondents that people whose employers provide formal ethical training have positive perceptions of their company’s ethical position, as well as higher job satisfaction. Valentine and Fleischman’s 2004 survey of over 300 business professionals obtained similar results. Such a preference would encourage people to speak out. Many reasons can explain why people do reveal wrongdoing. No doubt one of them is that they believe that they will be fairly treated by an organisation with a reputation for ethical management. Another however, could be the assertion, which has some basis in empirical research, that we are naturally ethical.
research that has found that most of us value working for ethical organisations. Delany and Sockell found in a 1992 survey of over 1000 respondents that people whose employers provide formal ethical training have positive perceptions of their company’s ethical position, as well as higher job satisfaction. Valentine and Fleischman’s 2004 survey of over 300 business professionals obtained similar results. Such a preference would encourage people to speak out. Many reasons can explain why people do reveal wrongdoing. No doubt one of them is that they believe that they will be fairly treated by an organisation with a reputation for ethical management. Another however, could be the assertion, which has some basis in empirical research, that we are naturally ethical.
The proposition that that we are intrinsically cooperative, and to some extent altruistic receives extensive support in recent evolutionary psychology literature. Even Darwin argued that our evolutionary history will have built into us a series of ethical values that we are social animals, developing feelings of sympathy, obedience to a leader, faithfulness to the group, defending and aiding other members. All of which he argues would support the group in its competition for food and even survival.
To translate these findings into teaching content would be worthwhile, but still insufficient. For whistleblowers do suffer. “They pay a terrible price” says Alford (2001). He tells us:
“The average length of time between blowing the whistle and being fired was about two years. Little of this time was taken up with appeals. Rather, most… was spent waiting for time to pass until management could adequately disconnect the act of whistleblowing from the act of retaliation.”
There are many studies which confirm the widely held opinion that whistle-blowers experience a strong retaliation from their employing organisation. And from fellow employees. If we are to teach strengthening of ethical practices then we must inform students how to avoid the retaliation. And that requires us at minimum, to know and teach the legislation that is supposed to protect whistle-blowers.
It is legislation with erratic coverage, however, and even where it exists, only partially effective in both the private and public sectors. That also has been proven. One major piece of evidence is that Australia is the only industrialised country with no legislative protection for its national civil servants. There is whistleblowing legislation in every state in Australia.
None of it is rated as very effective, being for the most part legislation designed to give the political appearance that action is being taken, but lacking the administrative machinery to ensure that action takes place. Politicians do not like whistleblowers, for they expose issues on which the public expect a political response. NSW, which possibly has a greater need than any other state, is currently entertaining a Parliamentary proposal to scale back its existing (ineffective) legislation.
If we are to encourage undergraduates in our colleges and universities, or employees in the work place, to blow the whistle, then it is incumbent on us to teach them how to protect themselves.
One obvious consequence of the failure to assign administrative responsibility is that reporting a wrong by a whistleblower does not necessarily ensure that it is corrected. And this turns out to be a further complication of the whistleblowing course. It also becomes a decision on the part of the teacher or trainer in ethics on whether the defects in the legislation are pointed out to students as one way to build a consensus aimed at strengthening the legislation. In a recent article Laurie Oaks noted that not only are whistleblowers treated as savagely as they ever were but that the general public do not appear to care. It could be well argued that if whistleblowing is the most effective way of identifying wrongs, and has the potential to reduce the extent of unethical behaviour, then the need for reform of the legislation is a near obligatory component of an ethics course.
In any case, regardless of the validity or otherwise of these underlying questions the statement that whistle-blowing is the most effective way to identify wrong-doing is sufficiently well proven to suggest that the practice would rate a high order of priority in the teaching of any ethics course.