DOJ Whistleblower Pilot Sends a Serious Message to Businesses

The Department of Justice’s whistleblower award pilot program is a good start to help companies focus on policy and procedure. But company-specific whistleblower programs go to the much deeper issue of corporate culture.

Many companies have had whistleblower or ethics hotlines in place for a long time and provide yearly “speak up” training sessions. Businesses receive internal complaints, investigate some or all, and take some action to address them.

Where companies often fall short, and must reconsider, is the need to identify, develop, and strengthen a corporate culture that doesn’t foster a system where whistleblowing to the DOJ is seen as the only or best option.

Companies should ask whether their remote employees feel connected enough to the company to know whom to call, and whether they would feel loyal to the company to report an issue internally. A culture that doesn’t include proactive outreach to employees beyond yearly appraisals risks missing issues or concerns.

Businesses should also consider what channels of communication they can create and foster that aren’t necessarily within HR, as employees might feel more comfortable speaking with an ombudsperson or a supervisor who’s created opportunities to openly communicate and earned the trust of employees.

Management also should ask whether the company has openly addressed its response to prior issues (to the extent able) and has corrected the issues, which would help create confidence for employees that if they do raise an issue, it will be addressed and not dismissed. Employees who have raised issues shouldn’t face negative consequences.

The aim must be to create a culture where employees feel they can help remedy a wrong internally. If they see no point in raising an issue because they anticipate there will be no corrective action, they might be more inclined to go outside the company to address the wrongs they see. It’s not just the disgruntled employee (or ex-employee) who should be the focus of attention.

Adding a financial incentive, like the DOJ has done, further tips the scales toward raising the issue externally. Under that pilot program, whistleblowers can receive up to 30% of forfeitures that are $100 million or less, and up to 5% of forfeitures between $100 million and $500 million.

Company culture starts from the top, but it must be seen and felt by all levels of an organization. If the message set by management isn’t amplified throughout an organization, it won’t resonate. The response to the DOJ’s pilot program can’t be a focus on 100% compliance or zero mistakes, such that there’s nothing to report. This is wholly unrealistic.

Instead, companies should focus on a culture of encouraging individuals to raise concerns—the “see something, say something” model—and reinforce that behavior by holding bad actors accountable.

This is more than just a whistleblower policy (of course, you should have that too), but companies should heed the whistle from the DOJ pilot program and take a serious look at their culture—or pay the price later.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Michelle Williams is partner at Clifford Chase and a member of its litigation, regulatory and white collar practice group.

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