Whistleblowing Is Less Likely if You Have an Integrity Program

July 17, 2024, 8:31 AM UTC

In the last decade there’s been an uptick in government enforcement efforts to entice whistleblowers to come forward and report corporate misconduct. And earlier this year the Department of Justice announced a “90-day sprint” to develop and implement its own whistleblower program.

These efforts are no doubt inspired by the success of the Securities and Exchange Commission’s whistleblower program that has generated thousands of tips and paid out $1.9 billion dollars since its inception in 2011. A predictable rash of hand-wringing has ensued from in-house compliance attorneys and outside counsel. They complain the new efforts undermine compliance programs by incentivizing employees to go directly to the government in hopes of reaping huge financial rewards.

Ok, maybe they do, just a little bit. Perhaps, as some have suggested, the proposed DOJ program is riddled with flaws. But like it or not, bigger government whistleblower programs are coming, and you need to think about this on another level. This coming wave is the impetus to raise your own in-house game.

Yes, I’m sure you’ve got a compliance program. It’s probably great. But now, more than ever, that’s not good enough. You also need an integrity program.

What drives a whistleblower? It’s important to understand that, even with the lure of potential DOJ cash payouts, most employees don’t want to become whistleblowers. They come to your company because they love your product, or they’re aligned with your mission. They want great leadership, good colleagues, and rewarding work. They hope to learn new skills and build a successful career.

The path of a whistleblower isn’t very appealing—they’re labeled a “snitch” for betraying their colleagues and company. Too often, their identity is suspected or even revealed publicly. The DOJ’s proposed whistleblower program may not protect the identity of whistleblowers in bringing the criminal cases that could enable a recovery.

Once “outed,” a whistleblower typically finds it almost impossible to get another job. Employees don’t even like going to their own legal department about anything, and the prospect of approaching the intimidating DOJ won’t be any more appealing. If the government rejects your case, fails to make a recovery, or simply decides in its discretion that you don’t deserve any money, you’re out of luck.

I’ve talked to many whistleblowers. They aren’t drawn to report by a desire to get rich. They’re driven to the government out of frustration and personal conviction. They feel ignored by an internal culture that won’t take their concerns seriously, and are compelled to act by a deep sense of what’s right, even knowing the step they’re taking could be disastrous to their career.

Chances are, if your organization has a whistleblower incident in the next 10 years, it will be a result of your company’s inability to create a culture where employees feel comfortable speaking up and confident their concerns will be investigated and addressed. At the risk of sounding like a spiritual guru, you need to look deep inside and seek the truth therein.

But, Rob, we’ve got a hotline and we hardly ever get a report.

That’s actually a sign of a problem. There are ethical issues arising every day in organizations, and if no one is asking questions or raising concerns, it’s a signal that people don’t know where to go to speak up, they aren’t comfortable speaking up, or they don’t trust the company to follow through if they do speak up. And that’s a breeding ground for government whistleblowers.

You’re going to have to put out the welcome mat for ethical questions. Encourage people to speak up. Follow up on concerns, show employees that you’re serious about doing the right thing. Earn their trust.

Ethical concerns are like steam—they build up, and somehow, some way, they’re going to get out. If you don’t have a culture where employees trust you with their issues, we’ve seen that they’ll write a blog post about it, print out records and go to Congress, leak information to reporters, or go to the government.

Are you doing enough to encourage employees to come to you? At a lot of companies, information about your hotline is probably buried several links deep in your corporate intranet where it could take an hour to find. That speaks volumes about how you see it. Why not put the hotline link at the top of the intranet home page?

Better yet, add a hotline service that allows employees to report from an app on their phone—a strategy that can increase hotline reports and demonstrate that your compliance efforts are ahead of the curve.

Employees are fearful that raising concerns could be a career limiter. Fight that perception by publicly rewarding employees who have the courage to speak up when they see an issue. Or bring ethics out of the legal department by designating certain non-lawyer employees as “ethics ambassadors” in each department and encourage employees to go to them with questions.

However you do it, you need to set the tone from the top that you’re committed as a company to a culture of doing what’s right, then engage your employees as partners in that ethical journey.

Or get ready for the whistleblowers.

Rob Chesnut consults on legal and ethical issues and was formerly general counsel and chief ethics officer at Airbnb. He spent more than a decade as a Justice Department prosecutor and he writes on in-house, corporate, and ethics issues.

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To contact the editors responsible for this story: Jessie Kokrda Kamens at jkamens@bloomberglaw.com; Alison Lake at alake@bloombergindustry.com

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