Cultural differences in attitudes toward whistleblowing

Dec 08, 2014
<p>Companies need to coordinate efforts among&nbsp;HR, compliance, and legal departments to assess whistleblower claims to distinguish the valid from the illegitimate</p>

Given the greater risk of investigation of whistleblower claims for companies around the world and increased co-operation between government regulators to pursue companies that violate anti-corruption laws in any country in which they operate, it’s surprising that nearly one quarter of respondents to a new whistleblower survey say their company still doesn’t have a whistleblower policy in place.

That’s one of the major findings reported this week by international law firm Freshfields Bruckhaus Deringer, which polled more than 2,500 middle to senior managers at companies in the US, the UK, France, Germany and Hong Kong. In France, 19 percent of respondents say their company actively discourages whistleblowing while in Germany 21.4 percent say their company neither has a policy nor plans to implement one, the report says.

Indeed, another major takeaway from the survey is the extent to which cultural differences between regions explain how acceptable and encouraged whistleblowing is. In France and Germany, for example, 36.9 percent and 23 percent of respondents, respectively, say they would never consider becoming a whistleblower versus only 8.4 percent of US respondents.

Meanwhile, in Hong Kong, 27.9 percent of respondents say they have been a whistleblower. Because of more lenient employment laws in numerous parts of Asia that offer less protection from things like dismissal, ‘it’s possible that employees in Asia use whistleblowing to raise concerns in a way that doesn’t expose them to the risk of recrimination for having raised concerns,’ the report says.

Given that, what should multinational companies with operations in Asia do to distinguish credible claims from illegitimate ones?

‘The absolute key is to have a proper triage system in respect of the whistleblower complaints so you have the right expertise -- HR, compliance, legal -- to assess the whistleblower and then to make sure the right process is followed,’ says Caroline Stroud, global head of Freshfields’ employment, pensions and benefits group.

Whistleblowers sometimes complain not about actual misconduct but about how they personally have been treated. Hence, Stroud says ‘it’s key for an organization to be able to spot which track the investigation and the process around that whistleblower should follow because sometimes you might have a merging between the [HR and legal issues] and other times it might be very clear it’s just an HR issue and not a really serious financial or accounting issue.’

The survey also shows that attitudes toward rewards for whistleblowing differ by region. ‘The amounts offered by way of reward in the US are really significant, so you would expect that to encourage people to whistleblow in great numbers, but it doesn’t appear from the survey to have that direct effect,’ says Stroud. ‘In the US, 28 percent say they didn’t think a reward would encourage them to whistleblow.’

A recent survey by the charity Public Concern at Work shows that neither employees nor employers in the UK see rewarding whistleblowers as a good idea. ‘Employees didn’t want to be seen as tainted by the reward,’ Stroud says.

Freshfields’ survey also finds that while 26 percent of those polled say they would go directly to a regulator if misconduct reported internally wasn’t handled properly by the company, 21.5 percent think the average employee would expect managers to treat whistleblowers less favorably.

The potential for outright retaliation against whistleblowers is something US companies in particular need to be on the watch for, not only in-house but also at private companies with which they contract as the result of expanded whistleblower protections the Supreme Court upheld earlier this year. That, and the SEC’s stronger commitment to investigate claims of retaliation under Dodd-Frank should persuade firms to step up the rigor of their internal investigations.

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