Whistleblowing was big news in 2013 and it will probably continue to be so this year. However, the statistics tell us that employees blow the whistle in only a minority of cases, and most give up trying after two or three attempts. Organisations can’t even leave it to their experts – it’s calculated that less than 10% of documented wrongdoing is uncovered by compliance (or similar) professionals.
What stops employees from speaking up when they suspect fraud, inappropriate behaviour or some other form of wrongdoing? Is it because something else is going on, it’s too easy to keep doing what they’ve always done, it’s too hard to get other people to change so why bother, it’s not their job, they’ve too much to lose – the excuses are many and varied.
Yet the cost of doing nothing is enormous. Global employee fraud is calculated to cost $3 trillion alone with international benchmarks being 5% of annual turnover for the average company. Employee disengagement is calculated (according to Gallup) at £350 billion in the US – at least $2,246 per employee – and studies have shown that disengaged employees lead to disengaged customers so the true cost is incalculable.
So what can organisations do about it? There are a number of options;
1) Do nothing. The easy option – it always happens to another company and not yours, doesn’t it? But how do you know? And what happens if an employee wants to report a suspicion – simply hope that they manage to find who will act on their concerns and not someone who will ‘brush it under the carpet’?
2) Create more policies and procedures – tell people what they can’t do and to stop being ‘naughty’. This is the ‘head’ approach but experience has shown that some of the biggest frauds are committed in organisations with the most ‘rule bound’ governance structures. People in such organisations are so used to being told what they can’t do they either rebel or, when faced with a ‘grey’ area, simply assume that it must be okay because it isn’t forbidden.
3) Involve employees – show and encourage them to get involved and be part of an organisation where employees take responsibility and gain intrinsic benefits from doing so. This is the ‘heart’ approach and is the toughest of the three options, but ultimately the only guarantee of success.
Research has demonstrated that companies which encourage openness and provide mechanisms that allow and encourage employees to speak up get higher levels of reported wrongdoing than organisations which don’t. However, while such organisations report more events, they are raised when the financial and reputational impact is significantly smaller. In other words, when the potential impact is smaller and easier to control.
Workplace involvement and whistleblowing different sides of the same employee engagement coin. When it comes to combating organisational wrongdoing, do you want to wait for the explosion or would you rather actively manage the risk?
Courageous Workplaces is a professional services firm that offers seminars, consulting, workshops and coaching services on developing courage in the workplace.