September 30, 2020

In the middle of a global pandemic, with many offices closed or at reduced capacity and record numbers of employees and organizations moving to work-from-home environments, it might seem counterintuitive to learn that corporate whistleblower allegations are on the rise. But phone lines and email portals set up to provide employees with a channel to communicate professional concerns or allegations have been busier than ever.

For executives and decision-makers, understanding why whistleblower activity is on the rise — and, in that context, recognizing the critical importance of maintaining an up-to-date compliance program and effective investigative practices — is perhaps more critical today than ever before.

Why now?

The continuing rise of whistleblower allegations is likely due to a number of different factors. Being at home and away from colleagues and superiors may provide a feeling of comfort and distance that allows employees to feel safe reporting concerns that may have previously been hesitant to share. Additionally, emotions are running high, as the stresses and strains associated with a global health crisis and disrupted routines are almost certainly helping to spike confrontations and complaints. The virtual nature of so many workplaces is also contributing to miscommunication and misunderstandings, or problematic behavior from leaders who may lack the technical or personal skills to effectively and thoughtfully manage teams remotely. The growing influence and popularity of social media channels has opened up who new avenues for potential ethical or inappropriate communication, and serious issues like workplace sexual harassment are likely just as prevalent online as in person.

A fractured landscape

Traditionally, whistleblower tips or complaints are channeled through a reporting hotline or email portal. While numbers can vary considerably from one company and set of circumstances to another, typically about 2/3 of all reported concerns or complaints, while sincere largely sincere (frivolous or malicious complaints are actually relatively rare in the U.S.), ultimately turn out to be simple misunderstandings or easily resolved non-issues. But around 10% of complaints tend to be extremely serious, including things like sexual harassment or assault, fraud, and theft. These are the issues that can have a devastating impact on brands and businesses.

Unfortunately, while companies often spend a lot of time and energy setting up tip lines and taking complaint calls, they aren’t as consistent about staffing those channels appropriately to manage the investigative process required to get to the bottom of these issues.

And that’s when problems arise.

When legitimate concerns aren’t addressed and cases aren’t adjudicated correctly, it often leads to lawsuits and other serious issues. Employees may lose faith in the sincerity or efficacy of the ethics line entirely. Historically, companies rely on teams of internal auditors, HR professionals and legal counsel to handle whistleblower complaints. But those professionals, however well meaning, are rarely equipped to handle allegations, conduct interviews, gather and document evidence, and handle all the complexities of the investigative process. This is a highly specialized skillset, and HR and corporate lawyers are unlikely to have the training, experience or expertise to conduct these kinds of investigations. Another complicating factor is the all-too-common lack of clearly delineated protocols and procedures. And not effectively overseeing an outside firm brought in to conduct investigations (and may use questionable tactics) can create its own problems and exacerbate existing issues.

Best practices

So what’s the solution? How do you provide effective whistleblower investigation, support and resolution?

It starts with using a third-party investigative firm to ensure objectivity and employee trust in the system. Without trust and confidence, no whistleblower system will function as intended. That partner should have a well-established track record of conducting and supporting corporate whistleblower programs and investigations. Clear and consistent communication with employees is critically important, and so is establishing a clearly articulated process to reach out to whistleblowers to follow-up on complaints or in a timely manner. Organization leaders can often make mistakes by simply jumping on every allegation, but managers should proceed with a reasonable degree of caution, making every effort to verify allegations independently if at all possible.

A new compliance landscape

The reality is that the ethics/compliance function probably shouldn’t be within the company itself. There are simply too many potential conflicts of interest, and siloed investigative processes and a lack of expertise frequently leads to insufficient oversight and reporting contradictions. Even with the best intentions, it’s all too easy to mishandle these often sensitive situations.

It might be time to rethink the objectivity of internal compliance programs, and to consider whether can they can ever truly function independently to consistently investigate and adjudicate whistleblower concerns. The goal is to gather the unvarnished facts, as accurately as possible, and without the overlay of internal politics or relationships getting in the way of determining the truth and resolving the issue. That takes objective investigative expertise, new tools like sophisticated digital analyses (and AI and machine learning to detect potential fraud. It takes a robust training program. And it takes expert process management: having rigorous and well-designed processes and the right people in place to manage those processes.

An ethical future

Much has changed in recent years with respect to our collective willingness to believe victims and take workplace allegations seriously. Today, no one is exempt from being held to account for unethical or unlawful behavior. In a welcome shift, companies have been taking a harder look at compliance and ethics standards of behavior, and have been more proactive about updating their standards and practices to include information about social media, Zoom calls, and other new tech complications. Consequently, even the most powerful executives who may have previously felt insulated or immune to accountability are now being held to newly universal standards. But hard work remains. And it will likely be up to investigative security experts to handle the most challenging part of that process: designing whistleblower policies and procedures, and administering the system with necessary objectivity, professionalism and investigative acumen.

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