Running head: WHISTLE-BLOWING
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Whistle-blowing
Shannon Hagerty
Towson University
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Thesis and General Overview of Whistle-blowing
Whistle-blowing entails someone “blowing the whistle” for some reason and then the
procedures or actions taken after the whistle is blown and the protection offered to whistleblowers. I am first going to explain what whistle-blowing is and the aspects of whistle-blowing,
including possible reasons for whistle-blowing, so that the general idea is understood and then
explain the procedures and policies. The procedures for whistle-blowing are very important in
my opinion because of the negative repercussions that can arise after one blows the whistles.
Fortunately, there are also laws which protect whistle-blowers such as the Whistleblower
Protection Act of 1989.
Whistle-blowing reports improper or illegal behavior within an organization. Usually the
whistle-blower is an employee or former employee, but sometimes, the whistle-blower is in an
overseer position such as an auditor and they are in a role in which it is expected for them to
blow the whistle (Near, 1985). Employees, however, are not necessarily expected to blow the
whistle like auditors are because some believe that it is the employee’s duty to be loyal to the
company. Normally, the improper or illegal actions are necessary for society to know in most
cases, especially when someone’s safety is endangered. A whistle-blower can damage a
company’s reputation, so I believe that a whistle-blower should make sure that the information is
correct before exploiting the company’s questionable practices.
Dissent
Sissela Bok, a philosopher, states that there are three aspects of whistle-blowing that
makes it a problem: 1) Dissent, 2) Breach of loyalty, 3) Accusation. Dissent means that the claim
conflicts with the majority and/or authority view and is assigning blame. This could be a problem
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because the whistle-blower would not be supported by others in their claim and therefore may be
scrutinized or terminated from their position. People tend not to like others that don’t share the
same views as their self which includes their view of loyalty.
Breach of Loyalty
The second aspect of whistle-blowing is breach of loyalty. Bok speaks about the loyalty
that one owes to their clients and colleagues. However, one’s loyalty to their colleagues and
clients could conflict with one’s obligation to the public’s interest. I feel that a person’s
responsibility to the public is much greater than to that of their company. If an employee keeps
something secretive like a safety defect in his company’s product, then a lot of people could be
endangered and that is not fair to put others in danger just to stay loyal to a company. The
betrayal which the public will feel if something is kept secret is much greater than the betrayal a
company will feel and the public will be furious if anyone is endangered due to no one blowing
the whistle. Varelius argues that whistle-blowing is not an act of disloyalty to one’s employer
because it is for the moral good of the employer, such as if the misconduct does not uphold the
company’s value. Since the value and the whistle-blowing have the same goal, there is no issue
of loyalty (Varelius, 2009). I believe that a company’s goals can change over time and thus if not
updated and announced an employee could blow the whistle completely due to the thought that
they think they will be helping the company uphold their moral goal, when in reality that goal
could be outdated. However, the moral goal could conflict with the employee’s own personal
moral goal, so it can be justified that the whistle-blower blew the whistle in order to coincide
with his or her own beliefs, not those of the company. In this case, a breach of loyalty or not will
most likely be deemed differently amongst people. I agree with Bok that these are issues with
whistle-blowing, but there are ways to avoid these issues such as an anonymous accusation.
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Since whistle-blowing is seen as an act of disloyalty, a potential whistle-blower must take
precautions in order to not tarnish their reputation. If one blows the whistle others may not want
to employ them for fear of ‘disloyalty’ towards them as well. A solution is for the whistle-blower
to anonymously report the accusation. If the whistle-blower remains anonymous they will not
have to worry about being scrutinized or harassed. Also, the whistle-blower has the option to
leave the company before blowing the whistle. However, the problem with this is that they will
have to find other employment beforehand, which could take awhile, thus rendering the
accusation irrelevant. It is difficult to be selfless in these situations and do the right thing even if
it means one’s reputation will be harmed or loss of employment.
Accusation
The third aspect is the accusation. The accusation must be handled under due process and
be able to bring clear and specific charges. An accusation states that a person or group is
responsible for threats against the public’s interest. Someone must be responsible for the threat
or else it will not be considered whistle-blowing (Bok, 2011). The accusation is the hardest part
of whistle-blowing in my opinion because this is when the breach of loyalty comes into play as
well. Depending on who is being accused and their relationship with the whistle-blower, the
accused could take the accusation really harshly and the relationship between the accused and the
whistle-blower could be ruined.
Reasons for Whistle-blowing
Another potential concern about whistle-blowing is that the agent might blow the whistle
acts from malicious intentions. For example, some people may blow the whistle in order to seek
revenge. Think about an employee that has been laid off or one that his or her significant other
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was having an affair with the Chief Executive Officer of a company. The former or current
employer will then blow the whistle only to harm the person who had made them angry in the
past. This is wrong because one should blow the whistle because someone’s safety is endangered
or because it effects stakeholders (such as in fraud cases), not in order to have revenge through
tarnishing another’s reputation. Would that person have blown the whistle if s/he was not
enraged by another employee or the company? If the answer is no, then that person is
impermissibly blowing the whistle. If it is known that the whistle-blower has an issue with the
accused then it is very possible that the whistle-blower does not have good, honorable intentions.
Someone with a level head should evaluate the situation first before investigating the accusation.
However, there are reasons for whistle-blowing which are permissible.
Another reason for whistle-blowing is to protect the public’s interest. In this case whistleblowing is permissible unlike in the previous situation described. A famous whistle-blowing case
includes the Challenger space shuttle mission that went wrong even after Roger M. Boisjoly had
notified management about the problem with O-rings at freezing temperatures and nothing was
done to correct the issue (Remembering Roger Boisjoly, Challenger disaster whistleblower
(1938-2012) , 2014). In result, lives were lost. If only management had listened to Boisjoly, a
whistle-blower, then the lives of those on the Challenger space shuttle would not have been lost.
My intentions of mentioning this case is not to discourage whistle-blowers in fear of not being
listened to, but rather to encourage whistle-blowers to be more forceful and proactive when
people’s lives are endangered so such a tragedy can be prevented from happening again in the
future.
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Procedures
Sissela Bok makes three great points about the issues that arise with whistle-blowing, but
Kim Loyens takes a different approach to the topic of whistle-blowing and discusses the
reporting procedures of a company. I am going to discuss the reporting procedure differences
between companies based on their culture and size, and the importance of having such
procedures.
Loyens feels that a company’s procedures for whistle-blowing should match the
company’s culture (Loyen, 2013). Her article is very complicated, but I like the idea she raised
that not every company should have the same reporting procedure so I am going to discuss this
idea further. A very small and intimate firm should not need to report using official documents
and a formal procedure. An employee could simply talk to anyone in the company that s/he feels
comfortable and come to a consensus on the issue. On the contrary, a bigger company with many
employees should use a more formalized approach by filing a complaint and speaking with
someone specialized in the situation. Chances are that a small business will not have many legal
obligations if sued, but people will target a big name company so they must take special
precautions to ensure that they are meeting all ethical standards. The reasoning behind this is that
most people will not want to endure a long legal proceeding unless they will receive a lot of
money from the settlement. Typically, larger businesses have more money than small ones and
need to take more precautions and a more formal approach to ensure that they will not have to
pay out a lot of money in the future due to negligence or unethical conduct. The reporting
procedures should reflect the needs, liabilities, and culture of the company.
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Loyens goes on to further discuss reporting procedures by pointing out that a whistleblowing system is also important because an employee is less likely to report misconduct if there
is no system in place. Another philosopher, Tim Barnett, states that the whistle-blowing policy
should include:
1. A clear statement that employees who are aware of possible wrongdoing within the
organization have a responsibility to disclose that information to appropriate parties
inside the organization;
2. The designation of specific individuals or groups outside the chain of command as
complaint recipients;
3. A guarantee that employees who in good faith disclose perceived wrongdoing to the
designated parties inside the organization will be protected from adverse employment
consequences; and
4. The establishment of a fair and impartial investigative process. (Barnett T. , 1992)
I believe that these four guidelines for the policy are essential to make employees feel
comfortable reporting wrongdoings. If an employee does not know who to report to, then they
are less likely to report due to the mere fact that they don’t know who to tell. They are also less
likely if their employment or reputation will suffer or their claim will not be investigated.
Companies should indeed include all information that is presented above by Barnett in their
policies.
However, I find it necessary to point out that the reporting of a wrongdoing is not
considered whistle-blowing if it is reported to a co-worker. The report is then considered to be
peer reporting instead (King III, 1999). I like to think of peer reporting as telling a friend rather
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than a superior. People normally feel more comfortable telling friends rather than superiors. One
goal of having a whistle-blowing policy is to encourage employees to tell a superior instead of a
friend or co-worker because it is mutually beneficial for the company and the employee. The
company benefits because it becomes aware of the situation which may have been unknown
prior and the employee benefits from being able to get the information known to his or herself
off of their chest and see a change happen in the conduct. The best way for the information to be
reported in order to benefit the company is internally.
It is most desirable for companies to have an internal procedure so that the information
has a chance to stay within the company and be corrected. If the information is public it can be
turned into a full-on scandal as stated by Barnett (Barnett T. , 1992). A company can benefit
from encouraging internal reporting procedures because if the employees do not report any
misconduct, the company could suffer for months before being aware of the situation and then
correcting it. On the flip side, if there are no receptive internal reporting procedures, a whistleblower who feels strongly enough about the company’s wrongdoing might just go public with
the information instead of keeping it quiet amongst the organization. In this case the reputation
of the company is in jeopardy and the possibility of termination of the employee is created due to
the breach of loyalty aspect that I previously discussed. On the contrary, the whistle-blowing
policy should include a statement in which the employment of the employee will remain secure
even after blowing the whistle. Some companies may not hold this true if the procedures/policy
is not followed, however.
Accounting firms including Deloitte have a whistle-blowing policy which can be found
online in PDF format. The policy states the order of personnel to report to and encourages
employees to openly discuss the wrongdoing as opposed to anonymously reporting (Deloitte).
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The problem, however, with openly reporting is always the fear of being scrutinized by peers. On
the other hand, if the whistle-blower is known then the company can continue to have a dialogue
with the whistle-blower in order to improve the work situation.
Legislature
The first piece of legislature that I recall about whistle-blowing is the Whistleblower
Protection Act of 1989 which protected federal whistle-blowers. If the agency retaliates or
threatens the whistle-blower then they are in violation of the Whistleblower Protection Act. This
act is important because the government is a huge part of our society and should be somewhat
transparent especially with concerns to public safety and health. Whistle-blowers help the
matters become public knowledge and deserve to be protected.
Another important piece of legislature is the Sarbanes-Oxley Act of 2002 which is a vital
act in the accounting profession. It arose after the downfall of Enron and was made to help
prevent future fraud. Companies are now required to have some sort of internal reporting system
(Lee & Fargher, 2013). Making employees aware of a system and the laws meant to protect
whistle-blowers could help make whistle-blowers feel more comfortable and thus more likely to
blow the whistle. If the system is effective then it will help prevent fraud through employees
blowing the whistle as soon as they know of misconduct within the company instead of waiting
while the issue could be corrected as soon as possible. This is especially important in accounting
because accountants and more specifically certified public accountants (CPA) are highly trusted
by their clients and the public in general. Auditors, as mentioned in the beginning of this paper,
are also expected to blow the whistle. It is practically in their job descriptions to bring to light
any fraud.
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Fraud
Fraud is important to report especially when there are stakeholders in the company.
Whether or not a company conducts fraudulent practices could be a deciding factor for if
someone wants to become a stakeholder in that company or not. It is unfair for the public not to
know about such practices because it could go against their moral beliefs. Lots of people do not
want to associate with companies whose values or morals do not coincide with their own because
it is a bad reflection on them as well as the company. The public has the right to obtain this
knowledge and make decisions with this knowledge in mind. The public will not know unless
someone blows the whistle. Therefore, those with knowledge of fraudulent practices have an
obligation to the public to blow the whistle so that the public can make an informed decision
about the company in question and stakeholders will become aware of the risks involved with
being a stakeholder of that company.
Conclusion
While whistle-blowing is a difficult decision, hopefully I have made clearer of the
appropriate times and situations to blow the whistle including when there is a safety issue and in
most cases dealing with businesses including fraud cases. Also, I encourage everyone to be
knowledgeable about their employer’s whistle-blowing policy and the laws and moral
obligations for certain professions, such as accounting, to blow the whistle. It is unknown when
one may be obligated to blow the whistle, so it is crucial to know the policy before whistleblowing becomes necessary.
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References
Barnett, T. (1992). 'A Preliminary Investigation of the Relationship Between Selected Organizational
Characteristics and External Whistleblowing by Employees'. Journal of Business Ethics , 949-95.
Barnett, T. (1992). Why Your Company Should Have A Whistleblowing Policy. Sam Advanced
Management Journal, 37-42.
Bok, S. (2011). Whistleblowing and Professional Responsibility. In J. B. Ciulla, C. Martin, & R. C. Solomon,
Honest Work: A Business Ethics Reader (pp. 412-413). New York: Oxford University Press.
Deloitte. (n.d.). Whistleblowing Policy.
King III, G. (1999). The Implications of an Organization's Structure on Whistleblowing. Journal of Business
Ethics, 20 (4), 315-26.
Lee, G., & Fargher, N. (2013). Companies' Use of Whistle-Blowing to Detect Fraud: An Examination of
Corporate Whistle-Blowing Policies. Journal of Business Ethics, 283-295.
Loyen, K. (2013). Towards a Custom-Made Whistleblowing Policy. Using Grid-Group Cultural Theory to
Match Policy Measures to Different Styles of Peer Reporting. . Journal Of Business Ethics, 239249.
Near, J. P. (1985). Organizational Dissidence: The Case of Whistle-Blowing. Journal of Business Ethics, 4
(1), 1-16.
Remembering Roger Boisjoly, Challenger disaster whistleblower (1938-2012) . (2014, May 19). Retrieved
from Whistleblower Support Fund: http://whistleblowing.us/2012/02/remembering-roger-mboisjoly-challenger-disaster-whistleblower-1938-2012/
Varelius, J. (2009). Is Whistle-blowing Compatible with Employee Loyalty? . Journal of Business Ethics,
263-275.
Whistleblower Protection Act. (2014, May 19). Retrieved from wikipedia:
http://en.wikipedia.org/wiki/Whistleblower_Protection_Act