{"id":3454,"date":"2022-10-27T16:26:34","date_gmt":"2022-10-27T14:26:34","guid":{"rendered":"https:\/\/www.deintegriteitscoordinator.nl\/why-is-the-handling-of-whistleblower-reports-so-complex\/"},"modified":"2022-10-27T16:35:43","modified_gmt":"2022-10-27T14:35:43","slug":"why-is-the-handling-of-whistleblower-reports-so-complex","status":"publish","type":"post","link":"https:\/\/www.deintegriteitscoordinator.nl\/en\/why-is-the-handling-of-whistleblower-reports-so-complex\/","title":{"rendered":"Why is the handling of whistleblower reports so complex?"},"content":{"rendered":"
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The June Journal of Business Ethics published an article on the complexity of handling internal whistleblower reports. Although proper handling is important, research suggests that internal reports are often handled poorly. The article analyses the causes of the complexity in detail and then offers suggestions for improvement. For instance, it is important to build trust with regard to the process. For example, by strengthening the position and independence of the integrity coordinator.<\/p>\n

The June 2022 Journal of Business Ethics published an article by Smaili, Vandekerckhove and Arroyo Pardo on the complexity of handling whistleblower reports. The article cites research indicating that whistleblower reports are the most important way to uncover wrongdoing. Therefore, it is important to think carefully about this topic.<\/p>\n

The authors note that more and more organisations are obtaining specialist systems and staff to receive and handle internal whistleblower reports. This is not surprising, of course, now that many organisations in the EU are required to set up secure reporting channels and to appoint an independent person or department to receive and\/or follow up on whistleblower reports. And it’s a good idea anyway, see also our article with 5 reasons for a good speak-up culture<\/a>. In practice, however, doing this properly is not so easy. Research suggests that internal reports are often handled poorly.<\/p>\n

Principal-Agent theory<\/h2>\n

The article uses the principal-agent theory to explore the complexity, as the authors realized that \u00a0the recipients of the reports are in fact the agents of two principals: the whistleblowers on one side and the organisation’s (top) management on the other. They may be pressured by both sides. Besides looking at the relationship and interests of these three players, the cost side is also considered.<\/p>\n

The reporter versus the recipient<\/h2>\n

The recipient of a report may, for example, be the internal or external integrity coordinator, the ethics & compliance officer, an ethics committee or an audit committee. This recipient often decides what action to take in response to a report. The whistleblower would naturally prefer the recipient to act in such a way that the misconduct stops or is prevented. But how does the reporter know that the recipient will actually act accordingly? And what is the recipient’s own interest?<\/p>\n

An interesting observation is that whistleblowers are often focused on the outcome of the investigation, while the recipient is more focused on the process and will probably want to investigate the alleged misconduct first. Is it true? And is it as bad as the reporter claims? While the whistleblower often makes only one report, the integrity coordinator usually deals with many reports at the same time, having to weigh which ones to prioritise. The reporter naturally expects his or her own report to be dealt with quickly.<\/p>\n

The reporter often does not see all the actions taken by the recipient, which makes it difficult to assess what happens with the report. This becomes all the more critical if the misconduct is indeed proven and disciplinary actions are taken towards the offender(s). The recipient usually cannot report this back to the reporter in much detail. Only when the offender(s) are dismissed it will be clear to the reporter what actions haven been taken. The reporter is likely to get the impression that less is being done with his or her report than what is actually happening.<\/p>\n

There is also the problem that the risks lie mainly with the reporter. Reasons for not reporting include not believing that something will actually be done with the report, not believing that the identity of the reporter will remain confidential, fear for retaliation or that the reporter does not trust the recipient of the report. The risks for the integrity coordinator are mainly that misconduct is not reported or is reported externally. It is therefore important that the integrity coordinator is seen as a trustworthy person.<\/p>\n

Management versus the recipient<\/h2>\n

Next, we consider the relationship between the owner of the problem, the (top) management, and the receiver of the reports. Management naturally wants the receiver to act in the best interest of the company and themselves. Therefore, they would like the recipient to prioritise the reports that could have biggest consequences and stop the wrongdoing as soon as possible. Another interest of the management is that the matter is resolved internally and that the whistleblower does not go to external bodies.<\/p>\n

Sometimes management puts pressure on the recipient to reveal the identity of the reporter. In contrast, the integrity coordinator has an interest in protecting the reporter’s identity and conducting a thorough investigation. And now what if it turns out that the (top) managemers are involved themselves or if they have approved the misconduct? Perhaps the management then prefers not to have an extensive investigation or they would like to hide the results?<\/p>\n

Management often has a reputation to lose and may also be held liable if the whistleblower makes an external report. This is more likely to happen when the internal procedures are not sufficiently reliable. The integrity coordinator must therefore convince both the reporter and the management of the quality of the handling of the case.<\/p>\n

The reporter versus the management<\/h2>\n

Finally, to conclude this first part, the authors looked at the relationship between the reporters and the management. Both parties would like to see a report dealt with quickly. In practice, management sometimes insists on closing an investigation quickly, while the integrity coordinator has an interest in a thorough investigation, which takes time, to convince the whistleblower that the report has been taken seriously.<\/p>\n

Usually, there is no direct communication between management and the whistleblower, nor are the management’s actions always visible to the whistleblower. Because of the lack of communication, the whistleblower may quickly get the impression that not much is done with his or her report. The whistleblower may have the impression that management are a bunch of people who just want to fill their pockets with money and know little about the misconduct, while management simply sees the whistleblower as a disgruntled employee.<\/p>\n

If the management does take the whistleblower seriously, the costs of conducting investigations and taking action may still be considerable. However, if management does not take the whistleblower seriously, then the whistleblower may report externally, after which the costs could be even higher.<\/p>\n

Costs<\/h2>\n

The whistleblower will want frequent contact with the recipient to ensure that the report is handled adequately. This entails costs for the reporter but also for the recipient.<\/p>\n

The recipient wants to keep a good relationship with the reporter and keep the trust of the whistleblower. According to the ISO 37002 standard, the recipient should therefore regularly inform the whistleblower about the process.<\/p>\n

Other costs may arise because the integrity coordinator’s decisions do not fully match the whistleblower’s expectations. For example, if the misconduct stops, but the accused keeps his or her job or even gets promoted. Or if not all allegations are investigated. In such cases, the reporter will not be pleased.<\/p>\n

In the relationship between the management and the recipient, costs are made by the management, who want to monitor the reporting process and evaluate the performance of the integrity coordinator. They may consider indicators such as the number of reports received, the time it takes to close a case and the outcome of the reports.<\/p>\n

The integrity coordinator makes costs because they have to do their best to convince management that cases are settled in their best interest. At the same time, they have to dissuade the reporter from reporting externally. The recipient produces regular progress updates. In doing so, however, it is not clear what is best: a low or a high number of whistleblower reports. The recipient also often does not know whether the reporter will report externally, and this can cause stress (Note: some reporters also threaten to report the case to the authorities; GV).<\/p>\n

A whistleblower report can also lead to other costs for management due to investigation costs, fines, loss of reputation or loss of a licence. An investigation may even shut down an entire department. The (monitoring) costs are minimised if the whistleblower and management share the same goal: promoting a culture of integrity.<\/p>\n

Conclusion<\/h2>\n

What are the implications of this analysis for effectively handling whistleblower reports? The authors offer numerous suggestions:<\/p>\n