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Mark Pastin is an ethics consultant and the chief executive officer of the Council of Ethical Organizations, an Alexandria, Va.,-based non-profit organization that promotes ethics in business and government.
Mark Pastin is an ethics consultant and the chief executive officer of the Council of Ethical Organizations, an Alexandria, Va.,-based non-profit organization that promotes ethics in business and government.

LEADERSHIP LAB

Why embracing whistleblowers could save your reputation Add to ...

This column is part of Globe Careers’ Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab

Many of the businesses with which I consult have had a whistleblower take an issue public. This can lead to settlements with legal authorities that run into tens of millions of dollars, expensive civil litigation, and damage to a good corporate reputation that was years in the making. The media lionize whistleblowers while portraying companies and their leaders as bums. And the sad truth is that almost every case of public whistleblowing could have been prevented.

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There are two kinds of whistleblowers: “Inside” whistleblowers and “outside” or public whistleblowers. Inside whistleblowers raise an issue inside a company but outside the line of command. Outside whistleblowers take an issue public to a government agency, court or the news media. Most outside whistleblowers start as inside whistleblowers. This means that if you learn to love your inside whistleblowers, you are much less likely to have outside whistleblowers.

Here’s how to keep your inside whistleblowers from becoming outside whistleblowers.

1. Make it is easy to be an inside whistleblower.

Many companies think they have done enough if they establish a toll-free number, or “hotline,” that employees can call anonymously. This is a good start, but it is not enough. Employees who call hotlines are generally lower-level employees, who are less likely to have damaging information. Higher-level employees are unlikely to use a hotline and are more inclined to report a concern in person, whether by telephone, e-mail, or conversation. So it is important to have a policy in place protecting those who report concerns no matter what reporting channel they choose.

2. Follow up on every credible report.

Employees quickly learn whether the internal reporting process does no more than allow them to vent. While it is important to listen to whistleblowers, you also have to follow up on their concerns. Keep communication channels with employees open so that it is possible to get additional information if needed to investigate. (This is impossible if an employee remains anonymous, unless the employee agrees to call back.) While you may not be able to tell employees how you have addressed their concerns, they will see whether or not anything has happened.

3. Don’t let the large number of complaint reports discourage you.

When you are trying to manage whistleblower risk, you are not interested in the 99.9 per cent of reports that lead nowhere. You are interested in the 0.1 per cent that could become an outside whistleblower action. The odds are in your favour. There are usually several employees who are aware of any issue or problem. All you need is for one of these employees to report the concern internally. Once you are aware of the issue or problem, you can address it before it becomes a public issue.

4. Keep human resources at bay.

Virtually every successful whistleblower has a story of how human resources thwarted them. When you take inside whistleblowers seriously, you are encouraging them to leap over the line of command. This is often resented by an HR employee expected to be subservient to the line of command. Even if an inside whistleblower raises what is clearly a human resources or personnel matter, be sure that there is not more to the whistleblower’s concern before handing it to HR.

5. Have a firm policy prohibiting retaliation.

Make sure employees know they won’t be retaliated against for reporting a concern. (This does not exempt employees from discipline for their own wrongdoing.) It is easy to write this policy, but the policy is seldom applied. The argument is that it is hard to substantiate retaliation. This is the same reasoning that blocked enforcement of sexual harassment policies for decades. There is retaliation in every large organization. If you want to enforce a non-retaliation policy, you will need to find ways to do so.

Outside whistleblowers have ever-increasing rights under the law and a public who views them as heroes. The best way to avoid being damaged by such whistleblowers is to create a climate in which reporting inside the company, even if outside the line of command, is encouraged and retaliation is not tolerated.

Mark Pastin is an ethics consultant and the chief executive officer of the Council of Ethical Organizations, an Alexandria, Va.,-based non-profit organization that promotes ethics in business and government. He’s also the author of Make an Ethical Difference: Tools for Better Action.

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