The Management of Whistleblowing

Introduction

Within the last two decades, corporate scandals, fraud and corruption, unethical and illegal business practices, misconduct in the workplace, malpractice, and the mismanagement of funds have all been associated with corporate wrongdoing in the public and private sectors. Indeed, such a business context has arguably led to disgruntled employees, poor company images, and many publicized corporate melt-downs within powerhouse corporations across the globe. The effect of corporate failures brought devastating effects to the global economy as triggers to the economic recession in 2008. Undeniably, therefore, corporate wrongdoing must be brought under control within today’s workplace for all organizations.

Effective control of corporate wrongdoing within today’s workplace calls for clear, structured, accepted, and well-managed procedures to facilitate whistleblowing. A managerial perspective must therefore, be adopted to systematically establish and support whistleblowing. In the corporate context, whistleblowing can be defined as a disclosure process which uses various channels (internal and/or external) for organizational members (past or present) to report illegal, immoral or illegitimate practices within an organization, with the aim of stopping or addressing the harm or threat (Near and Miceli 1985). Immoral practices also cover wrongful and questionable commissions and omissions on the part of the organization to protect their members from serious harm (Near and Miceli 1996). In this regard, whistleblowing can assist in rooting out corruption and wrongdoing by bringing such issues to the forefront. Whistle-blowers should therefore, be seen as heroes since they can assist in saving billions of dollars and numerous lives through the disclosure of information regarding fraud, corruption, and other forms of corporate wrongdoing and misconduct by organizations, thereby protecting citizens, employees and consumers, and preventing related disasters and scandals from intensifying.

Despite the potential of whistleblowing as a process for managing corporate wrongdoing, its effectiveness has often been brought into question by opponents due to several reasons. First, the decision to report the observed wrongdoing is never an easy one, given the high personal costs, which can deter whistleblowing. In some contexts, whistle-blowers can be regarded as heroes, while in others, they can be perceived as traitors and snitches. Second, organizational leaders and management can respond in a number of different ways, which may or may not be favourable to the reporter or whistle-blower. Managerial responses can include: correcting the wrongdoing, ignoring the report, or even retaliating against the whistle-blower. Positive managerial responses can signal to employees that management accepts the whistleblowing behaviour in the organization and is prepared to curb the wrongdoing. Negative managerial responses in the form of victimization and/or no action can serve as a disincentive to whistleblowing. In such a context, it is apparent that the effectiveness of whistleblowing in addressing corporate wrongdoing can be limited. To maximize the potential of whistleblowing, therefore, it becomes important to answer the question: “How can organizations manage whistleblowing to effectively address corporate wrongdoing in today’s business environment”? To answer this question, the research objectives of this Chapter are to:

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  Describe the key management issues associated with whistleblowing.

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  Outline the essential aspects of the ethical dilemma in the management of whistleblowing.

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  Present and evaluate a managerial framework to enhance the effectiveness of whistleblowing.