Why do employees blow the #whistle? by #Robin #Singh (Published by #ACFE)

FRAUD BASICS
Fundamentals for all
Why do employees
blow the whistle?
Sentinels face few positive reasons for reporting questionable activity
or fraud. They often lose their jobs, health, reputations and family stability.
Yet every year a handful of whistleblowers step out from the crowd.
Here are some reasons why they do it.
J
ames Holzrichter believed he was
doing the right thing when as an
eager young analyst and systems
auditor in the 1980s for an American
aerospace and defense technology
company, he innocently brought some
problems of material acquisition and
management to his supervisor.
Ultimately, Holzrichter discovered
anomalies that led to a “qui tam” suit
(under the U.S. False Claims Act) against
his company for alleged fraud of overcharging
the government and selling it
defective equipment, and a 17½-year ordeal
in which he’d lose his job, his health
and his house. And someone attempted
to harm him, his son and daughter. Yet,
he didn’t quit. (See “Vindication at a
high price,” Fraud Magazine, July/August
2015, tinyurl.com/y9xq6qcz.)
Severity and gravity
of situations
Holzrichter reported anomalies because
his father’s advice, “When is it
ever wrong to do the right thing?” was
programmed into his life. According to
researchers at Boston College and Northwestern
University who’ve been studying
whistleblowing since the 1980s,
would-be whistleblowers base their decisions
to report problems on two things:
the severity and gravity of the situations.
(See “The psychology of whistleblowing,”
by James Dungan, Adam
Waytz and Liane Young, Current Opinion
in Psychology, Volume 6, December 2015,
tinyurl.com/y9n5jygo.)
If an employee stumbles upon
grave misconduct and wrongdoing
— problems that can demolish a
system — they’re more than likely not
to blow the whistle. And if the would-be
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whistleblower isn’t sure about the validity
of what they’ve uncovered, they’re
unlikely to tell authorities because their
career could be destroyed if they’re
proven wrong. Whistleblowers might
spend years investigating a case before
they report it.
A whistleblower never wants to
be wrong or proven wrong. That’s why
even though 45 percent of workers
might notice wrongdoing, only 65 percent
of them are likely to report what
they saw, according to a 2011 National
Business Ethics Survey, “Retaliation:
When Whistleblowers Become Victims,”
tinyurl.com/yd2wt44d. They’ll
likely brush it off as anomalies or
chalk it up to human error. According
to the Ethics & Compliance Initiative,
nearly none receive widespread media
coverage. (See “Retaliation against
Whistle-Blowers: No Good Deed Goes
Unpunished,” by Michael McMillan,
CFA, Enterprising Investor, Oct. 24,
2012, tinyurl.com/y8b2fa5e.)
A whistleblower is counted as one
only if they’re employed by the organization
that they’re reporting on and can
suffer the consequences of their actions
from that organization. An outsider,
independent person or committee that
uncovers wrongdoing often isn’t considered
a whistleblower.
Psychology behind
whistleblowing
According to the British Psychological
Society, employees can determine if they
might fit the profile of a whistleblower if
they answer positively to most of these
questions:
• Are you highly educated?
• Do you show good performance in
your work?
• Do you think something can be done
about the problem?
• Is your organization seemingly responsive
to complaints?
• Is the problem not widely known?
• Are you a dominant but not always
the most agreeable in character?
(See “Why do some people choose
to blow the whistle,” by Craig Lewis and
Laurence Cawley, BBC News, March 24,
2015, tinyurl.com/ybopq9ld.)
Whistleblowers commonly talk
about how employees and managers
in their organizations bully them after
they’ve reported problems. Contrary
to what some might think, if a whistleblower
is a favored employee, then the
blowback is far greater.
Ethics versus loyalty
As Holzrichter discovered, the stakes are
quite high for a would-be whistleblower.
They need to understand that they’ll pay
a price for blowing the whistle on their
boss or peers. However, if they decide
not to blow the whistle they need to live
with that decision, which could have
even more negative implications for
their psyche.
COLUMNIST
CFE
COMPLIANCE AND
ETHICS LEAD OFFICER
In “The psychology of whistleblowing”
article in Current Opinion in Psychology,
the researchers outline a concept
they call, “the whistleblower’s dilemma:
the fairness-loyalty tradeoff.” The authors
write that “moral foundations theory”
identifies five basic moral values:
harm, fairness, loyalty, authority and
purity, which employees consider when
they’re faced with deciding whether a
behavior is right or wrong. They say that
“fairness and loyalty are brought into
direct conflict by situations that allow
for the possibility of whistleblowing.”
They tested the hypothesis “that
when norms for fairness dominate
norms for loyalty, whistleblowing will
increase, whereas when norms for
loyalty dominate norms for fairness,
whistleblowing will decrease.”
In a controlled study, the subjects
were asked to rank how likely they were
to blow the whistle on various targets,
including strangers, close friends, family
members and acquaintances for degrees
of wrongdoing ranging from stealing
$1 out of a restaurant tip jar to killing a
store clerk.
The results of subsequent studies
showed that those who endorsed
fairness over loyalty reported greater
willingness to be whistleblowers. In fact,
whistleblowers were seen to generally
speak, write and describe incidents from
a fairness point of view rather than the
loyalty point of view. Whistleblowers,
the researchers found, consistently
had an ethical viewpoint, rather than a
loyalty point of view.
Factors influencing
whistleblowing
Personal
Specific personal factors can identify a
whistleblower, the researchers report in
the Current Opinion in Psychology article.
According to data collected and analyzed,
a correlation exists between a certain
type of worker and their propensity
to blow the whistle, especially if they’re
the “fairness” sort of person. While correlation
doesn’t always equal causation,
this is an interesting look into the type
of person who’d place fairness above
loyalty to a company and the people that
are in it. The idea here is that clearly
a high sense of loyalty can deter and
hinder whistleblowing, but it doesn’t
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FRAUD BASICS
Fundamentals for all
necessarily mean that a loyal person
won’t blow the whistle. The researchers
say that the few employee demographic
factors that correlate with higher rates
of whistleblowing include:
• Increased tenure of employment at
the company.
• Increased pay.
• Increased education.
• Being male.
Situational
According to the Current Opinion in
Psychology article, strong predictors
of whether an employee will become
a whistleblower include: 1) organizational
support and encouragement for
whistleblowing, 2) adequate dissemination
of knowledge of ways to report
unethical behavior plus protection from
retaliation. Some organizations include
these whistleblower protections and
employee encouragement in their written
offcial policies.
Another situational point is the
time factor. According to the article,
“people are more likely to voice disapproval
of others’ behavior when that
behavior becomes unethical abruptly
rather than slowly over time.” However,
the more an employee feels an act of
whistleblowing is immediate and noticeable,
the more diffcult the reporting of
the wrongdoing will be.
In a study conducted on university
students, when an experimenter asked
them if they’d raise ethical questions
about inhumane research on humans
most of them said they would. (See “To
defy of not to defy: An experimental
study of the dynamics of disobedience
and whistle-blowing,” by Piero Bocchiaro,
Philip G. Zimbardo and Paul A. M.
Lange, Social Influence, Volume 7, 2012,
Issue 1, tinyurl.com/yb7ogxbs.)
The majority, 77 percent, complied
with the experimenter’s unethical
request. The minority was split between
those refusing — 14 percent — and those
reporting the misconduct to higher authorities
— 9 percent. (However, when
the experimenter asked an independent
sample to predict their behavior, they
gave the opposite reaction. Only 4 percent
believed they’d obey the authority.)
It’s not easy for people to blow
the whistle against authority figures,
especially when dealing within a group.
Group loyalty is a strong feeling.
Cultural factors
Geographic cultures can affect an
employee’s decision to blow the whistle.
For example, according to the Current
Opinion in Psychology article, those in
Asian cultures — including Japan, China
and Taiwan — view whistleblowing less
favorably than those in the U.S. This
could be because collectivist cultures,
often in the East, fiercely value loyalty to
their authority figures. Western cultures
are more individualistic.
The researchers say that the amount
of collectivism in a culture is positively
related to that culture’s propensity for
bribery “and the perception that collectives,
rather than individuals, are
responsible for personal conduct.” Loyalty
increases the inclination to overlook
unethical acts.
Thanks to whistleblowers regardless
of their motivations
We can’t generalize why a whistleblower
decides to report possible unethical or
illegal events. Each has unique legal,
cultural and personal factors that affect
their decision. But we know they will pay
a price. They’ll probably lose their job.
They might have to endure harassments,
ill health and family disruptions. They
might never find justice and closure.
The path to justice is uneven. Half
the battles are lost during the uphill
climb of legal assessment. Others are
lost because of society’s pressures and
loss of livelihood. More are lost in court
because of lack of evidence. Only a handful
remain to see the light of the day. But
because of courageous whistleblowers
stepping out of the crowd we see many
frauds vanquished and wrongs righted.
And for that, we’re grateful. n FM
Disclaimer: The views and opinions
expressed in this article are those of the
author and don’t reflect the opinion, views
or policy of the Abu Dhabi government or
its business entities or its affliates.
Robin Singh, CFE, is the compliance
and ethics lead offcer at an Abu Dhabi
Government entity (healthcare sector).
Contact him at robin@whitecollar.org,
whitecollar.org and LinkedIn.com/in/
whitecollarinvestigator.
Visit Fraud-Magazine.com for an expanded
column, which contains worldwide
legislation to aid whistleblowers.
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