Managers aren’t doing enough to encourage whistleblowing

The Wells Fargo fake accounts scandal drew a lot of media attention, particularly around the intense pressure on staff to meet sales goals. But far less attention has been paid to how the bank actively discouraged whistleblowing. Several Wells Fargo employees alleged that they had surfaced concerns about the pressure to meet impossible sales targets at branch offices. Some employees even said that they were fired for calling the internal ethics hotline.

These claims raise important questions that every major company needs to ask: Are employees aware of our ethical standards and the laws surrounding our business? Have we created a safe and responsive environment for any employee to call out unethical behavior? Will conscientious employees at our firm actually say something if they see something? Or, like Wells Fargo, is management tone-deaf when employees try to blow the whistle? Even worse, would management retaliate against a whistleblower?

Getting employees to voice concerns is hard enough. Most of us don’t want to get branded as a “snitch” or a “troublemaker.” And most rank-and-file employees don’t want to be noticed for the wrong reasons. So employees who do escalate unethical behavior to senior management should be taken seriously. Radio silence is the easiest way to signal that management is not interested in fixing the problems.

I encourage managers to ask themselves some hard questions about the whistleblowing climate at their companies. Is there a specific time frame for investigating ethics complaints from employees? Do you investigate individual complaints, or try to connect the dots across multiple reports? If a tipoff about a brewing problem surfaces, do you look for similar issues elsewhere?

Do you look for the root cause of an issue? Do you learn from the mistakes of your peers, so that if other banks report problems, you investigate whether your employees have raised similar complaints? More important, do you try to understand why that initial complaint was overlooked?

Management should aim to assure rank-and-file employees that when they do point out issues, somebody higher up will take them seriously and investigate the allegations. The onus should be on managers to construct a tight, evidence-backed case of the alleged wrongdoing

Ultimately, the ability to maintain a culture that supports whistleblowing rests with the board. Does the board actually meet with staff who escalate serious matters? How does the board ensure that employee tips are not ignored or buried by middle and senior management? Does the audit committee review internal employee complaints? Do board members ask for a quarterly report of internal whistleblowing complaints or detailed investigations of the most intriguing tips?

If the board and senior management do not devote resources to investigating every complaint carefully, potential tipsters will be dissuaded from pointing out the next existential threat to the company. Creating a climate and process to facilitate internal problem-raising will help companies spot the next scandal before it is too late.