Whistle Blowing: A Good Opportunity for Businesses

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Table of Contents

Introduction
Whistle Blowing Defined
Individual and Organizational Issues
Conclusion
Works Cited

Introduction

In recent years, there has been a resurgence of public attention to whistleblowing. Several factors have contributed to this resurgence. Recent cases of whistleblowing have been well-publicized, including three high-profile cases in 2001 involving Sherron Watkins of Enron, Coleen Rowley of the Federal Bureau of Investigation, and Cynthia Cooper of WorldCom. The attention to the topic is also reemerging at a time when there is a growing interest in corporate ethics and ethical business practices. This resurgence has also made the topic timely for scholarly inquiry.

Whistle Blowing Defined

Whistle-blowing has been defined as “the act of a man or woman who, believing that the public interest overrides the interest of the organization he serves publicly ‘blows the whistle’ if the organization is involved in corrupt, illegal, fraudulent or harmful activity” (Schermerhorn, 2000). It has also been defined as “the disclosure by organizational members (former or current) of illegal, immoral or illegitimate practices under the control of their employers, to persons or organizations that may be able to affect the action” (Near & Miceli, 455). Many other definitions of whistleblowing exist, though they run into problems of inclusion and exclusion and create problems for the researcher attempting to operationally the concept as a form of organizational communication.

The following definition comes close to providing sufficient clarity: Whistle-blowing occurs when an individual performs an action or series of actions intended to make the information public. The information is made a matter of public record and is about a possible or actual non-trivial wrongdoing in an organization, and the individual who performs the action is a member or former member of the organization (Grant, 396). This distinction is important because the whistleblower should not be confused with the boat-rocker, who is an organizational member who expresses dissent in a direct, straightforward manner within the boundaries of the organization (Read, 354). There are two compelling reasons why this boat rocking behavior should not be considered whistleblowing. First, the scope of instances where an organizational member circumvents normal hierarchal channels is vast. If this type of dissent was classified under whistleblowing, the term would become too general. The second, and more important reason, concerns the moral connotation or implications of whistleblowing. Ignoring the normal channels of communication and going outside of the organization suggests that the problem is much more severe and that it cannot be resolved using procedures internal to the organization.

Several definitions of whistleblowing do, however, allow the label to be applied to both internal and external displays of dissent (Fritzsche, 2000; Chiu, 2003). Reasons for labeling internal and external dissent as whistleblowing include the argument that both types of acts are committed by members of organizations with the goal of ending perceived wrongdoing. It has also been argued that the use of voice (expression of the concern) is evident in internal and external displays, rather than voiceless displays of dissent such as sabotage, exit, or compliance (Grant, 399).

However, Miceli and Near (2002) believe that making a distinction between internal and external dissent as a requirement for whistleblowing causes one to “prematurely conclude that certain variables that predict one type are irrelevant to the other” (p. 27). A reason for not drawing distinctions is that many whistleblowers who use external channels first voiced their dissent internally. Although this is true, the consequences for voicing dissent externally are usually different from the consequences for voicing internal dissent (Seeger, p.4). Further, the choice to voice dissent internally may come quite easily because employees think they are doing their job and helping the organization. External dissent is a choice that is much more thoughtful because of the possible consequences or potential consequences involved. The consequences are likely to be more serious when the member feels he/she must go outside the organization. This external provision definition also provides a larger scope and identifies an audience that must hear the message.

Debate exists over whether or not whistleblowing is, and should be, limited to internal and/or external individuals. This may be the wrong way to address such a distinction in the definition. However, rather than making distinctions on whether the whistleblower is an organizational member or an outsider (internal vs. external), the argument should focus on the whistleblower’s relationship to the organization. This would allow both internal and external dissenters to be characterized as whistleblowers and would aid in an operational variable. Furthermore, Near and Miceli (2002) define whistle blowing as including former or current members of the organization, thus contributing to the internal/external dichotomy. (469)

Therefore, defining the term on the basis of the individual’s relationship to the organization appears to be a better solution. Johnson, et. al., (2004) suggest that whistleblowers could include suppliers, vendors or professional community members that possess information and communicate publicly about issues of perceived wrongdoing. Thus, they also argue that whistleblowing is more about the relationship between the organization and the whistleblower rather than the actual physical location of the whistleblower in the organization.(p. 43) Organizational goings-on and structures increasingly promote the reliance on substantial relationships and networks of external groups and contractors, consultants and agencies.

Thus information pertaining to corruption or wrongdoing is likely to emerge from within such networks. One such relationship is outlined in Johnson et al. (2004): Roger Boisjoly and Allan McDonald, for example, were engineers with Morton Thiokol Corporation, a National Aeronautics & Space Administration (NASA) contractor, when they blew the whistle on the design and decisional flaws that led to the Challenger Space Shuttle disaster. (58) Although it may be argued that Morton Thiokol and NASA were so closely connected that Boisjoly was a de facto NASA employee, he clearly fits into a broader conceptualization of whistleblowing. In a more contemporary example, Houston-based Paine Webber broker Chung Hu was fired for advising his clients to sell Enron Holdings (Seeger & Ulmer, 48). Even though He was not affiliated with Enron in any formal sense, he was severely punished for calling attention to serious wrongdoing. In summary, the whistleblower can be seen as an employee exposing the wrongdoing of his or her employer. However, there are still a lot of problems that addressing.

The literature on whistleblowing usually places the act into the category of organizational dissent and describes it as a distinct form of organizational communication (Chiu, 65). Organizational dissent entails both personal and principled issues (Johnson, 2003), but does not always entail vigorous protest or objection (Read, 2003) or adversarial behavior (Grant, 2000). Dissent may be a means of enhancing work or a measure of one’s helpfulness to the organization. It can also be used for the advancement of a personal agenda or as a means of protest.

Dissent is always part of the organization and its environment, but through different strategies on the part of the dissenter, a perception that dissent is absent might also develop. Organizational dissent is characterized by the expression of displeasure or conflicting opinions in or about the workplace (Johnson, 394). This expression is not always obvious to others. An organizational member may engage in dissent using various channels, some more overt, such as public protests or covert, such as reduced work effort. Thus, in some cases, the organization may be unaware that dissent has occurred. When an organizational member becomes or feels more personally invested in an organization, and is given more voice in organizational affairs, that member may feel the need to express more disagreement. This occurs for three reasons (Read, 362). First, organizational members wish to express their opinions, and some organizations, therefore, incorporate dissent as a form of participation. Second, dissent may manifest when organizational members recognize the limitations which exist or the barriers that prevent them from becoming involved in the decision making process. In these cases, dissent is a kind of reaction to those barriers. Third, dissent may appear because of the organizational members’ frustration with the internal process that prevents participation or voicing messages as described earlier.

Employee dissent is characterized by the expression of displeasure or conflicting opinions in or about the workplace (Goodwin, p.113). Whistle-blowing, therefore, is a specific subset of dissent. Often, researchers have used the constructs of dissent and whistleblowing synonymously and interchangeably (Fritzsche, 130). However, Keenan, (2002) argues for the recognition of employee dissent as a distinct construct. This is an important distinction because employees often use strategies other than whistleblowing for dissent. (24)

Individual and Organizational Issues

Seeger (2003) notes that whistleblowers confront two conflicting value tensions. One tension is the function of ethical individualism (as an internal tension at the individual level). (52) In this instance, the organizational member believes that the organization is not acting in the best interest of the public. The member then must choose whether or not to act in a manner that is beneficial to the public (Read, 358). The second tension is the issue of breaking group trust and loyalty. As an organizational member, the individual feels an obligation to the group, while at the same time feeling an obligation to the larger society of which he/she is a member. As stated by Seeger (2003): Tension inherent to whistleblowing is a consequence of two competing sets of values.

These competing sets of values create ethical dilemmas in whistleblowing. When faced with knowledge about an organizational wrongdoing, an employee must balance the values of organizational loyalty against the values associated with the free dissemination of information. Resolving the dilemma and making ethical judgments about whistleblowing requires that one set of values takes precedent over another (p. 94). Further, the obligation may not be felt towards only one group. As stated earlier, organizations rely on extensive relationships and networks with external groups and organizations, thus the individual contemplating blowing the whistle may feel an obligation to a parent organization and an obligation to partners of the parent organization. These feelings of obligation create more tensions for the individual. Often disputes (which lead to dissent) between individuals and organizations concern matters with substantial implications for groups not party to the dispute (Grant, 399).

Thus, whistleblowing is also a unique form of dissent in that the process involves individuals instigating dissent, many times on the part of a third party that is not directly part of the organization where the corrupt action occurs. Thus, for example, an individual blowing the whistle on a company polluting is doing so on the part of society, though most members of society are not directly part of the organization involved in the polluting. Organizations also react to whistleblowing. Generally, they see the dangers arising from whistleblowing on two levels: internal and external. Internally, whistleblowing can create problems within the organization that contribute to mistrust, reduce worker productivity, or even prompt the exit of talented employees (Fritzsche, 132). External consequences maybe even more serious. The organization is dependent upon the external environment for survival.

However, when conditions deteriorate, external entities may exert influence over organizational operations. Thus, the organization has a vested interest in keeping the whistleblower silent. Additionally, the organization has an interest in maintaining its autonomy, which is threatened by the whistleblower (Read, 362).

Moreover, those organizations that actively discourage dissent are generally the most prone to ramifications when the whistleblowing event occurs. Because of the conflicting tensions experienced by the potential whistleblower, the fear of possible retaliation against the whistleblower and the negative connotation that accompanies whistleblowing, most employees are fearful of reporting any wrongdoing. As noted by Chiu, (2003): employees are among the first to know about industrial dumping of mercury or fluoride sludge into waterways, defectively designed automobiles, or undisclosed adverse effects of prescription drugs and pesticides. They are the first to grasp the technical capabilities to prevent existing product or pollution hazards. But they are very often the last to speak out, much less to refuse to be recruited for acts of corporate or government negligence or predation (74).

The reporting and subsequent correction of corporate wrongdoing through the internal whistle blowing process is an important social issue that can benefit a variety of stakeholders (Fritzsche, 140). Unsafe products and working conditions can be addressed through the whistle blowing process, thereby benefiting consumers and workers (Keenan, 2002; Miceli & Near, 2002; Grant, 2002). The reporting of wrongdoing, such as whistle blowing on illegal dumping of toxic materials, benefits the environment. Society can also benefit from a financial perspective. A decrease in illegal corporate activities through whistle blowing can save individual and institutional investors from huge financial losses (e.g., Enron) as well as improve public confidence in the overall financial markets (Near & Miceli, 455). Miceli and Near also argued that the reduction of wasteful practices through whistle blowing can reduce taxes or improve services, or both, as well as to cause a decline in legislative interventions designed to investigate and monitor corporate activities, which ultimately are paid for by the public in taxes.

The encouragement of whistleblower reports and effective procedures for addressing whistleblower complaints by organizations can also yield tremendous benefits to a company and its employees. Wrongdoing can be promptly identified and corrected, thereby improving efficiency, the morale of employees, and potentially avoiding the negative reputation and financial consequences of lawsuits (Near & Miceli, 457). However, “A mishandled case of whistleblowing can undo years of marketing and public relations” (Tavakoli, Keenan, & Crnjak-Karanovic, p. 50). If society and corporations are to benefit from whistle blowing, workers must first report wrongdoing. No benefits to anyone will accrue from an employee who observes wrongdoing but chooses to remain silent. Accordingly, there is great social value in a better understanding of the whistle blowing process, specifically the factors that might both encourage or discourage staff from reporting wrongdoing.

Alongside organizational ethics is the belief of organizational responsibility. Organizations have an ethical obligation and duty to adhere to legal and moral codes, and community standards and expectations. When corruption or some type of unethical event has occurred, those responsible must offer some excuse, justification, interpretation or reason as a response to the events. Responsibility then is an ethical principle, and it has important implications for how organizations communicate when something has gone wrong. Organizational responsibility also refers to the obligations to operate according to accepted social norms and standards. However, organizations that deviate from thesethese norms and standards can be considered unethical.

Responsibility as an ethical issue is connected to crisis avoidance. A crisis prone organization is one that doesn’t create an ethical climate in which members can blow the whistle on wrongdoing. Thus, ethical organizations need to engage employees in dialog regarding organizational ethical issues. In the absence of this highly ethical climate, corruption may go unquestioned and be dismissed until it reaches a point where it damages not only the organizational members but also the public. Whistleblowing is a form of crisis communication. It is a signal indicating that there are problems that need to be attended to. If these problems are ignored, a crisis will occur or become worse. As stated previously crisis has a connotation of urgency, as does whistleblowing; both are seen as disruptive and disharmonious. However, whistleblowing, and thus an organizational crisis, can be seen in a different way.

Conclusion

Whistleblowing is a good opportunity for businesses to manage the risk and the crisis. Big companies are paying consultants lots of money in order to find the malfunctions in their organizations. Whistleblowing is a free of charge control system that alerts the top management when there is a problem. When companies believe in the effectiveness of whistle blowing, moral questions about the whistleblower will disappear. They will no longer be treated as disloyal, complainant and harmful, threatened to lose their job or to be socially excluded.

The events that cause the individual to blow the whistle allow and sometimes require new and more flexible thought and therefore create a moment that is ripe for change. In the case of the whistleblowing event, communication must be used to address the issues of cause, blame and consequences to the event. Opportunities then may arise for the organization to take action and move in new directions. The organization, therefore, needs to take advantage of the whistleblowing event. With whistleblowers continually making the news, finding variables that will encourage and help predict willingness to blow the whistle is increasingly important. Countless issues of corruption, fraud, and misconduct would remain unknown if it were not for individuals willing to blow the whistle. Several variables and conditions related to the study of the phenomena still exist and provide several outlets for further research.

If society and corporations are to benefit from whistle blowing, workers must first report wrongdoing. No benefits to anyone will accrue from an employee who observes wrongdoing but chooses to remain silent. Accordingly, there is great social value in a better understanding of the whistle blowing process, specifically the factors that might both encourage or discourage staff from reporting wrongdoing. Safer products for consumers, safer working conditions for employees, a healthier environment, more secure pensions and benefits for employees, and reduced operational risk concerns for institutional and private investors are all positive social changes that are possible through the more ethically responsible behavior of publicly traded corporations.

Works Cited

Chiu, R. K. Ethical judgment and whistle blowing intention: Examining the moderating role of locus of control. Journal of Business Ethics, 43(1/2), 2003, 65-74.

Fritzsche, D. J. Ethical climates and the ethical dimension of decision making. Journal of Business Ethics, 24(2), 2000, 125-140.

Goodwin, B., Ethics at work, Kluwer Academic Publishers, Netherlands, 2000, p.113.

Grant, C. Whistleblowers: Saints of secular culture. Journal of Business Ethics, 39(4), 2002, 391-99.

Johnson, R. A. Whistleblowing: When it works and why. Boulder, CO: Lynne Rienner Publishers, 2003 p. 43-58.

Keenan, J. P. Whistleblowing: A study of managerial differences. Employee Responsibilities & Rights Journal, 14(1), 2002, p.17-32.

Miceli, M. P., & Near, J. P. What makes whistleblowers effective? Three field studies. Human Relations, 55(4), 2002, 455-479.

Read, W. J., & Rama, D. V. Whistle-blowing to internal auditors. Managerial Auditing Journal, 18(5), 2003, 354-362.

Schermerhorn, J.R., Campling, J., Poole, D., Wiesner, R., (2004) Management, An Asia-Pacific Perspective, John Wiley & Sons, Brisbane.

Seeger, M., & Ulmer, R. R. Explaining Enron: Communication and responsible leadership. Revised for Management Communication Quarterly, March, 2003. 48-57.

Tavakoli, A. A., Keenan, J. P., & Crnjak-Karanovic, B. Culture and whistleblowing: An empirical study of Croatian and United States managers utilizing Hofstede’s cultural dimensions. Journal of Business Ethics, 43(1/2), 2003, 49-64.

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