Whistleblowing and the Importance of Strong Corporate Governance

However thoroughly your employees are vetted, and whatever the penalties for wrongdoing, there is potential in any organisation for illegal or immoral activity to take place.

How you deal with these potential situations is important; in many organisations, the company culture allows senior managers to ‘turn a blind eye’ and intimidates employees into staying quiet about what they witness.

Whistleblowing and corporate governance are closely linked; in an open and transparent corporate environment where policies on wrongdoing and whistleblowing are made clear, it is much easier to detect malpractice early, put right any wrongs and avoid a scandal that could be disastrous for your business.

What you need to know about whistleblowing

Employees who become aware of corporate malpractice have the right to disclose what they know if it is in the public interest to do so. Activities that come under this umbrella might include any illegal or unethical practices that affect the public, as well as any attempts to keep these covered up. These can be events that happened in the past, are happening now, or even planned activities for the future.

The Public Interest Disclosure 1998 protects the rights of the whistle-blower, guaranteeing the right to keep their job as long as they follow correct procedures in their disclosure. They are entitled to remain anonymous and not to be victimised as a result of their actions.

Preferably, employees will approach somebody within the company with their disclosure, which will be dealt with transparently according to a well-documented whistleblowing policy. However, if they choose, individuals are equally entitled to ‘blow the whistle’ to a prescribed person or body outside the organisation.

The benefits of a whistleblowing policy

Whistleblowing and corporate governance do not always go hand in hand. But while it’s not mandatory for companies in the UK to have a whistleblowing policy, it’s advisable to have one in place.

Setting out your whistleblowing policy is a sign of strong corporate governance and a company culture that takes such claims seriously. It may act as a deterrent to those thinking of committing wrongdoing within the company and may also reduce the likelihood of false accusations, because employees will understand more clearly the consequences of their disclosure. It will also deter people from going straight to the media with their revelations instead of dealing with them through the correct channels.

It’s a good idea to have a designated person who is known to be responsible for your whistleblowing policy. This individual will be charged with communicating the company stance on whistleblowing throughout the organisation, training employees on the subject, and following the procedure when an employee confides in them.

Business ethics and corporate governance

Creating an open and transparent company culture needs to come from the top down. At board level, business leaders must lead by example; good corporate governance and ethics should permeate down to management level and throughout the organisation.

We’ve seen how whistleblowing and corporate governance are interlinked, and acting to implement transparent policies and procedures could make a vital difference to your company. With a knowledgeable and robust approach to whistleblowing at board level, companies could potentially avoid lawsuits, negative media coverage and damage to their reputation.

Contact Us for more advice on setting up a whistleblowing policy for your organisation. We can review your current policies, make recommendations for change and offer training on having a whistleblowing policy in corporate governance.