Don’t let whistle-blowing leave you gasping
For a brief time in 2013, Hong Kong was home to the biggest news story in the world in 2013 when Edward Snowden came out of hiding in Kowloon. We now know that Snowden was formerly employed by a subcontractor of America’s National Security Agency and had committed one of the largest acts of whistle-blowing in world history. While his actions are an extreme version of what can happen when employees blow the whistle, there are still lessons to be learned for companies of any size.
Whistle-blowing is something that goes on every day through global markets, and the consequences can be massive. In September last year, the US Securities and Exchange Commission paid US$30 million to a whistle-blower – who was not based on US soil – for information that they provided to the government regarding their employer’s conduct.
The practice of whistle-blowing is tipped to keep increasing, with more regulator payouts and the rise of social media as a way for employees to air their grievances while maintaining anonymity.
However, if managed the right way, whistle-blowing can provide opportunities to companies instead of risks.
The Right Approach
While we associate whistle-blowing with external leaks – to media or regulators – it can often be kept in-house with the right approach from management.
Concerned employees will often go outside of the company to blow the whistle because they feel their concerns have not been adequately addressed – or they do not think management would welcome their input.
Commonly, this can happen where employers do not have the right policies and protocols in place to deal with whistle-blowers. What those companies fail to recognise is that whistle-blowing – particularly in Hong Kong – is something many employees consider doing.
Last year, Freshfields asked 2,500 management-level employees globally – including 500 in Hong Kong – about their attitudes towards blowing the whistle. The data showed employees here were far more willing to report malpractice than those surveyed elsewhere.
Nearly two-thirds of the Hong Kong participants said they had already blown the whistle or would consider doing it. What is more, seven out of every 10 employees said they would consider taking their concerns outside of their company if management’s response was seen to be inadequate.
Employers can either ignore the risks, or build a system and put in place processes that encourage a culture of internal communication, so potential problems can be identified before they leave the workplace.
A whistle-blowing policy can provide an avenue of powerful upwards communication from staff that can highlight problems before they occur, improve morale, and minimise expenditure. However, establishing such a policy needs to be deliberate and careful.
The needs of every company are different, and that means whistle-blowing policies change from business to business. There are, however, some fundamental concepts that make the difference between an effective whistle-blowing policy and a meaningless document.
A good whistle-blowing policy needs to be simple to understand and communicated openly. It is not enough for a policy to exist if it is hidden in some dark corner of the intranet. Employees need to know that management treats the policy seriously.
That policy needs to be clear about what sort of conduct is included in the policy – will it address purely financial matters within a company, or it will it also include potential violations of other human resources policies, such as occupational health and safety?
The policy must also be open about how the company plans to manage the confidentiality of any allegations made by staff. A whistle-blowing policy will be ineffective unless staff members understand the way in which their disclosures will be treated.
Employees need to be able to report questionable activity within the company in such a way that bypasses the person or business unit they believe may be behaving questionably.
If a staff member is concerned about their direct supervisor’s conduct, it is vital they can report their concerns in a way that does not involve the supervisor in question. HR departments commonly play the role of honest broker between the whistle-blower and upper management where there are genuine concerns.
If a business decides to implement a whistle-blowing policy, it requires investment from leadership and senior management to ensure its success.
For some companies, a whistle-blowing policy can lead to larger cultural shifts, and employees will only buy into those changes if they see support at the top.
For those companies that do go down this path, a whistle-blowing policy can be a start of much larger and positive changes within its business.
It makes good sense for companies to consider a whistle-blowing policy – both to minimise risk and foster a broader culture of compliance and transparency.
Kathleen Healy (left) is a partner in Freshfield’s expanding employment, pensions and benefits practice in Asia and specialises in advising on Asia-Pacific employment and HR projects.
Laura Chapman is a senior associate in Freshfield’s Employment, pensions and benefits team based in Hong Kong. She has a broad range of experience advising employers on both contentious and non-contentious employee matters throughout the Asia-Pacific region.