Benefits of a whistleblower program

A whistleblower program shows employees that the company is committed to improving and providing them with a safe space where they can raise any concerns they may have. It reassures them that whistleblower complaints will be taken seriously and the company will try to prevent any hints of retaliation. Companies sometimes do not realise the many benefits that a whistleblower program carries. Whistleblowers are usually seen as ‘snitches’ and some organisations view them in a negative light. 

However, companies should strive to find employees who would be willing to blow the whistle and notify them if something is going on. In 2022, the ACFE ‘Report to the Nations’ revealed that 42% of fraud detections within organisations came from whistleblowers. This number has been steadily around the 42-43 mark but is now in danger of decreasing as younger generations are less likely to report fraud due to fear of retaliation. 

Benefits of a whistleblower program 

A whistleblower program does not only benefit the employees but the company as well. An employee can easily jump ship and go elsewhere if they think the company they work for is unethical. If they believe that there is hope, it is more likely that they will come forward and report any suspicions. A whistleblower program can:

• Discourage misconduct
• Reduce costs
• Create a better working environment
• Manage a business’s reputation
• Provide insights

Discourage misconduct

When people are aware that there is a whistleblower program, they know that the business places a strong emphasis on compliance. Individuals will know that they are less likely to get away with doing something illegal, which reduces the perception of an opportunity, an element of the fraud triangle theory. A whistleblower program can also reduce or even completely eliminate corruption before it spreads within an organisation. 

Employees are the protagonists when it comes to business operations. They see what is going on up close, something executives may not have the ability to do. In larger companies, it is easier for lower-ranking employees to detect fraud, as they interact with more people and can report it much sooner than an executive would notice. 

Reduce costs

If you think a whistleblower program is not needed in your company, think again. If an employee does not know how to report suspicions of misconduct or they are afraid of retaliation. They will be faced with two options:

• Option 1: They leave
• Option 2: They report the misconduct to an external party

With option 1, the company will have to deal with increased costs due to the employee leaving and their managers needing to hire a replacement and train them. The business, however, is still suffering from the misconduct as it goes unnoticed. This means more costs in the longer term as the severity of the crime increases. 

With option 2, the employee does not give the organisation any chance to right their wrongs. The business will be held liable for the illegal offences and depending on how many people were involved, there could also be financial fines to be paid by the company for not detecting the misconduct sooner. If CEOs are behind the alleged fraud, they might even face time in prison. When JEA’s CEO was found guilty of fraud and conspiracy, it was also found that the company had $76 million worth of expenses that were tied to the scheme. 

A whistleblower program can deter even those in higher positions from engaging in fraudulent practices. In the beginning, setting up a whistleblower program may seem time-consuming but in the long run, it can save the business a lot of time that would have been attributed to legal procedures, recruitment and training. 

Create a better working environment

A whistleblower program can build trust among and with employees. As problems are caught early on, the staff can feel assured that they work for an ethical company that prioritises compliance above greed. 

Whistleblowers may report unsafe working conditions or different types of harassment. If steps are taken to remedy the situation, then the business will show its staff that it cares about their personal health and well-being. People like to work for companies who listen to them and respect their feedback. A safer workplace will lead to higher morale and better productivity since there will be fewer incidents. 

Choosing a third-party provider to set up a hotline can make the whole process easier since it adds an extra level of security for employees. They know that each matter will be handled impartially and by an experienced group of people. 

Manage a business’s reputation

With a whistleblower program, a company has control over the next news story that will be published about it. The leadership can control whether they will receive positive publicity or negative publicity. Positive publicity can inform the public about how the organisation’s whistleblower program caught the misconduct practices before they escalated. Negative publicity, on the other hand, may look at how the business ignored whistleblowers who came forward and tried to silence them. There is also the scenario where fraud escalates to the point where the information is leaked to external parties without the company being able to respond. 

Having a whistleblower program can increase the possibility of fraud being uncovered and the business managing the issue before it becomes public. As a result, the business will be kept in a positive light and be presented as an ethical entity. That way, the company is more likely to attract better-skilled individuals as well, since they will have higher standards when it comes to choosing their next workplace. 

Provide insights

When trying to execute successful risk management, entities will look at other businesses within the industry to predict trends. According to the ACFE report, the main departments that struggle with fraud are:

1. Operations
2. Accounting
3. Execuritve/Upper Management 
4. Sales

Not every company will have the same weaknesses. A whistleblower program may hint at certain departments that are currently at higher risk than others. The organisation may realise that more attention and resources need to be attributed to different area than previously thought. Without employee complaints, that might not have been noticed. Better policies, security measures, and risk management strategies can be developed to offer stronger protection against future threats. 

How do you ensure that the program is effective?

A whistleblower program is a great example of how businesses can empower employees and help them be part of the mission to prevent misconduct at every level. An effective whistleblower program should guarantee the anonymity of the complainant. This will encourage more employees to make reports as they know that they will be protected. For some companies, a whistleblower program is a regulatory requirement, usually for larger ones. When something is mandatory, it does not necessarily mean that it will be carried out correctly. There are many instances where companies set up a whistleblower program to tick off a box. 

Currently, Gen X employees are 11% more likely to report fraud than Gen Z employees. The difference highlights the need for better measures to keep employees safe and discourage retaliation by their managers or colleagues. Younger employees are only just starting their career and they will be more scared of jeopardising it. To combat that fear, the business will need to communicate regularly with employees and stress their commitment to creating a better workplace for everyone. 

They should also make it clear that if employees come forward with complaints, their identity and job position will be protected. This can lead to an increased number of reports, which may seem negative, but it can be beneficial for the growth of the organisation in the long term. More reports will mean more problems but it also means that the employees are taking action and they are not staying silent. 

Make sure to give employees different options to submit complaint forms. These can include:

• Phone lines
• Emails
• Web forms
• Live chat

While phone lines used to be the most popular way to raise an anonymous complaint, employees can now send emails and anonymous web forms. For a whistleblower program to remain current and effective, it will need to adapt as times change. 

Where do you start?

Setting up a whistleblower program can be confusing as there are many elements that need to be taken into consideration. Confidentiality, security and complaint monitoring may seem daunting but they are all part of creating a reliable whistleblower hotline. 

At Polonious, we value whistleblowers as we know how important they are to every company. We offer our clients a 24/7 whistleblower hotline that can be used in multiple languages. Our aim is to make whistleblowing easy for both the employee and the company. The easier it is to report a complaint, the more likely it will be for staff to lodge one. 

We provide our customers with a cost-effective solution that allows employees to submit reports anonymously. Companies can customise our hotline to fit their needs and our specialists are trained to handle every report with empathy. If you want to learn more, reach out! We will be happy to show you how our whistleblower hotline can help you protect your business.