Firms must encourage whistle-blowers - they can’t afford not to
Organisations need to invest in independent and safe mechanisms for their employees to speak up
Something has clearly gone awry in some SA workplaces, but how many? Is it that we just happen to know about the goings-on at, say, Bosasa and VBS, but that similar behaviour is taking place at other companies too? These are questions business leaders should be asking themselves.
Those who maintain an “ignorance is bliss” attitude have fundamentally misread the historical moment we are living through. Those who respond with openness may feel the heat at first, but with the right intentions and steadfast ethical leadership, they will benefit from increased trust in future.
EOH, which is going through the sort of credibility crisis that haunts all executives, has opted for the latter approach of openness. It has a long road still to walk, but has begun with the right attitude, accompanied by a crucial practical step: launching a whistle-blowing facility for employees.
It was reported in February that EOH had invited its entire employee base to use a new whistle-blowing application. Importantly, the process is being spearheaded publicly by the chief executive, Stephen van Coller. On February 25 he announced that the app had been launched as a “public service” and went on to make rousing statements about doing one’s duty for company and country. This kind of public endorsement from leadership is one of the vital ingredients required for any whistle-blowing function to be trusted.
The second is independence of the line, which is paramount. Employees must be able to trust categorically that their submission via the line is going through a secure channel that cannot at any time be accessed by anyone other than the independent third party who is trained in precisely how to receive and process such reports. It goes without saying that anonymity must be unambiguously guaranteed as well, and only a truly independent line can offer such a guarantee.
Say organisation X is far from being in EOH’s unenviable position and is in fact doing quite well, and enjoying a strong reputation. Why go to the trouble of investing in a safe reporting line? (Safe reporting is a term with less baggage than whistle-blowing and, arguably, preferable.)
Consider the statistics. PwC’s global economic crime and fraud survey of 2018 again found SA to have the highest rate of reported economic crimes in the world. Asset misappropriation is listed as the crime most committed, and procurement fraud, and bribery and corruption, are third and fourth respectively. These findings tie in neatly and painfully with the evidence presented at the Zondo state capture inquiry (to name but one such inquiry) that huge amounts of government and shareholder assets have been, well, wasted.
Businesses must take note: they are not immune to crime. Encouragingly, it seems that many business leaders are taking a more active interest in their governance responsibilities and want to be informed of unethical conduct in their organisations – before they hit the headlines. A study into business ethics, conducted by The Ethics Institute in 2016, found that one in every four employees knows of misconduct but only half of them report it. Their main reasons for not reporting are a fear of victimisation, a belief that the report will not receive attention, and the worry that they cannot report anonymously.
These reasons are important, and should be of concern to organisational leaders since many potentially detrimental incidents of misconduct go unreported and therefore unnoticed. While most organisations in SA, in compliance with the Companies Act, have safe reporting mechanisms in place, these trends imply that there is a lack of trust in such reporting channels. Again, we are back to the importance of independence and anonymity, and the backing of an authentic leader who actively advocates for Pandora’s box to be opened.
The irony will not be lost on the leadership at EOH that it was a whistle-blower report to the US Securities Exchange Commission that led to Microsoft’s alleged unilateral cancellation of its contract with EOH, an action that has sent its already fragile share price into a tailspin. But that is how it works with openness, and why it is so hard for many organisations to embrace: sometimes it hurts. Leading with an iron fist, where orders and information flow only from the top of the organogram to the bottom, seems a lot easier and less risky. But, just like silence is something to be suspicious of with small children, so is it something to be suspicious of in organisations.
If the new EOH safe reporting application can deliver on its promise of independence and anonymity and continues to be supported by the organisation’s leaders, EOH will be in a much better position to judge the state of its ethics. Of course, it might not like what it sees, but at least it will be seeing it clearly. Perhaps the only thing that separates those organisations that are now notorious for ethical scandals from those that are not, is that the former’s misconduct was exposed and the latter’s remains hidden, although this is probably taking too dark a view.
Ultimately, the point is that organisations cannot afford not to invest in independent and safe mechanisms for their employees to speak up.
• Groenewald is senior manager for organisational ethics at The Ethics Institute.