Don't fear whistle-blowers: with HR's help, principled whistle-blowers can be a company's salvation. Here is how several organizations encourage a culture where bad news can be heard and acted on before it's too late

Workforce, July, 2002 by Janet Wiscombe

FBI whistle-blower Coleen Rowley launched a bombshell memo in May accusing her bosses of ignoring warnings of the September 11 terrorist attacks. She angrily blasted agency director Robert Mueller and others for "a delicate and subtle shading/skewing of facts" and for making "a rush to judgment to protect the FBI at all costs." And she sharply criticized the bureau for rewarding careerism and promoting a "culture of fear."

Just a few months before, Enron executive Sherron Watkins had penned another incendiary memo. She sent it to then chairman Kenneth Lay, detailing the firm's dire financial problems. Her candor was hardly rewarded. Management factions intent on squelching bad news admonished her and tried to get her sacked for telling the truth.

Since the energy company's meltdown last fall, Watkins has talked publicly about what she calls Enron's culture of intimidation. She has stated that there was widespread knowledge within the organization of controversial off-the-books partnerships and shaky finances, but that no one was confident enough to confront company officers.

As the impact of the two powerful memos unfolds, HR professionals and others who deal with matters of ethical conduct in the workplace are raising these questions: Why did so few employees come forward to report that something was amiss? Certainly most rank-and-file employees wouldn't have had the same access to information that Rowley and Watkins had. But it is no leap of logic to assume that scores of employees did see red flags.

Why didn't they talk? What can organizations do to protect whistle-blowers, and others who voice complaints--internally and externally? How do you protect employees from being ostracized or forced to commit career suicide if they report what they know?

As the colossal FBI and Enron scandals are analyzed and the players scrutinized, there is one reality that no one questions: to silence a whistle-blower or to muzzle a watchdog is very likely to result in further compounding problems--whether in the public or private sector. When an organization creates a culture in which employees feel they have to conceal and distort information, the consequences can be catastrophic, say HR executives, business leaders, and ethical advisers.

"It is absolutely and unequivocally important to establish a culture where it is possible for employees to complain and protest and to get heard," says Michael Josephson, attorney, author, and founder of the Josephson Institute of Ethics in Marina del Rey, California.

As a consultant, Josephson works closely with HR professionals to help them establish cultures that actively encourage employees to share information without fear of reprisal. It's HR's job to take a leadership role in creating an atmosphere that won't tolerate concealment and distortion of information, or discourtesy to and harassment of whistle-blowers, he says.

HR is ideally set up for the task, concurs Linda Trevino, a professor of organizational behavior and the Franklin H. Cook fellow in business ethics at Penn State's Smeal College of Business Administration. Ethics programs work best when they are woven into the fabric of an organization, she says. To assure a successful ethics program, "requires working across the organization with lots of different people, and a lot of those need to be people in HR."

Whistle-blowers are employees who often risk everything by taking public some malfeasance. They can also be those who come forward internally to report wrongdoing. Some are people of high moral character; others are not. But in much the same way that the FBI is compelled to investigate a bomb threat, Josephson says, it is imperative that a whistle-blower's information is taken seriously.

"Your company cannot make good decisions based on incomplete and often bad information," he says. "People who bring complaints must, must, be treated with respect--and even gratitude."

For HR, setting up channels and other mechanisms that not only allow but also promote healthy, open communication can involve sorting through a great deal of information. It can mean training managers throughout the organization to fully understand and encourage candid employee comments. And it can entail implementing more effective solutions for receiving feedback such as conducting anonymous employee surveys and setting up confidential help lines.

Josephson currently is working with a Fortune 500 company that was sued for mistreating a whistle-blower. He recalls a similar case he had a few years ago involving an employee who worked at a pharmaceutical company. The man believed that a device the firm was making was potentially dangerous, and reported the problem to his bosses. The company was under enormous pressure to get the product out. If the problem were to be corrected, manufacturing would be delayed six months. The whistle-blower's bosses dismissed the warning, insisting that the employee didn't know what he was talking about.

Well, the employee did know what he was talking about. "He was frustrated, so he went to the federal government," Josephson says. "They put a wire on him. There was a lawsuit. The company lost huge money."