Whistleblowing is central to the plurality of checks and balances that allow businesses to thrive. A new report from ICAEW, "How whistleblowing helps companies", discusses the importance of effective whistleblowing and provides guidance for boards on how to create environments that encourage it.
It argues that too many organisations do not promote a culture or provide policies that encourage employees to report deficiencies. The guide provides a five-point action plan for boards on how to create systems and environments that support whistleblowing.
“Whistleblowing is a very contentious topic. If it helps to increase profits or prevent financial loss, whistleblowing is praised and applauded but if it exposes other kinds of deficiencies it is often scorned," said Elizabeth Richard, ICAEW’s head of corporate governance. "This separation needs to stop. Whistleblowing offers companies a chance to get honest feedback which is not corrupted by self-interest or personal motivations and it should be seen as an opportunity for improvement – irrespective of the deficiency exposed.”
She added that, while directors cannot be aware of all operational details of the companies they lead, they are expected to ensure that problems are identified so that they can be dealt with. It should therefore be in the directors’ and senior managers’ interest for whistleblowing to be a key tool towards effective management and strong corporate governance. "But there needs to be a supportive environment and operational system in place that encourages employees to speak up about deficiencies and problems they observe without fear of potential consequences,“ she said.
This article was first published in April 2019.