What is whistleblowing?
Whistleblowing is where an employee exposes the dishonest, illegal, fraudulent or dangerous practices of their employer. Whistleblowing can occur internally – to managers or the CEO, for example – or externally to the police, government regulators or the media.
The wrongdoing doesn't have to be that serious – a whistleblowing employee could be worried about a colleague abusing sick leave, small scale theft, exploiting the company credit card for personal use and other 'minor' issues.
The dangers of encouraging whistleblowing
The cons of encouraging whistleblowing at work include the potential for reputational damage to the business, particularly if the exposure occurs in the public domain. Any kind of wrongdoing within your business will, if exposed publicly, reflect badly on your integrity and your brand, and may harm your profitability.
Whistleblowing can also have financial impacts in terms of costly court cases, fines imposed by regulators, or compensation payouts, depending on the nature of the activity exposed.
In some cases, it could even open up staff or managers to criminal proceedings. All of this is likely to seriously damage the company’s reputation and employee morale.
The advantages of whistleblowing
There are also pros to encouraging whistleblowing. The negative practices exposed by the whistleblower could've become even more costly and damaging had they been left undetected. Importantly, a corporate culture that supports employees in voicing their concerns without fear of reprisal is less likely to suffer from external whistleblowing. As a result, it'll be better positioned to manage and contain the situation internally.
Not sure how to approach the issue? The best policies tend to be those which actively encourage internal whistleblowing, while at the same time removing any need for employees to contact external regulators or the media directly. Some companies even offer financial rewards for employees who uncover fraud and report it internally.