The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Monday, September 12, 2016

Strategic CSR - Whistleblowing

The article in the url below reminds us of the potential unintended consequences of good intentions. The article reports research recently published in an accounting journal that suggests that when firms promote anti-retaliation protections in order to encourage the reporting of ethics and compliance transgressions, it can actually have an effect that is opposite to what was intended:
 
"Anti-retaliation protections are the bedrock of whistleblower rights, but explicit reminders that employees don't have to fear for their jobs when reporting concerns may do more harm than good, a recent study found."
 
In particular:
 
"The study … found that in a group of students qualified as staff-level auditors, people were about 17% more likely to report information if explicit anti-retaliation references were not made in a scenario involving corporate conduct violations."
 
The reason, it is argued, is that reminding people they are protected from retaliation actually serves primarily to emphasize that reporting transgressions is inherently risky. In other words, by reminding people they cannot be fired if they report, you are actually reminding them that there is a risk they might be fired (and that they would then have to go to the trouble of suing their employer in order to be reinstated and compensated). As the authors of the research conclude:
 
"To our knowledge, this study is the first to demonstrate that promoting explicit whistleblower protections can have the unintended consequence of actually inhibiting reporting of misconduct by intensifying the perceived risk of retaliation. As such, our results have important implications for the promotion of whistleblower reporting in audit settings."
 
But what exactly are those implications? Are we suggesting that firms should not reassure their employees they want them to come forward to report transgressions and have put in place specific protections as proof of those intentions? Should firms not even mention that they want transgressions to be reported, or set-up reporting tools (like an anonymous helpline), and just hope that whistleblowers will come forward as a result of their own volition?
 
Hmmmmmm, humans are difficult beings to work with (and to try and manipulate).
 
Take care
David
 
 
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Anti-retaliation Reminders May Deter Whistleblowing
By Stephen Dockery
March 23, 2016
The Wall Street Journal