A whistleblower is a person who reports any misconduct and unethical practices to the people who have the power to take some corrective action against it. Some of the malpractices are violation of a law, rule or regulation, fraud, corruption, etc… Whistleblowing is a practice that is widely encouraged by all firms and the governments.
The Sarbanes - Oxley Act of 2002 recognizes whistleblowers and gives the private sector whistleblowers protection if they disclose any malpractice that may affect the stock price of the firms that are publicly traded. The salient features of this act are:
• Whistleblowers are protected from any form of discrimination or harassment
• Alleged harassment cases would be investigated and hearings would be processed
• Whistleblower has a right to jury trial in a US District Court if no administrative ruling is given in __ days
• Attorney fees and damages are paid for
• Retaliation leads to criminal felony penalty
• An audit committee is required to develop the complaint procedure
All claims are filed by the Department of Labor (DOL) within __ days of the event that has allegedly occurred. The DOL then starts an investigative procedure and temporary relief might be provided to the whistleblower.
The main objectives of a Whistleblowing program are to encourage ethical practices in a firm and to curtail any violations of rules and regulations that may occur, to ensure that a firm undergoes minimal damage in the case of any malpractice, and get it through to the employees that the firm is strict about its ethical policies and security. There are many obstacles to Whistleblowing that a firm might face, such as, distrust in the internal system of the organization, employee reluctance to participate in such risky activities, and fear of alienation and retaliation.
There are some steps that the firm can take in order to build a Whistleblowing culture. The first step is to create a strong policy against unethical practices. There must be processes in place so that employees can report anything fishy that might be happening in the firm. These processes must be clearly communicated to every employee in the organization. The top management must fully support this initiative for it to have some credibility. All allegations must be followed up no matter how unimportant they might sound. The magnitude of the consequences must be kept in mind while considering the allegations. Also must be considered how probable is the act likely to occur and affect the firm. One thing that the firm can do to encourage Whistleblowing is to have a workshop on it. Employees should be encouraged to work out policies on their own and also identify a set of practices that maybe termed unethical. This will give them a greater sense of identification with the firm.