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Corporate Governance

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Question 4

A whistleblower is often an individual, an employee, who discloses information regarding

activities within public or private entities that may be termed fraudulent, illegal, unsafe, or

unethical. Whistleblowers often have two internal and external channels to report such

occurrences. Many whistleblowers commonly use internal channels to make reports through their

supervisors, the compliance team, or the human resource department. Other bold whistleblowers

may also report the allegations through external entities, including law enforcement departments,

the government, or media houses (Cheema et al., 2021). however, whistleblowers experience

retaliation from other employees and even the corporate management team. They often pay

enormous prices for reporting fraudulent, illegal, or unethical activities to organizations.

Whistleblowers often experience retaliation through termination from employment, bullying

within the organization premises, prevention of task completion, increase in workloads, increase

in working hours with minimal pay, denial of promotions, and denial of essential employment

benefits. As a way of preventing such retaliation against whistleblowers, different countries have

implemented various rules and regulations to protect whistleblowers.

Whistleblowers play a vital role in corporate governance, which benefits organizations and

other employees in numerous ways. Whistleblowers help develop a healthy culture of

accountability and transparency within the organizations. Employees working in organizations

that adhere to the set code of ethical conduct often feel valued, respected and proud to be part of

such organizations. However, when anything interferes with that feeling, employers become

worried and frustrated as, in many cases, such activities may impact their organizational goals. In

organizations with a healthy culture, employees who value and maintain high ethical standards

will often feel safe and confident reporting any activity, be it a fellow employee's unethical
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behavior or a manager's illegal activity. Creating a healthy workplace culture that embraces

accountability and transparency gives employees confidence that the top organizational

management will address the emerging issues and ascertain that the healthy culture values are

maintained (Cheema et al., 2021). Whistleblowers play a role in eliminating mistrust and

suspicion in workplaces by reporting unacceptable behaviors, which in many cases may go

unreported, thus causing damage to other employees and the organization in general.

Additionally, whistleblowers play a significant role in preserving and protecting the

organization's long-term interests. Whistleblowers develop an effective whistleblowing process

that protects the organization when under scrutiny. Offering free channels to report illegal and

unethical conduct provides an excellent opportunity to handle challenging situations before

developing into more complex issues (Lombard et al., 2020). Whistleblowers ensure that the

organization follows up on the reports made, illustrating its commitment to mitigating any

misconduct, thus upholding high values and ensuring all activities undertaken comply with the

law. Whistleblowers ensure that organizations minimize the risk of legal exposure by providing

that the organization has a company policy that allows investigations on any violations to be

conducted. They will ensure that the organizational leaders conduct internal balances and checks

to increase the company's safety and its employees. Through this, whistleblowers will keep the

company on its toes to ensure that it stays on the good books of the government, the internal and

external auditors, and other compliance authorities. Therefore, the company maintains high trust

among its primary stakeholders, investors, and customers.

Whistleblowers offer the company opportunities to track all its operations. The

organizational leaders may be challenged in monitoring every process that occurs within the

organization. Still, through whistleblowers, they may obtain a clear report of what goes on at
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every level of the organization. The increase or decrease in whistleblowers may help the

management track the organization's performance as an increase in whistleblowing may illustrate

an inefficiency in management skills or more awareness of the activities taking place in the

organization. On the contrary, a decrease may indicate failure of success in the organization

being compliant and adhering to all the ethical codes of conduct (Lombard et al., 2020). The

company can conduct thorough investigations to understand the reasons for the decrease or

increase in whistleblowing encounters. Therefore, whistleblowers may indirectly play a

significant role in the decision-making process in the company as it decides on the most

appropriate methods to address the issues that arise due to malpractices and unethical behavior

among the employees and management. It also helps make decisions on better employee

treatment while providing a safe space to report any irregularities without feeling threatened.

Despite being a risky activity, whistleblowing plays an essential role in helping better the

organization's performance and preventing any illegal and unethical practices. It keeps every

employee in check regardless of their position within the organization as they are afraid of might

be reported for their malpractices. It helps maintain a good reputation for the company, thus

attracting better opportunities that increase the overall productivity and profitability while

offering employees a favorable work environment.

References

Cheema, M., Munir, R., & Su, S. (2021). Corporate Governance and Whistleblowing; Corporate

Culture and Employee Behaviour (3rd ed.). Taylor & Francis.

Lombard, S., Brand, V., & Austin, J. (2020). Corporate Whistleblowing Regulation: Theory,

Practice, and Design. Springer Nature.