The Consumer Financial Protection Bureau has recently raised concerns about broad company confidentiality agreements potentially intimidating employees from reporting suspected or unlawful actions by their employers.
While opinions on this issue vary, it does highlight the opportunity to review your company’s confidentiality agreements to ensure employees are not restricted from reporting wrongdoings to government agencies. Rather than debate confidentiality agreements, it is even more relevant to understand why having a whistleblower policy is a sound business practice and its importance in establishing and maintaining a robust compliance program.
Whistleblowing involves reporting misconduct, illegal activities, or other wrongdoings within an organization. These reports can cover illegal activities, financial mismanagement, harassment, or safety violations. While exposing your company to potential negative publicity may seem counterintuitive, fostering a company culture that encourages a ‘see something, say something’ approach and prioritizes compliance is crucial to an organization’s reputation. Encouraging employees to speak up about potential compliance or ethical issues gives a proactive advantage to your organization. Open communication serves as an early warning system, allowing organizations to address potential problems or vulnerabilities before they escalate into more significant issues. This reporting can protect your company from legal, financial, or reputational risks.
Establishing a culture of compliance can take years, but once in place, it can be easily maintained if properly nurtured. A culture of compliance starts with top management engagement and is shared with every employee in the organization. Organizations with an open-door policy empower employees to share concerns, which can prevent future misconduct and escalating problems from the onset. Addressing issues internally can make employees feel valued, promoting a culture of compliance and sending a powerful message that ethical behavior is encouraged and a core value. This, in turn, can enhance employee loyalty to the company.
Implementing a Whistleblower Policy
Define the Purpose of the Policy
Identify What Types of Concerns Should Be Raised
Employees should be encouraged to report:
- Violations of any law or regulation.
- Activities not in line with company policies or codes of conduct.
- Incorrect financial reporting or misuse of funds.
- Improper conduct.
- Dangers to public safety or health.
Identify Who to Approach with Concerns
List the management team members designated to handle concerns. This may include their direct manager or specific individuals depending on the nature of the concern—be it legal, financial, business or employment-related.
Approach with Kindness and Empathy
Protect Confidentiality
Provide Evidence
Outline the Investigation Process
Prevent Retaliation
Address concerns of retaliation from the company. Monitor for retaliation against employees, considering the rights of those coming forward and those who are the subject of the incident. Document the steps and consider any risk of interference in an investigation, ensuring methodical and fair measures are in place to prevent it.
Keep Everyone Updated on the Investigation
Record Keeping
Policies and Training
Ensure your company has adequate policies and procedures to address compliance and that all employees know where to access them. Encourage employees to ask questions and provide training on why processes are done a certain way. Ensure employees understand that certain actions could violate laws or company policies, so it’s helpful for everyone to be informed.
Implementing a whistleblower policy is a proactive, best-in-class measure that helps create a culture prioritizing open communication. It sets up a systematic process to address problems before they become bigger issues, fostering a healthier, more compliant organization.
