Breaking the rules
Is breaking the rules a crucial skill? We examine how the people who have made their own rules also significantly shaped the world of business.
by Ben Knight
Read more about the topic "Breaking the rules"
Speaking out can be terrifying. It can also save an organization – which is why a growing number of companies are now taking lessons from those who've put their own reputations on the line.
Wendy Addison's professional life was going well in 2001. She was the international treasurer at a major South African gym operator, LeisureNet – a job that she loved and that had seen her rise to the company's board. A year later, she found herself sitting on a cardboard box outside the railway station in Kingston-upon-Thames in London, 10,000 kilometers from home, begging for money while her son was waiting in a squatted house.
The downfall came after she reported that two senior LeisureNet executives were committing major fraud. She was sacked and moved to the UK only to find that her actions had left her virtually blacklisted from the whole profession of accountancy. It took 11 years of legal struggle for the two executives to be jailed – a period that Addison mostly spent in poverty and isolation while LeisureNet was liquidated as part of an ugly episode often called "South Africa's Enron." As with many whistleblowers, the destitution was mental as well as financial. She recalls the moment when she realized that colleagues who had also known about the fraud failed to support her: "Psychologists call this a 'social death,'" Addison says now. A doctor in the US put it in more melodramatic words: "You know, Wendy," he told her, "people like you are destined to wander in the desert alone until you die." Looking back, she remembers: "That was an awful thing to say, but it was so powerful because I knew what he was talking about."
A lot has changed since that disturbing doctor's visit. Whistleblowers like Edward Snowden, Chelsea Manning and Christopher Wylie have changed the public attitude about reporting abuses of power and subtle but fundamental shifts are now happening in the business world. Part of this is down to legal prodding. Several European countries have followed the lead taken by the United States in 1989 and introduced their own whistleblower protection laws, including France in 2016. That same year, the UK's Financial Conduct Authority (FCA) issued new whistleblowing guidelines and created a central reporting hotline. Indeed, the European Commission itself finally gave human rights lawyers a reason to celebrate in 2018 by proposing EU-wide standards to protect whistleblowers from reprisals. And other measures have become more sophisticated. The FCA has also mandated that every financial institution with over $325 million in assets must appoint a senior manager as "whistleblowers' champion."
A small industry has emerged that offers the many companies now starting to go beyond their legal requirements ways to create anonymous reporting channels and administer cases. Karin Henriksson is a founding partner at one such firm, Stockholm-based WhistleB, which offers "whistleblowing plans" from a buffet of options ranging from a standard anonymous reporting system to case management and expert support services. When WhistleB was founded in 2011, companies would often ask whether all this was really necessary. "We never get that question anymore," Henriksson says. She thinks companies are waking up to the advantages of whistleblower services. Her customer studies show that nearly half of the reports relate to financial crimes – fraud, theft, bribery and corruption – and the Association of Certified Fraud Examiners (ACFE) has found that 40% of all fraud-related cases are first reported by whistleblowers. "The problem with internal audits is that you cannot really detect things like that," says Henriksson.
For Marianna Fotaki, professor of business ethics at Warwick Business School in the UK, there is no alternative. "You need to have measures within an organization to encourage people who have witnessed wrongdoing to come forward," she says. For those reasons, anonymous channels like those that WhistleB installs can be very useful, she says, as long as they are internal but still independent – and transparent. "Ideally, the person being reported to should be outside the management structure," she says. "And the channel should be easy to use and people in the company should know what happens to the disclosure, and what happens to the person who discloses."
The issues surrounding whistleblowing, however, go much deeper than this – they reach, if you want to go that far, to fundamental questions about human psychology and social structure. Whistleblowing violates a human instinct for group loyalty, one reason why whistleblowers are often abandoned by their co-workers and suffer reprisals from their superiors. "There is a need for a bigger societal shift to understand that whistleblowers should be able to speak up without being either lionized or undermined," says Fotaki. The ultimate aim is to create a culture in which whistleblowing, and the sophisticated measures being put in place to enable it, are no longer necessary at all.
This new awareness is one of the reasons why Addison did not end up dying in a desert. Instead she now runs a company in the UK, SpeakOut SpeakUp, which advises firms that want to provide better conditions for whistleblowers – or rather, conditions in which whistleblowing is not necessary in the first place, something she calls having "courageous conversations." It was hard work. "It took years and years to even get companies to speak to me," she says. "The fact that I'm getting a foot in the door, as a whistleblower, signals to me that companies are starting to engage. Even two years ago, she remembers, "they would actually say, 'why would I want Edward Snowden in my organization?' It's been a really hard battle to convince them that I have practical, objective intentions." Addison supports whistleblowers too, either with practical advice or psychological counseling. There are bewildering layers of legal conundrums to resolve: What law, for instance, applies to a British citizen working in Singapore for a company that is listed on the New York Stock Exchange?
Then there are the moral dilemmas and the stress involved with being a whistleblower, which is still very real. "What I'm seeing is something I call 'pretaliation,'" says Addison. "Where they'll have a report, maybe from a hotline or innocuously through a conversation, and then the organization attempts to shut that down before the regulators get wind of it – and the way they do that is provide some kind of settlement with the employee – and part of that is non-disclosure." That leaves the whistleblower with an awful question to answer. "Do they take the payment, leave the company and just let the wrongdoing go on? It's a heavy choice to make, especially when life has already become unbearable."
The crucial challenge remains the same: creating a new culture of trust and transparency. Whistleblower support services are of no use if employees don't trust them or don't know about them. "This is not like a clock that needs fixing or a box that needs ticking," says Addison. "You're asking people to do something really, really difficult. It's not easy even to approach a hotline. A hotline seems very ambiguous and gray: Is it really encrypted? Does my boss really not get to see the report? Will I really remain anonymous? Am I able to use my office computer?"
After exposing the scandal that became known as "South Africa's Enron," Wendy Addison received anonymous death threats that prompted her move to the UK. Finding herself virtually blacklisted in her field, she eventually founded SpeakOut SpeakUp to advocate for what she calls "courageous conversations."
Equally important is training employers to listen to reports of wrongdoing. As Addison describes it, that can be a deep psychological challenge. "It's very difficult to listen to bad news, especially when you've got skin in the game and emotions enter the room," she says. There is also something she calls "optimism bias" – the fact that many managers are convinced, based on internal surveys, that their employees would report wrongdoing if they found it. "Most of us believe that we're good moral people, but we know from whistleblower stats that under 50% of people actually do report," says Addison.
Morality is only part of it – it's also simply a matter of responsibility. "Whistleblowers should not be seen as heroes or martyrs," says Fotaki. "That's good for the movies, but the mundane reality is quite different: These are just people trying to do their job." The recent #MeToo movement has also helped change attitudes to whistleblowing. WhistleB reported in June 2018 that the number of reports from its customers increased fivefold between the fourth quarters of 2016 and 2017, a spike which Henriksson puts down to a new attitude to reporting abuse of power. In sensitive matters like this, companies often have to enter into a dialogue with the whistleblowers to draw out all the information – which is where anonymity can be really useful. "Sometimes, like with child labor, these are also issues where people are a bit ashamed that they know about it," Henriksson says.
Anna Romberg, an ethics and compliance officer at Cargotec, a Finnish cargo handling solutions and services company, is one of WhistleB's clients. She has also noticed that some issues are still best addressed by providing an anonymous reporting line. "The tool has been instrumental, especially when it comes to very sensitive matters, such as discrimination and harassment," says Romberg. In her career at Cargotec and elsewhere, she has been involved in cases where fraud schemes have been revealed by whistleblowers. But Romberg is keen to emphasize that "the cases that lead to the most tangible benefits for the comp-any, cases with great financial implications, are usually cases where an employee speaks up and makes contact directly with my team. The anonymous cases may be more challenging to investigate, especially if the person with information about the case is hesitant to meet and provide more information."
There are benefits to anonymity, however. "The whistleblower system, in its structure, is very democratic," says Henriksson. "You can be a worker in a factory in Bangladesh and you can be the CFO at the headquarters in Frankfurt and you have the same rights to use this channel if you feel there is a deviation either to your own ethical code or that of your company." It has taken a while for this to sink in. In one company WhistleB provided its services to, middle management levels were very hesitant about introducing a new whistleblowing service, Henriksson recalls. "But then when we had implemented it and everyone had understood what it was all about, it was something that people were extremely proud of," she says. "Some of the companies are actually treating the whistleblowers internally as heroes now." On average, WhistleB's tools are used once a year per 400 employees, which the company considers a relatively healthy rate. "If you detect wrongdoing at an early stage, you strengthen your brand and you can work preventively. And if you have a whistleblowing system, you can avoid the wrongdoing in the first place," she said.
Should attitudes change too much, of course, the opposite problem could arise: that companies are actively encouraging people to report wrongdoing openly. "That would be a problem, but a very positive one," says Henriksson, smiling. "That would actually be the ultimate goal, wouldn't it? Then I would have to do something else." Addison is also optimistic that the narrative is changing in business. "There are still stories like mine," she says. "By the time whistleblowers approach me, they're already in the quagmire – I get whistleblowers from all over the world connecting with me who are living in their cars, who are separated from their families because of jurisdiction laws, and they're having a pretty miserable time of it. But I also see corporations starting to handle what they perceive to be very hot potatoes."
Shahmir Sanni blew the whistle on Vote Leave's Brexit campaign after discovering spending irregularities. The UK's Electoral Commission found Vote Leave guilty, but Sanni's actions have come at significant personal cost. Here's his story:
"There's a plethora of obstacles that make whistleblowing a significantly traumatic experience. My own journey was a significant blow financially, professionally, politically and socially. My revelations not only got me fired from my workplace – which was not the organization I was whistleblowing – but also outed as a means to silence me.
There's no way to prepare because each situation is unique. Your gender, race, social class or disability all can play a role in how the public perceives you and how you might be character assassinated. The media is either your best friend or your worst enemy. They make or break your story. The most traumatic experience I found was being silenced. A lack of coverage can be the worst blow. It makes you more vulnerable to the organization you are whistle-blowing – and their supporters.
Therapy helps tackle the trauma but many whistle-blowers spend years dealing with the severity of their experience. So my advice to future whistleblowers would be to ensure they have a solid group of friends and family members to fall back on. To ensure that the journalists they speak to are genuine and to always have their mind focused on the goal, never on the attention.
My depression and anxiety was triggered by whistleblowing. I found it difficult to adjust to the onslaught of attacks on my integrity, race, religion, sexuality and beliefs from all sides of the spectrum. But if you believe in the end goal of justice and retribution then, at least for me, it's a risk worth taking."
Is breaking the rules a crucial skill? We examine how the people who have made their own rules also significantly shaped the world of business.
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