The Harvard Business Review recently published research about whistleblowers in the United States. It led to the conclusion that whistleblowers, while they may often herald corporate disaster, are actually indicative of healthy companies.
The researchers had access to more than 1.2 million records of internal reports made by employees of U.S. public companies. It found that the more employees used their internal whistleblowing hotlines, the fewer lawsuits their companies would actually face and the less money those companies must pay out in settlements.
The report also looked at the types of firms in which employees most actively use internal whistleblower hotlines. Firms that had more powerful management or very fast growth were less likely to use their internal reporting systems. However, the firms that were active in using their systems tended to be more profitable than those that were less active. In addition, companies that were active with those systems were generally more capable of finding and addressing internal issues before litigation became necessary or likely.
What do these results mean?
Many companies tend to misuse or ignore their whistleblower hotlines — or fear what they will discover if they encourage active use of internal reporting systems. This study, however, indicates that active use of such systems is highly beneficial to a business’s operation. More internal reports are not necessarily indicative of widespread troubles within a company. It could simply mean employees have more trust in their management and are comfortable using the communication channels available to them.
To learn more about what it means to expose illegal behavior and the protections the federal government affords to corporate whistleblowers, speak with a skilled whistleblower lawyer at Whistleblower Law for Managers.