We recently released our 2014 Global Ethics Benchmarking Report, an annual report that contains a thorough analysis of the previous five years of whistleblower hotline reporting data, that gives the market insight into emerging trends. Sadly, one of the unfortunate trends we found in 2013 was retaliation. For the second straight year, retaliation increased as a factor in reports. The leading type of retaliation is found within the Retaliation for Whistleblowers category, representing 57% of all retaliation cases. And, we aren’t the only ones to report high rates of retaliation; the 2013 National Business Ethics Survey (NBES) uncovered similar results, with 21% of reporters saying they faced some form of retribution. To put it in perspective, that’s 6.2 million Americans. This number is largely unchanged from the previous year’s 22%. (In 2007 it was only 12%.)
Why Retaliation Is Dangerous
Well, 1. It’s illegal. As stated in SOX section 1107:
“Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense, shall be fined under this title or imprisoned not more than 10 years, or both.”
And under Dodd Frank Section 922’s Whistleblower Retaliation Protections:
“In general – no employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower…”
The same sentiments are addressed in Section 21F of the Securities Exchange Act of 1934.
So, we know why it’s wrong – retaliation is illegal. But not only is it wrong, it’s also flat out bad for your organization. According to Ethics Resource Center’s report, “Retaliation In The Workplace: Why It Matters And What Companies Can Do About It,” effects of retaliation include: “blocking open communication, driving out good workers to jobs in a safer environment, and undermining ethics cultures by reducing the odds workers will report misconduct.” In addition to that, the 2013 NBES survey states that 34% of employees said they have chosen not to report for fear of retaliation from leadership. If employees are afraid to report internally, companies will lose the opportunity to solve issues before being exposed to public scrutiny or intervention by law enforcement.
What Is Considered Retaliation?
The descriptions of retaliation outlined in the Dodd-Frank Whistleblower Retaliation Protections provide a good outline for what constitutes retaliation, but they certainly can’t and don’t cover all possible scenarios. The 2014 SCCE CEI session, “Preventing Retaliation: Ten Solid Steps to Create A Speak Up Culture,” provided further insights into what kinds of actions count as retaliation, including:
1. Subtle Retaliation: “Mildred, I don’t want you to speak in my meetings anymore, because you brought up a complaint.”
2. Failing to Honor Anonymity: If an employee wants to report anonymously and you bring up their name… that is retaliation!
3. Change of Work Responsibilities
4. Exclusion from Desirable Assignments
These examples show that retaliation isn’t always glaringly obvious. As stated in the SCCE session, “We are lowering the bar on what counts as retaliation – it’s not just being fired, demoted, etc. – it could be making weird faces at someone, making you feel demeaned.” The takeaway here is that we need to be more aware than ever, because retaliation is many things to many different people.
The Cost Of Corporate Retaliation
1. WRPS – $200 Thousand
Shelley Doss, former environmental compliance specialist for WRPS, was fired in October of 2011 after “raising concerns to her supervisors about nuclear and environment safety, permit and record-keeping violations”. OSHA has ordered that WRPS pay Doss $200 thousand for attorney’s fees, interest, back pay and damages. Read more.
2. M.K. Battery- $990 Thousand +
Former M.K. Battery sales representative, David McIntosh, was fired after reporting to the Department of Defense that M.K. Battery had failed to disclose critical product information to the Army. After selling batteries to the army for use in their Humvees, M.K. Battery changed the manufacturing process around the batteries, cutting their lifespan in half. McIntosh has received $990 thousand for reporting the misconduct and is on track to receive more for his termination. Read more.
3. Chicago State University – $3 Million
After firing senior legal counsel, James Crowley, for reporting misconduct by top university officials in 2010, Chicago State University was ordered by a Cook County judge to pay Crowley 3 million dollars for attorney’s fees, reinstatement, front pay, interest, double back pay and punitive damages. The court also ordered the school to give Crowley his job back or pay further financial penalties. Read more.
Implementing Robust Anti-Retaliation Provisions
Preventing retaliation starts with having a culture that values and encourages open communication. Your anti-retaliation policies should be clear and concise, but not too concise so as to give the impression that the topic is low priority. During an SCCE CEI session I learned, for example, it’s better to stay away from one line policies like: “We do not tolerate any form of retaliation.” Short anti-retaliation policies could give employees the impression that anti-retaliation isn’t important to the company, even if it is.
Likewise, the location of your anti-retaliation policies also impacts perceptions of importance. Featuring anti-retaliation policies at the front of your Code visually tells employees: “This is important; we want to address it first and foremost.” By the same token, placing anti-retaliation policies at the end of your Code could have the opposite effect – giving employees the impression that it is an afterthought and not very important to the company.
Mid-tier management is a critical area to focus on in terms of culture and detecting misconduct – CEB’s Q1 2014 Edition of Risk Intelligence Quarterly reveals that 70% of employees go to a direct manager to report (troubling when you consider that only 58% of managers feel that they are prepared to handle reports of misconduct). It’s therefore vital that you train your mid-tier managers to receive reports of misconduct from employees and help communicate the anti-retaliation message throughout the organization. This training should cover all aspects of taking a report, interviewing the employee for as many details as possible and submitting the information via the correct channels. This doesn’t mean you don’t need an anonymous whistleblower hotline; to the contrary, your managers should be trained to utilize the leadership web forms that are part of your whistleblower program to report the misconduct that is brought to their attention. This has the added benefit of allowing you to track your reporting program as a whole, rather than just the calls that come in through the hotline, giving you a more comprehensive picture.
Retaliation is illegal, negatively impacts corporate culture and is extremely costly. Are you confident in your anti-retaliation measures or is it time to re-evaluate and implement new practices to ensure you are promoting a positive work environment?
by Jillian Heim