Corporate commitment to speak up cultures is suffering. The Ethics and Compliance Initiative's recent Global National Business Ethics Survey (available HERE) contained a critical finding – corporate instances of retaliation against employee for raising concerns doubled in the last five years.
In the 2013 survey, 22 percent of respondents reported instances of retaliation against employees. This number increased to an astounding 44 percent of respondents in the 2018 survey. This is an astonishing result, especially when you consider all of the positive developments over the last five years in the ethics and compliance field.
My question is basic – are companies really interested in hearing and responding to employee concerns?
The deterioration in this basic relationship between company leadership and employees will undermine any chance a company may have to develop an ethical culture. It goes without saying, but employees will not trust their companies if there is no real commitment to listen to and address their concerns.
An additional finding on this issue in the ECI report should be addressed as well – most attempts to retaliate against an employee occurred in the three-week period following the communications of the concern. Companies have to mindful of the period of time shortly after a manager or executive learns of a specific concern to prevent any retaliation against the employee.
The significant increase in retaliation against employees who raise concerns is disturbing and runs counter to corporate progress made in elevating culture and ethics. The message behind retaliation is devastatingly clear – do not rock the boat, do not complain, and keep your mouth shut or else you will suffer. Unfortunately, companies that do not listen to their employees are bound to suffer serious harm from misconduct or disasters that could have been avoided had they encouraged employees to raise concerns.
The value of maintaining a speak up culture is unquestionable. Companies that listen to their employees avoid safety, economic and serious harms, and promote a positive culture, leading to the sustainable growth and improved performance.
In the face of this obvious contradiction, forward-thinking companies need to reexamine a possible solution – an independent ombudsman. My friend and mentor, Judge Stanley Sporkin served for years as the BP Ombudsman and has frequently touted the benefits of such a program.
An independent ombudsman, if properly established, can provide an important avenue for employee concerns. The commitment to an independent ombudsman can result in trust between the company's leaders and its employees. It is a costly step but one that can bring significant results, especially in those industries subject to incentivized whistleblowers.
An independent ombudsman, however, has to operate with backing from senior leadership and the company's board. If the ombudsman identifies issues for remediation, the company cannot fight nor ignore the recommendations. The ombudsman's credibility depends on his/her ability to resolve issues and mandate changes.
An ombudsman's ability to promote a speak up culture requires that he/she have adequate authority and resources to investigate specific issues, and to promote its function of responding to employee concerns in a timely and effective manner. As the ombudsman gains credibility, employees will increase reporting of concerns with the expectation that they will be heard, investigated and addressed. This is a vital communications loop that has to be promoted as part of a speak up culture.
It is unfortunate that corporate governance in the United States has reached the point where companies can no longer meet basic requirements for a speak up culture without establishing a separate and independent mechanism. The trend over the last few years is unmistakable – retaliation against employees who report concerns continues to increase despite corporate awareness of the dangers of such behavior to a company's culture. The facts are the facts, and change is needed.
Corporate directors and officers owe a fiduciary duty to a corporation's shareholders (the corporation's true owners) and they owe duties of honest dealing to the investing public and consumers in connection with the corporation's regulatory filings and public statements. A prosecutor's duty to enforce the law requires the investigation and prosecution of criminal wrongdoing if it is discovered.
As a former prosecutor, you should recognize the above narrative, taken directly from Title 9 of the U.S.Attorneys' Manual. As a victim's advocate, our justice system has failed the American people miserably, by demonstrating more compassion, and perhaps "passion," for the corporate criminal than for the victims.
Corporate governance as we once knew no longer exists in today's business culture. Until the enforcers start putting corporate thieves in prison for their wrongdoing, we will not see a change in corporate attitudes. The greatest problem we have today are the prosecution agreements that allow criminals to go free while share-holders pay the costs for their wrongdoing.
Unfortunately, the victims of financial fraud will continue to be victims, and corporate crooks will continue to be crooks, because lobbyists continue to remain well entrenched within the policies of both Democrats and Republicans. Change will require Congressional efforts, and lobbyists control their votes.