Why Do Companies Punish Whistleblowers?

Last Updated Jul 14, 2010 6:15 AM EDT

You spot your company doing something illegal. You document the problem and take it to your manager and Human Resources department and they should support you, protect you and make sure the problem is fixed. There is a patchwork of laws surrounding this issue and they vary from state to state. But, of course, fixing the problem and protecting the whistleblower falls under the category of "right thing to do," no matter what state you live in.

The job of the Human Resources Department is to help the business be successful. By encouraging people to come forward with evidence of serious problems, the company can correct small problems before they become big problems that can result in serious legal and financial consequences for the company.

Apparently, someone forgot to tell certain Pharmaceutical Companies this. My BNET Colleage Jim Edwards writes:
In a string of recent whistleblower cases a common theme has been the worried or disgruntled executive reporting wrongdoing to management, giving them the chance to fix the problem. Instead, management chose to harass or fire the staffer, thus virtually guaranteeing that a lawsuit would be filed.
I want to bang my head and say, "Why? What are you thinking? This exposes your company to lawsuits and fines and since you're pharma, illegal activities can actually kill people. WHHHHYYYY?" But, I'm a rational person and know why. It's not all about greed, either. (Although that undoubtedly plays a part.) Here are some of the non-obvious reasons why we punish instead of protecting.

Denial. It's a powerful thing. And there are rational reasons for simply denying that what the person is telling you is not true.

In the first place, you have no idea how often employees come forward complaining about "illegal" behavior that they see. My e-mail inbox is full of people wanting to know if it is "legal" for their boss to say, "nice dress," ask where they are going on vacation, require overtime, give a bad (but true) reference or any number of things that are absolutely legal.

It can make you jaded after a while. When everyone is knocking on your door claiming illegal activity is going on, and it's not, the temptation is to assume that everyone complaining is wrong.

Fear. No one wants to be the bearer of bad news. Do you want to waltz into the CEO's office and tell him your sales reps have been selling pharmaceutical products off-label? Or that your expensive legal department approved language that violates several laws? No? Well, neither does your boss. it's easier to claim the whistleblower is the irrational one and causing disharmony amongst the ranks. You rarely need high level approval to fire a low level employee, but you sure as heck are going to have to tell the big boss in order to fix a systemic problem.

Profits. So, your drug is being marketed illegally. Sales reps are pushing an off-label use. But, it's selling well. If you stop this push, it will hurt sales, which will hurt the business, which may hurt your bonus, or worse, your job. So, if we can just keep this darn whistleblower quiet, or discredit him, life will be just fine.

Sure, no problem. Except, every day you continue to participate in illegal activities increases the chances you'll get busted. Especially if you harass the whistleblower. Most likely, this person will not only report your bad behavior to the relevant government agency, he'll initiate a lawsuit as well. The end result can be a lot more money lost then gained.

Misguided belief that it's not a big deal. So what if we're violating a law? People break the speed limit every day. What's the big deal? So, when someone comes forward, everyone says, "yeah, so what?" And then when that person complains again, people start to see the person as the problem, rather than the problem itself.

Forgetting about the big picture. Many people are so focused on their short term or departmental goals that they forget there is an entire company out there that will (hopefully) still be operating in 10 years. Focusing only on what brings in money RIGHT NOW causes you to neglect the fact that violation of laws may bring profits in the short run but will cause bigger problems in the long run. Sometimes you have to take the pain right now in order to preserve profits in the future.

Of course, these are just a few of the reasons Whistleblowers aren't taken seriously and are even punished. It should not be that way. Every company should have an established process for reporting and investigating problems. And, every employee should know how to report and have the reassurance that they will be listened to and not punished.

Communication lines should be kept open. If someone reports an activity that is within guidelines and laws, there should be follow up with that person to explain why. If a report is made that proves to be problematic, again, you should follow up and report back on how things are changing. Never ignore. That just makes people frustrated and angry.

And if you spot something going on that shouldn't be? You report it. Don't let yourself be caught up in the above justifications. It's always important to do the right thing.

Photo by stevendepolo, Flicker cc 2.0

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