Managerial Social Responsibility

1. Managerial Social Responsibility Week 9 Whistle-blowing

2. Aims • To define ‘whistleblowing’ • To consider whether it is ever justified and, if so, in what circumstances • To consider what protections ought be afforded to whistleblowers • To consider whether organisations ought to have specific policies in this regard

3. Whistleblowing - definitions • Internal Whistle blowing – An employee discussing their ethical concerns with their superiors or colleagues. • External Whistle blowing - The voluntary release of non-public information, as an ethical protest, by a member or former member of an organisation to an appropriate audience outside the normal channels of communication regarding the illegal and/or unethical conduct in the organisation that is opposed to the public interest.

4. Elements of the definition • A whistleblower is a member or former member of an organisation and not an outsider • The information that is revealed by the whistleblower is non-public information and not already-known facts • The information concerns some significant misconduct by the organisation or its members

5. Elements of the definition • The information is revealed outside of the normal channels of corporate communication within an organisation • The information is revealed voluntarily and not by a legal mandate • The information is revealed as a ethical protest in order to correct some perceived wrong

6. Questions: • Does whistle-blowing conflict with the duty of loyalty that an employee automatically owes their employer? • Do employees ever have the negative Right to blow the whistle? • Do employees ever have an obligation to blow the whistle on organisational wrongdoing? • Is there ever a justification for whistle-blowing?

7. The Risks of Whistleblowing • There is no protection under Australian law for ‘private sector’ whistle-blowers – the risk of dismissal, injunctions, and actions for defamation

8. The Risks of Whistleblowing • EEOC data shows that 1 in 3 charges that are made by whistle-blowers will result in retaliation. • In 2011, 31% of whistle-blowers experienced physical attacks on their property. • Retaliation has increased by 89% since 2009, yet whistle-blowing has only increased by 12% in the same time period. • The biggest jump in retaliation of all employee levels has occurred amongst senior management. • The damages recovered by individuals claiming retaliation went past the $100 million mark for the first time in 2011. • Only 2% of whistle-blowers experience retaliation in companies with programs that have written standards, training, an in-house complaint process, and other resources that employees can draw upon.

9. The Duty of Loyalty • This is an argument against whistle-blowing: • it pits the duty of loyalty to the organisation against loyalty to the public interest • Duty of loyalty: • employees are agents of their employers and are obligated to work (as directed), to protect confidential information, and generally to act in the best interests of the employer

10. The Duty of Loyalty • Limits to the duty: • to act on the reasonable and lawful directions of the employer; the duty is limited to the scope of the employment • Question: if whistle-blowing is performed in the ‘best interests’ of the organisation, can it thereby be ‘disloyal’?

11. Justifications • Utilitarian Justification? • Will a particular act of whistle blowing generate the greatest good for the greatest number? • Kantian justification? • What maxim concerning whistle blowing will pass the Categorical Imperative? To whom do you owe your ‘duty’ is very important here in terms of defining your maxim!

12. Justifications • Rights justification? • Does the organisation have a negative Right to privacy? On the face of it: Yes • Can an employee’s negative Right to free speech (i.e. to blow the whistle) ever be more important than this? If a 3rd party’s negative Right is being violated: Yes • Justice justification? • Does whistle-blowing serve to make the worst off in society better off?

13. Whistle blowing…Your Right versus your Obligation • Whistle-blowing is a fact of modern corporate life. • Corporations can (and do) get things badly wrong • Examples include the Ford Pinto case; the NASA Challenger Disaster; Shell in Nigeria etc. • …there should be an opportunity for employees to tell others what is going on to prevent/minimise harm.

14. Your Right to Whistle blow • You are ethically justified in Whistle blowing if the following three conditions are met: • 1.The firm, through product or policy, will do serious and considerable harm to employees or public. • 2. The employee, upon discovering this potential/actual harm, reports it to their immediate supervisor and makes their ethical concern known. • 3. If the supervisor does nothing effective about the concern, the employee exhausts all other internal avenues of communication. • The whistle-blower now has the negative Rightto whistle-blow if they want to.

15. Your Obligation to Whistle blow • If the three conditions are accompanied by the following 2, then the decision-maker is ethically obligedto whistle-blow: • 4. The whistle blower must have, or have access to, documented evidence that would convince a reasonable and impartial person that the company’s product or policy will likely cause significant harm. • 5. The employee must have reason to believe that the benefit to the public of whistle-blowing will outweigh their potential detriment of going public.

16. Protection? • Given that ethically justified whistle-blowing benefits society • through the exposure of illegal activity, the identification and removal of avoidable harm, and general mismanagement • …and given the treatment handed out to whistle-blowers • The benefits of whistle-blowing can only be maximised if protections exist • Is this an ethical right that requires legal protection?

17. Private Sector Whistleblowing • Ethically justified whistle-blowing in the private sector is valuable to both society and the long-run interests of the organisation! • However, the risks to the whistle-blower are great, and the protections afforded them under the law are virtually non-existent • There is need for a voluntary set of policies and procedures to enable managers to address misconduct internally (i.e. maximise internal whistle-blowing) and to avoid embarrassing public disclosure • Managers must ensure that reports are properly investigated, action taken, and retaliation prevented • This will help affirm the organisation’s commitment to maintaining an ethical climate, and to learn about potentially hidden problems and take corrective action

18. Whistle Blowing Case Studies • Read the ‘Nurse’s Duty of Care’ case study • In your opinion, did Jean-Claude Ascot have the negative Right to blow the whistle? Or was he obliged to blow the whistle? • Justify your response in relation to the five criteria outlined in this lecture

19. Whistle Blowing Case Studies • The case of Nathan Moore’ case study • In your opinion, did Nathan Moore have the negative Right to blow the whistle? Or was he obliged to blow the whistle? • Justify your response in relation to the five criteria outlined in this lecture.