Home >Companies >News >Whistle-blowing: What role can CEOs play

The management team at SAP Labs India was in a tizzy following a series of anonymous emails urging the company to act against a senior executive who had allegedly assaulted another employee. There was further shock in store when police enquiries revealed the sender to be none other than the company’s managing director Anirban Dey. The unexpected turn of events resulted in Dey quitting the company in June. Three experts discuss the role of CEOs in whistle-blowing. While they believe it is the right of all employees, whether the CEO should be involved in it is debatable.

Dinesh Pillai, chief executive, Mahindra Special Services Group

While many corporates set up whistle-blowing mechanisms in all seriousness, a lot of small family-run businesses do not care much. Between these two are companies sitting on the fence.

“Standards on whistle-blowing are at varying degrees," says Pillai.

Every employee fears his identity will be compromised, and a neutral third party complaint-reporting channel will allay this fear. Whistle-blowing mechanisms fail when governance committees fail to act, which sends a message of “we don’t bother" within the organization.

Even CEOs need to use the whistle-blower channel for reporting malpractices, even though they have the wherewithal to order an independent investigation. “However, if the complaint is about a senior person or member of governance committee, then the CEO can constitute an external enquiry, keeping one of his higher-ups informed about the same," says Pillai.

“In our experience, instances of CEOs blowing the whistle are extremely rare. This is due to the decentralization of authority within the organizations. And the complaints received by the CEO are normally passed to the governance committee," he adds.

Maintaining ethics in business operations is the responsibility of the board of directors. Even if the CEO is not very keen to implement a whistle-blower mechanism, the board must enforce it, feels Pillai. “It is essential that they encourage even CEOs to blow the whistle through appropriate channel. It is quite possible that the normal whistle-blower system under his authority may not be the right medium to report," he says.

Abinash Panda, associate professor, IIM Kashipur

When Michael Woodford was made president and CEO of Olympus, he became the first Westerner to lead a Japanese organization. He was brought in to clean the system. He realized that the problem was deeper and a case of systemic mismanagement, says Panda. Woodford became a whistle-blower. “He was eventually fired unceremoniously. Woodford fled Japan to save his life," points out Panda.

Back home, last month, the resignation of Anirban Dey from the position of managing director at SAP Labs India Pvt. Ltd was announced after his alleged role as a whistle-blower became known.

Panda feels whistle-blowing policy keeps a check on everyone, including the CEO and the board, and helps the CEO learn about unethical practices.

Organizations have dealt with their leaders who turned into whistle-blowers quite harshly, as they are the people who should lead organizations by both creating and implementing the right kind of policies and practices that encourage ethical and desirable practices, points out Panda. “Hence, the chief executive or managing director or any other top organizational leader should not get involved in whistle-blowing," he feels.

Organizations, says Panda, need to implement whistle-blowing policies with well-defined systems. “Every employee should be encouraged to follow the system and report through the defined reporting channels. Each of them should be asked for as much evidence as possible," he says. The organization must have a team of leaders who should act as trusted mentors, as confidantes.

“Most importantly, organizational leaders should not commit hara-kiri by turning into whistle-blowers," says Panda.

Rohit Mahajan, senior director and head (forensic services), Deloitte India

Even though whistle-blowing channels are usually meant for employees, not top executives who themselves frame such policies, C-level officials should not hesitate to blow the whistle as any other employee when required, feels Mahajan.

About 94% of the respondents in a survey by Deloitte Forensic India said the top management must demonstrate its commitment to whistle-blowing with periodic communication to make it successful. The survey found 31% were scared of retaliation or termination. Companies must build employees’ trust by keeping tips anonymous and confidential, says Mahajan, and adds, they may internally publish suitably anonymous examples when such complaints led to appropriate action. “We have observed that ongoing educational workshops and training programmes can also help build the necessary trust among employees. Internationally, several companies have developed meaningful rewards for whistle-blowing to encourage employees to come forward and report suspicions," he says.

Policies should ensure that any “detrimental" action taken against the whistle-blower as a result of his allegation should be treated as a serious matter, believes Mahajan. A clear process for managing complaints can prompt employees to report suspicions, 17% of the survey respondents felt.

According to Mahajan, employees need to be informed of how their complaints will be handled, so that they trust the system. During the investigation process, it is important to ensure that the suspect is not victimized. Companies should try to gather more facts to help validate the complaint raised by the whistle-blower before taking any action, he says.

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