We still hear a lot of talk about the reliability of second-hand information in relation to the Trump whistleblower. In November, a study of data from whistleblower reports filed at more than 1,000 companies found it very reliable. Secondhand reports are “47.7% more likely than firsthand reports to be substantiated by management, which suggests that management views many secondhand reports as credible.“

Read our interview with Kyle Welch, the George Washington University business professor who co-wrote the study. Then check out his new piece in the Harvard Business Review.

Kyle Welch

Whistleblowing stories are all over the news. Some observers have attributed this to a systemic change in society. There are more stories about whistleblowing, the argument goes, because there are more crimes to report.

However, rather than an increase in criminal activity, we may instead be observing an increase in the willingness of employees to speak up

The researchers looked at anonymous data from NAVEX Global, which runs employee hotlines for some of the world’s largest companies.

Our study of the data led us to two important findings: First, whistleblowers are crucial to keeping firms healthy. The average manager seems to take these reports seriously and uses them to learn of and address issues early, before they evolve into larger, more costly problems. We also found that second hand reports are more credible and more valuable, on average, than firsthand reports.

Companies that have a higher volume of complaints from whistleblower hotlines report fewer lawsuits and smaller legal settlements, they found. The HBR piece quotes Daniel Garen of Pivot Point Compliance Management. He says employee hotlines “have been the single greatest source for uncovering problems at the organizations I have worked with.”

Unless they are used against employees, he noted.  Some lawyers advise whistleblowers to seek outside counsel first and approach company hotlines with care. The program’s aim is to protect the company, not the whistleblower, creating a built-in conflict of interest.
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As companies head into 2013 facing yet another year of increasing and complex compliance and ethics challenges, here’s a threshold question for the Board of Directors: Does your chief compliance officer have the empowerment, independence, seat at the table, line of sight, and resources to do the job?

Following is a “boardworthy” sample of big developments from 2012 that should give some boards and C-suites (and you know who you are) pause:
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In Washington, there’s an old cliché: The definition of a gaffe is when a politician accidentally tells the truth. So this recent internal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) video gone viral, one of several internal “changecasts” from Acting ATF director B. Todd Jones, has got to qualify him for induction into the Gaffe Hall of Fame.
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So far, the sky has not fallen. That’s not to say there isn’t some curious weather activity.
Now that the SEC has logged at least seven full months of the Dodd Frank whistleblower program, it’s worth taking a moment for a brief status check on what we have learned so far.
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