The Prevalence of Whistleblowing in Organizations

The Prevalence of Whistleblowing in Organizations

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History of Whistleblowing
The definition of a whistleblower is a past or pesent employee or member of an organization, who reports misconduct to people or entities that have the power and presumed willingness to take corrective action, or to notify the general public of wrongdoing. In most cases, whistleblowers are employees of the ogranization but can be employees of government agencies as well. Normally the misconduct being reported is a violation of law, rule, regulation and/or a direct threat to public interest such as fraud, health, safety violations, and corruption. The word whistleblower originates from the old practice of English bobbies who would blow their whistle when they noticed a crime that was being committed. The blowing of the whistle would alert both law enforcement officers and the general public of danger. (Wikipedia, 2007).
Whistleblowing is not something that is new to today’s modern business world, however, it has grown so much that there is much more impact to all parties involved including the whistleblower. Depending on the magnitue of the misconduct being reported, it will not only change the company and the whistleblower, but also may change the society and how it views different businesses or business in general. Although whistleblowing is not new, the modern day attitude towards it has changed greatly. Before the 1960s, corporations had broad freedom in employee policies and could fire an employee at will, even if no reason existed. Employees of organizations were expected to be loyal to their organizations at all costs. Among the few exceptions to this rule were unionized employees, who could only be terminated for "just cause," and government employees because the courts upheld their constitutional right to criticize agency policies. In the private industry, few real procedures for airing grievances existed. Partly because of this lack of protection for whistleblowers, problems were often hidden rather than solved. Probably the most atrocious example was in asbestos manufacturing, where the link to lung disease was clearly established as early as 1924 but actively hidden by company officials from the public and other agencies. The first product liability lawsuit against an asbestos manufacturer was not successfully publicized until 1971.
In the 1970s, there were many memorable cases where potential whistleblowers decided not to act and ended up causing serious harm to employees and consumers alike, as well as the organizations as soon as the information went public that they had known of potential dangers.

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Alan Westin, Henry Kurtz, and Albert Robbins wrote a book called “Whistleblowing” that looked at many of these cases where potential whistleblowers decided to keep silent and ended up failing to prevent much damage to consumers. Sometimes a whistleblower acts only to have their notification go in one ear and out the other. Such a case is the Firestone disaster that occurred in the 1970s. In 1972, Firestone Tire Director of Development Thomas A. Robertson sent top management a memo warning that the “500” tire was inferior and subject to belt-edge separation at high speeds. His warning was ignored despite reports about poor performance from major customers such as General Motors, and the “500” tire was kept on the market. By the time Time magazine reported that accidents caused by blowouts had resulted in more than 41 deaths and hundreds of serious injuries, the company had already replaced 3 million tires and spent millions of dollars in personal injury lawsuits. If Robertson had received an internal hearing or blown the whistle externally, such disasters for the public and the company could have been avoided. (Ravishankar, Lilanthi)
Not all whistleblowing opportunities have turned out to be negative to the public. Take the following example where whistleblowing helped change an industry. In this example, an internal employee knew that the company he worked for was pushing a product that did not do what it was advertised to do. David Franklin, a former Parke-Davis employee who exposed illegal marketing of Neurontin, an epilepsy drug, for relieving pain, headaches, bipolar disorder and other psychiatric illnesses. This case showed that the company marketed the drug for these illnesses while withholding evidence that the drug was not effective for these illnesses. After initially denying any wrongdoing, Pfizer plead guilty to criminal violation of the Food, Drug and Cosmetics Act and paid criminal and civil fines of $430 million dollars. This case has opened a unique window into pharmaceutical industry practices through the achieving and study of documents by UCSF obtained by Franklin’s attorney Thomas Greene. The Franklin v. Pfizer case was unique in a number of ways: it was the largest settlement obtained for U.S. taxpayers in a case not joined by the Department of Justice, it established a new standard of accountability for pharmaceutical industry marketing practices, it broadened the use of the False Claims Act to include fraudulent marketing claims (not just financial fraud) as criminal violations of federal and state law, it revealed the involvement, complicity and active participation in fraud by many renowned physicians, and it demonstrated that the medical literature which is the foundation for medical practice and particularly off-label prescribing by physicians has been deeply adulterated by the pharmaceutical industry and its paid clinical consultants. Franklin v. Pfizer showed that pharmaceutical control of the healthcare system, including doctors and pharmacists resulted in a high number of patients (not just Medicare/Medicaid) paying a great deal of money (Neurontin sales were $2.2 billion in 2004) for a drug that did nothing to help their illness. (Wikipedia, 2007)
Whistleblowing Today
Why does an individual decide to blow the whistle at a company? There are a multitude of reasons. An individual may know the law is being broken, or that the actions of the organization are going to hurt others. In some cases no laws are being broken, but the organization is turning a blind eye to harmful acts. Some whistleblowers do not work within the organization they are reporting on. Some whistleblowers are investigators who bring to light what others in the organization know and may be afraid to tell. Legislation has been created throughout the years to help better protect whistleblowers and encourage them to report any wrongdoing to the proper authorities.
In the late 1970s, legislation was developed and federal and state laws were enacted to protect employees in private industry. The Whistleblower Protection Act of 1989 extended protections through the Merit Systems Protection Board and increased the authority of the Office of Special Counsel created in 1979. These laws protect disclosure of information as well as a government employee's refusal to participate in wrongful activities at work. In the 1980s, states began to provide whistleblower protection to employees as a result of the erosion of the at-will employment doctrine, which until very recently meant that private, non-unionized employees could be fired for any reason, including blowing the whistle. Currently, only 15 states do not provide whistleblower protection. With the enactment of the Sarbanes-Oxley Corporate Reform Act of 2002, internal and external whistleblower protection has been extended to all employees in publicly traded companies for the first time. The creation of this act has created an environment in which many organizations have realized the importance of instituting ethics policies and codes of conduct to address issues related to unethical or illegal conduct. The business climate in the wake of Enron and WorldCom, coupled with Sarbanes-Oxley, is one in which employees have more power report ethical or legal violations.
Even though legal protection exists to any person who decides to blow the whistle, it does not protect them in all other areas outside the legal realm. Although some whistleblowers are seen as “saviors” by the public, in the eyes of their coworkers and others they may be viewed as a snitch who is looking for personal gain. Because of this skewed thinking, whistleblowers may well encounter difficulties when they appeal internally or go public with information that may damage their companies. These people are doing so much to help protect the public, yet they are then discriminated against for their actions. Most have a difficult life after they make the decision to go public with the information that they know despite the laws protecting them.
Conclusion
Whistleblowing is becoming more important everyday in today’s business world due to the great power this process contains. Due to the increased number of misconducts by organizations in the recent past, whistleblowing incidents have been on the rise. This trend is likely to be bolstered by the provisions of the Sarbanes-Oxley Act, which for the first time, accords legal protections to whistleblowers in publicly traded companies. Whistleblowing is good for society because it can help prevent different issues such as safety, health, or corruption in companies. It is sad, but the whistleblowers, even with legal protection, are not protected from coworkers or others views or even harassment when an issue is reported. However, as whistleblowing becomes more prevalent and accepted in our society and other societies, and newer managers are trained to understand whistleblowing policies and procedures, whistleblowers should see less harassment than they do today. In the long run, whistleblowing is good because it holds business accountable in areas where they have not always been accountable before.

References

Wikipedia (2007) Whistleblower. Wikipedia, http://en.wikipedia.org/wiki/Whistleblower

Guttman, Reuben A., Lugbill, Ann, Murphy, Mark The Law: An Overview
False Claims Act Whistleblower Employee Protections. Whistleblowerlaws.com, http://whistleblowerlaws.com/protection.htm

Ravishankar, Lilanthi Encouraging Internal Whistleblowing in Organizations. http://www.scu.edu/ethics/publications/submitted/whistleblowing.html

Miethe, Terance D. Whistleblowing at Work: Tough Choices in Exposing Fraud, Waste and Abuse on the Job. Boulder, Colo.: Westview Press, 1999.

Lawrence and Weber, Business and Society Stakeholders, Ethics, and Public Policy, 12 Edition, 2007.

Wines, William, Ethics, Law, and Business, 1st Edition, 2006
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