Warren Buffet once said that smart people do not learn from their mistakes; they learn from other people’s mistakes. Very true!
Some months ago we were giving a lecture to a group of our Warsaw clients and we touched upon the topic of whistleblowing. One of the question from the audience was: ‘surely company executives would want to know about any irregularities in the company and any misconduct, so why then does whistleblowing occur in practice so rarely?’
Someone mentioned the VW case, so we took it as an example. We discussed why no one had challenged the cheating devices at such a large, multinational corporation. There was no doubt that Volkswagen had extensive policies and procedures in place for anti-corruption, bribery, antitrust and whistleblowing. Yet the deception still occurred, only being discovered by accident during a routine control by external investigators. It was them who passed on their discovery to the regulators. Something had evidently failed at Volkswagen.
The case makes for a very interesting study indeed. VW had confidence in its technological prowess. They were headed up by a group of extraordinary executives who had been driving the organisation to become the largest company on the market. With a workforce of almost 600,000 employees, the company had exhibited the kind of pride that often comes before a fall. Hubris had given wings to what can only be described as a regulatory heist.
Closing the lecture, we suggested that the current narrative of ‘if you see something, say something’ is hopeful at best. We all want to believe we can, and will, speak out when we notice misconduct. We want to believe our message will be received and acted upon. We want to believe in a fair and just world. While whistleblowing presents the best and sometimes only solution to many cases of organisational wrongdoing, we need to better understand the conditions that encourage and discourage it in order for it to be a robust avenue to mitigate corruption.
What lesson does that teach us?
Due to the modern-day international nature of businesses and transactions, every company, even the larger-than-life one, should strictly follow all of the extensive compliance regulations, including any codes of professional conduct, data protection, antitrust and unfair competition regulations.
The broad statutory regulations make compliance a particularly important topic; it is simply no longer just an abstract idea. The traditional approach to understanding compliance is losing its effectiveness and needs to be revised.
The reason why in practice whistleblowing occurs so rarely is because it is still generally negatively perceived. Although it is an effective tool in combating various irregularities, the informer will almost always have to face negative reactions to his reports from the management and his colleagues
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