Some of the worst corporate disasters of the past two decades were heralded by whistleblowers: Sherron Watkins raised the red flag internally at Enron, Cynthia Cooper let management know of major accounting problems at WorldCom, and Matthew Lee brought problems to his management team at Lehman Brothers. The whistleblowers weren’t able to halt their companies’ declines and—in some cases—faced punishment for calling attention to internal misdeeds. Looking at these examples, it would be easy to say that whistleblowers have little impact on how companies both conduct themselves and weather corporate storms. But that’s not the case.
In 2018, NAVEX Global, the leading provider of whistleblower hotline and incident management systems, provided us secure, anonymized access to more than 1.2 million records of internal reports made by employees of public U.S. companies. Our analysis revealed that whistleblowers—and large numbers of them—are crucial to keeping firms healthy and that functioning internal hotlines are of paramount importance to business goals including profitability. The more employees use internal whistleblowing hotlines, the less lawsuits companies face, and the less money firms pay out in settlements.Read more here.