A person who rings bells. I do not know what your association with it is. Mine is very positive. I think of my early youth. I am in bed and hear the deep toll of the church bells on Sunday morning. You still have the entire Sunday ahead of you. Life is good. I hate the sound of a whistle. It hurts my ears, it sounds shrill. Everything is on edge. A huge contrast.

Still, a person who rings bells means the same as a whistleblower. A person who rings a bell or a whistleblower exposes wrongdoings in a company or organization. He or she reports dishonorable conduct, makes it public. The other colleagues often close their eyes and ears to this conduct. They cannot, are not allowed, or do not want to see it, not to mention say something about it. And then there is another remarkable phenomenon. This phenomenon is also already as old as mankind itself: the bearer of “bad” news is killed. All aggression is aimed at the messenger and not at resolving the problem he has identified. Because many consciously or unconsciously fear this effect, they rather keep quiet.

This phenomenon confronts management boards of companies with a difficult problem. Dishonorable conduct is not reported or reported late. In the workplace, this can concern various types of conduct. Think of ignoring safety procedures, forgery, theft, sexual harassment, etc. Even worse is when the direct supervisor himself or the management board itself does such things. What to do? There are plenty of examples in which the person exposing a wrongdoing is ignored, made fun of, bullied, or even dismissed. In that case, you had better keep your mouth shut. And then the dishonorable conduct continues, with all the associated trouble.

Whistleblower programs
In order to prevent the latter, in recent years so-called ’whistleblower programs’ have been introduced in all kinds of companies in the context of improving corporate governance. These are procedures laid down in writing that protect the person who exposes wrongdoings. These procedures have several common characteristics. For instance, the ’whistleblower’ first has to attempt to report the wrongdoing identified internally, for instance to the direct supervisor. If this is impossible or someone is afraid to do so, a confidential adviser can be approached. In no way can someone seek publicity if the prescribed procedure has not been followed first. If the procedure laid down is followed to report wrongdoing, he or she is guaranteed protection by the management board or supervisory board.

This all sounds great. Does it work, too? The American Sarbanes Oxley Act prescribes whistleblower programs as mandatory. The Dutch Code Tabaksblat and other European codes also prescribe whistleblower programs for companies listed on the stock exchange. That is why meanwhile quite some research has been done into the effectiveness of these types of programs. This effectiveness appears to be limited. It is also hard to measure. If few reports are known, does this mean there are high ethics in the workplace, or rather the opposite, notably that despite the program nobody dares to report? The point in this respect is that by definition the supervisors are always all part of the problem that has led to the wrongdoing. No matter what, supervisors in the company are responsible for it. Even more often it concerns systematic wrongdoings, whether or not intentionally tolerated, maintained, or even facilitated by the management.

That is why I believe a whistleblower program always has to be regarded as part of a much more extensive ethical framework that the management board gives the workers. Key words in this respect are the good example of the management itself, creating trust, not tolerating and promptly handling bullying and other wrongdoings, regularly organizing internal integrity training, making sure there is a confidential adviser, awareness and prevention of secret or less secret forms of sexual harassment, etc. Only in this context can a whistleblower program be effective. In my opinion, the Supervisory Board has an important (stimulating) duty in this respect. For on the one hand it is sufficiently involved in the company and on the other hand it has sufficient distance to assist the management board in creating this more extensive framework.

A beautifully sounding bell, giving that deep feeling of trust of that Sunday morning, does not have only one sound but a combination of different sounds that have been attuned to each other harmoniously. This is what the whistleblower program also has to be. The program needs to have the right timbre. Just making a program because it looks good is completely meaningless. In that case it becomes a shrill whistle.

Do you have a question about corporate governance yourself? Please e-mail it to governance@vaneps.com and perhaps your question will be discussed in the next blogpost!