Organisational Wrongdoing, Whistleblowing and Retaliation: What we Think we Know and What we Need to

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Organisational Wrongdoing, Whistleblowing and
RetaliationWhat we Think we Know and What we
Need to Know

• Janet P. Near
• Kelley School of Business
• Indiana University
• Bloomington, IN, USA

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Why Does Whistleblowing Matter?

• Costs of organisational wrongdoing in US
• 5 billion in employee theft
• 350 billion attributable to antitrust violations
• 300 billion in tax fraud
• 100 billion in health care fraud (Miethe, 1999)
• Insiders in better position to observe
  wrongdoing and report it than outsiders

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Agenda for Today

• What we think we know (US data)
• Overall incidence of wrongdoing, whistleblowing
  and retaliation against whistleblowers
• Predictors of whistleblowing by organisation
  members who observed wrongdoing
• Predictors of retaliation against whistleblowers
• Predictors of effectiveness in the whistleblowing
  process
• What we need to know

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Theoretical Framework Whistleblowing is
affected by Power Relationships among Multiple
Social Actors and the Organisation
Complaint Recipient
Whistleblower
Organisation
Wrongdoer
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Legal Issues in US Whistleblowing and Retaliation

• Employment-at-will doctrine
• Public policy exception
• Protection from discrimination, sexual
  harassment, OSHA violations
• Protection for union employees
• Early state statutes protecting whistleblowers
  were not used in cases as often as torte law
  (Dworkin Near, 1987, 1997)
• Current state statutes vary (Callahan Dworkin,
  2000 Dworkin Callahan, 2004)
• Merit System Protection Act (1978) protects
  federal employees from retaliation (USMSPB, 1981,
  1993)
• False Claims Act protects others who report fraud
  against U.S. government (Callahan Dworkin,
  1992)
• Sarbanes-Oxley (2002) provides federal statutory
  protection (only 3 whistleblowers have received a
  favorable ruling since 2002 Barakat, 2004)

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Incidence Information Federal Employees
(1980-1992) and Directors of Internal Auditing
who Observed Wrongdoing, Blew the Whistle and
Suffered Retaliation (Miceli et al., 1991, 1999)
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Conceptual Definition of Whistleblowing

• The disclosure by organisation members (former
  or current) of illegal, immoral, or illegitimate
  practices under the control of their employers,
  to persons or organisations that may be able to
  effect action (Near Miceli, 1985, p. 4).
• Implications
• Internal or external whistleblowing
• Not just recommending changeshas to involve
  wrongdoing
• Purpose of whistleblowing is to get wrongdoing
  stopped
• Focus on behaviour, not intent

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Typical Questionnaire Measure of Wrongdoing
Most Serious Wrongdoing Observed in the Past 12
Months

• Stealing of federal funds or federal property,
  accepting bribes/kickbacks, use of position for
  personal benefit,unfair advantage to contractor
  and employee abuse of office
• Waste of organisational assets, by ineligible
  people receiving benefits or by a badly managed
  program
• Mismanagement including managements cover-up of
  poor performance or false projections of
  performance
• Safety problems including unsafe or non-compliant
  products or working conditions
• Sexual harassment
• Illegal discrimination
• Violation of law

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Most Serious Type of Wrongdoing Observed, US
Military Base Sample, n1224, 37 of all
employees (Near et al., 2004)
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Response to Wrongdoing, by Observers of
Wrongdoing, Military Sample, n1125(Miceli et
al., 2001)
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Predicting WhistleblowingIndividual difference
variables

• Age
• Years of service to the organisation
• Years of school
• Gender (male)
• Pay level
• Supervisory status
• Knowledge of appropriate channels for reporting
  wrongdoing
• Feeling of responsibility to report wrongdoing

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Predicting WhistleblowingSituation variables

• Serious wrongdoing
• Strong evidence
• Supportive supervisors
• Organisation supportive of whistleblowing

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Definition of Retaliation

• Conceptual undesirable action taken against a
  whistleblowerand in direct response to the
  whistleblowingwho reported wrongdoing internally
  (i.e., within the organisation) or externally
  (i.e., outside the organisation). (Miceli
  Near, in press).
• Operational Sum of threatened and actual
  retaliations, termed comprehensiveness of
  retaliation (e.g., Miceli et al., 1999)

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Typology of Retaliation

• Work retaliation victimization adverse
  work-related actions that are often tangible,
  formal, and documented in employment records
• Social retaliation victimization antisocial
  behaviours, both verbal and nonverbal, that often
  go undocumented (Cortina Magley, 2003 248)

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Types of Retaliation (US Military
Sample) Threatened Experienced Co-workers not
socializing with me .4 11 Pressure from
co-workers to stop complaint 2 5 Tighter
scrutiny of daily activities by management
2 14 Withholding of information needed to
perform job 1 10 Personnel/staff withdrawn
0 9 Verbal harassment or intimidation
5 12 Poor performance appraisal
2 15 Professional reputation was harmed
1 7 Charged with committing an unrelated
offense 1 7 Denial of award 1 7 Denial
of promotion 2 7 Denial of opportunity for
training 1 9 Relocation of desk or work
area in office .4 5 Imposed access
restrictions to areas needed for job
1 7 Assignment to less desirable or less
important duties 2 8 Reassignment to job
with less desirable duties 1 7 Reassignment
to a different geographical location 0
3 Security clearance withdrawn
.4 1 Required to take a fitness-for-duty
exam 1 2 Suspension from job 0
.4 Grade level demotion 0 .4 Fired from
job .4 .4 Other 3 3
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Predicting RetaliationSummary of Results

•         Most whistleblowers didnt suffer
  retaliation, and those who suffered retaliation
  did not differ reliably from other whistleblowers
  in terms of personal characteristics, such as
  age, gender, race, status in the organisation,
  pay, etc. (but among federal employees
  retaliation was positively related to education
  and inversely related to pay, performance and
  majority ethnic group Miceli et al., 1999).
•         Whistleblowers who did suffer
  retaliation often felt that they had less support
  than others from managers and supervisors, and
  they were more likely to have used external
  channels to report the wrongdoing, rather than
  internal channels exclusively.

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Regression of Retaliation (ß), Federal Employees
(Miceli et al., 1999)
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Conceptual Definition of Effectiveness

• the extent to which the questionable or wrongful
  practice (or omission) is terminated at least
  partly because of whistleblowing and within a
  reasonable time frame (Near Miceli, 1985
  681)
• Basis for definition
• Early finding whistleblowers themselves
  perceived the process to have been effective if
  they were successful in changing managements
  views about the wrongdoing (Near Jensen, 1983)
• Effectiveness is separate from retaliation

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Regression (ß) of Effectiveness (Miceli Near,
2002)
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Implications and Questions for Practice and
Theory

• Theory
• Bureaucracy is still the basis for most
  organisation structures
• Bureaucracy is built on Max Webers notion of
  authority the boss rules
• What happens to organisation structure if dissent
  is permitted?
• What happens to organisation effectiveness if
  dissent isnt permitted?
• Practice
• If lawmakers want to reduce corporate wrongdoing,
  how can they persuade insiders to blow the
  whistle?
• If managers want to improve organisation
  effectiveness and prevent lawsuits for
  wrongdoing, how can they encourage valid and
  useful dissent?
• If organisation members want to blow the whistle
  effectively and without suffering reprisal, what
  strategies should they use?