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To Protect and Serve? Insights of Compliance and Ethics Officers into Determining Their
Role in Enforcing an Ethical Workplace
A thesis presented by Shirley J. Knowles
to The Graduate School of Education
In partial fulfillment of the requirements for the degree of Doctor of Education in the field of Education
College of Professional Studies Northeastern University Boston, Massachusetts April 2021
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Abstract
This dissertation argued for the need for stronger corporate ethics policies and enforcement, as
well as tougher anti-retaliation protections. The problem investigated was how corporate ethics
policies can be improved in the property and casualty insurance industry. This dissertation
explored the importance of code of ethics policies and programming, in addition to anti-
retaliation policies managed by ethics and compliance officers in the property and casualty
insurance space. Additionally, the research aimed to understand the role these officers play
within an organization when they communicate, implement, and enforce their organization’s
ethics policies, ensuring whistleblowers feel protected when they report misconduct. This
dissertation highlighted key commonalities and themes in code of conduct policies at six leading
property and casualty insurance companies and featured interviews with compliance and ethics
officers in the property and casualty insurance space. These individuals stated how they believe
corporate ethics protections can be improved within their organization.
Keywords: ethics, compliance, code of conduct, ethics policies insurance, anti-retaliation, whistleblower, corporate America, unethical behavior, leadership
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Acknowledgements
There are a few folks who stuck by me during this journey and I’d like to take a moment to acknowledge them.
First, I would like to thank my dissertation committee, comprised of Dr. Lynda Beltz, my advisor and biggest cheerleader; my second reader, Dr. Krystal Clemons; and my third reader – who was also my master’s degree thesis advisor—Dr. Marlene Fine. To say this was my support group would be an understatement – they guided and encouraged me every step of the way and made me believe I had what it took to get this done. Without their leadership, I would not have made it. I would also like to call out my copyeditor, Lee Sebastiani—she was the final piece of the Dream Team. Thank you for adding the final touches to this manuscript.
To my parents, sister, and friends: you pushed me so hard to cross the finish line, even on the days when my mind and body were tired, and I wanted to give up. It truly takes a village and
I am glad you are a part of mine. I am forever grateful for the phone calls, text messages, and overall patience and understanding. We did it!
Finally, I would like to dedicate this thesis to anyone who has ever been told they could not achieve greatness, or made to believe they are not “smart enough” or “good enough” to accomplish a major life goal – the world is yours, just keep swimming. To my ancestors who were denied opportunities because of the color of their skin, this is for you. Thank you for your sacrifices—because of you, I can.
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Table of Contents
Abstract ...... 2
Acknowledgements ...... 3
Chapter 1: Introduction ...... 8
Theoretical Framework ...... 15
Code of Conduct Policies ...... 16
Chapter 2: Literature Review ...... 27
Whistleblower Protections ...... 29
Theoretical Framework ...... 32
Why Are Corporate Ethics So Important? ...... 35
The Importance of Communicating Ethical Awareness ...... 36
Corporate Culture and Media Influence...... 38
Corporate Ethics Programs ...... 38
Conclusion ...... 42
What is Whistleblowing? ...... 42
Types of Whistleblowers ...... 44
Importance of the Whistleblower ...... 47
Role of an Ethics or Compliance Officer ...... 48
What Prevents Employees From Becoming a Whistleblower? ...... 49
How Can Employees Be Protected From Retaliation? ...... 54
Summation ...... 56
Chapter 3: Research Design ...... 59 5
Research Questions ...... 59
Role of the Researcher ...... 60
Research Tradition ...... 62
Procedures ...... 63
Case Study Approach ...... 63
Participant Selection Criteria ...... 64
Recruitment and Access ...... 66
Data Management ...... 68
Interpretation ...... 69
Standards for Valuable Qualitative Research ...... 70
Potential Research Limitations ...... 71
Conclusion ...... 72
Chapter 4: Results ...... 73
Age and Gender ...... 76
Tenure & Job Satisfaction ...... 76
Interview Statements and Questions ...... 77
Statement: My Organization Has a Strong Ethical Culture ...... 77
Statement: A Whistleblower’s Relationship With The Wrongdoer Impacts Their Likelihood
Of Reporting Misconduct ...... 79
Statement: I believe whistleblowers are fully protected from retaliation...... 79
Question: What type of misconduct is most frequently reported to you? ...... 80
Question: Based on your experience, employees at what level have the most misconduct
reported against them? ...... 81 6
Statement: Leaders encounter the same consequences as everyone else within my
organization...... 82
Question: Are the company’s ethics policies understood by employees at every level? ...... 83
Question: In your experience, is the punishment for misconduct handed down fairly, no
matter the employee’s role within the organization? ...... 84
Statement: There is more I can do to enforce an ethical workplace...... 84
Conclusion ...... 85
Chapter 5: Discussion & Future Considerations ...... 87
Summary ...... 87
Themes ...... 88
Strong Ethical Climate ...... 88
Real-world Events Influence on Ethics Policies ...... 89
Importance of Protecting the Anonymity of Whistleblowers ...... 89
Retaliation Prevention ...... 90
Recommendations ...... 90
Accountability ...... 91
Communication ...... 93
Implications of Results ...... 94
Limitations of the Case Study ...... 96
Areas for Future Studies ...... 99
Conclusion ...... 100
References ...... 102
Appendix A: IRB Approval ...... 112 7
Appendix B: Recruitment Email ...... 113
List of Tables
Table 4.1 Overview of Interview Participants ...... 75
Table 4.2 Age and Gender of Case Study Participants ...... 76
Table 4.3 Participant Tenure and Job Satisfaction ...... 77
List of Figures
Figure 4.1 Dimensions of Ethical Corporate Culture Model ...... 78
Figure 4.2 Employees at What Level Have the Most Misconduct Reported Against Them? ...... 82
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Chapter 1: Introduction
Over the last several decades, multiple spotlights have been placed on corporate ethics
policies, the officers who enforce the policies, and whistleblowing, dating back to the rise of
anti-big business protest groups in the United States. Due to whistleblowing and government
legislation, ethics have been integrated into organizations; this is reflected through corporate
social responsibility strategies and codes of conduct policies. An ethical workplace creates an
internal guideline for behavior expectations and consequences while also having a statement of
corporate values and commitments that all employees and external stockholders can abide by.
Corporate business ethics is something companies realize they need to manage and internalize.
Additionally, legislation challenged organizations to establish an ethics or compliance officer
role and introduce rules and metrics for monitoring and enforcing the ethics policies. Today, the
Compliance Officer Association (ECOA) provides a network for members to exchange ideas and
strategies on ethics and on legal compliance.
The Ethics & Compliance Initiative, North America’s oldest nonprofit dedicated to
independent research to promote and advance high ethical standards and practices in public and
private institutions, provides a timeline of business ethics, examining (a) the ethical climate of
the last sixty years, (b) major ethics and compliance issues, and (c) ethics and compliance program developments. During the 1960s, the country saw social unrest and an anti-war
sentiment. Employees were becoming less loyal to their organization and more loyal to their
ideals. In the 1970s, environmental concerns were prevalent while unemployment skyrocketed.
In the 80s, the relationship between employees and their employer was redefined with the rise of
bribery and illegal contracting practices. The 1990s saw increased concerns about child labor,
environmental issues, and the emergence of the Internet challenging cultural borders. In the 9
2000s, cybercrime, financial mismanagement, international corruption, and intellectual property theft became major focus areas for those in the compliance space. Finally, in the 2010s, the U.S. witnessed growing frustration over income inequality and pay gaps between individual contributors and C-suite workers. Additionally, companies were held to higher expectations for transparency from their internal and external stakeholders.
Whistleblowing is the term used when employees report illegal, illegitimate, or immoral practices and behavior to their employer who can take corrective action (Pierson et al., 2007).
The term “whistleblower” was coined and made popular by U.S. civic activist Ralph Nader in the 1970s (Tsahuridu & Vandekerckhove, 2008). Nader described a “whistleblower” as an individual who believes that the public interest overrides the interest of the organization one serves and blows the whistle on the organization that is involved in corrupt, illegal, fraudulent, or harmful activity (Scaturro, 2018).
Although Nader made the terms popular in the 1970s, the concepts of whistleblowing and whistleblowing protections have been around for hundreds of years. In her book,
Whistleblowers: Honesty in America from Washington to Trump, Stanger (2019) gives a detailed timeline of the history of whistleblowing in the United States, dating back to the late 1700s, when 10 American soldiers and Marines got together to report misconduct by their commander,
Esek Hopkins, who was accused of cursing at sailors and treating prisoners in an inhumane manner. By signing a petition to the Congressional Congress, the whistleblowers were protected from any legal retaliation from Hopkins; ultimately, their report was the driving force in the
Congress passing a law to protect future whistleblowers. Since this whistleblowing event in
1778, there have been other individuals who have stepped forward in the spirit of reporting wrongdoing. In the early 1900s, muckrakers—who were also identified as investigative 10
journalists and activists—were some of the most well-known whistleblowers in 20th century
American history.
Upton Sinclair, author of The Jungle, wrote a fictionalized account of the corruption and
contamination in Chicago’s meatpacking industry. Ida Tarbell, a teacher and journalist,
published a book, The History of the Standard Oil Company, which depicted Standard Oil tycoon
John D. Rockefeller as a monopolist. Ida B. Wells detailed the systematic disenfranchisement of
Southern Blacks and even some poor Whites with her books Southern Horrors and The Red
Record, and played a major part in the early movement for civil rights. Additionally, she was one
of the founders of the National Association for the Advancement of Colored People (NAACP) in
1909. In How the Other Half Lives: Studies among the Tenements of New York, Jacob Riis
documented the harsh living conditions of recent immigrants in New York City in the late 1800s,
inspiring reforms such as the New York Tenement House Act of 1901, which required tenement
housing to be cleaner, safer, and more open.
On an international level, governing bodies have also attempted to do their part to prevent
retaliation against whistleblowers. At the November 2010 Seoul G20 Summit, leaders identified
the importance of protecting whistleblowers in their anti-corruption agenda. In their G20 Anti-
Corruption Action Plan, leaders asked the following from G20 countries:
To protect from discriminatory and retaliatory actions whistleblowers who
report in good faith suspected acts of corruption, G-20 countries will enact and
implement whistleblower protection rules by the end of 2012. To that end, building upon
the existing work of organisations such as the OECD and the World Bank, G-20 experts
will study and summarise existing whistleblower protection legislation and enforcement
mechanisms, and propose best practices on whistleblower protection legislation. 11
Additionally, the G20 Anti-Corruption plan goes into great detail on defining
whistleblowing; explaining what public and private sector whistleblowing protections look like;
highlighting their work on whistleblower protection campaigns, communications, and trainings;
and acknowledging the barriers to whistleblowing. It also briefly describes the use of incentives, noting that the United States is a leader in rewarding whistleblowers reporting fraud against the government. The 36-page document is a good example of how organizations should detail how they will protect whistleblowers—and also incentivize them to come forward—should they witness misconduct that could be detrimental to the business or could harm internal and external stakeholders, including employees.
Ewing (1983) explained that the whistleblower’s impact is dynamic: he or she can provide a source of information that is critical in maintaining the performance of complex organizations. Most whistleblowers are internal employees who report misconduct on a fellow colleague or superior within their organization through anonymous reporting mechanisms often called hotlines (Ferrell et al., 2014). McCutcheon (2014) noted that whistleblowers are individuals who value fairness over loyalty—the intent is not to cause harm to the organization, but rather to enable the company to fix its problems. According to Banisar (2011),
“Whistleblowers have been hailed as heroes for revealing corruption and fraud in organizations and for preventing potentially harmful mistakes from leading to disasters (p.64).” Although it may be a terrifying experience coming forward to report misconduct, whistleblowers show courage and can have a direct impact in ceasing wrongdoing that could have a catastrophic effect on others.
Waytz et al. (2013) explained that people’s valuation of moral norms, especially when deciding between fairness and loyalty, can contribute to whether they will report misconduct to 12 an ethics or compliance officer in their workplace. These officers cannot have eyes and ears everywhere, so the whistleblower can assist in ensuring misconduct is reported and eliminated from the organization. Many employees, regardless of industry or level within an organization, have witnessed some form of misconduct in the workplace, whether it be at their current organization or a previous employer (Keenan, 1988).
Business ethics and whistleblowing in the corporate world are important because they provide a system of checks and balances which, in theory, should ultimately eliminate wrongdoing by employees at every level. This includes even the board of directors, chairmen, chief executive officers, chief operating officers, chief financial officers, and any other individual of influence within an organization. But sometimes these decision makers (known to some as “the powers that be”) make conscious decisions to cover up fraud.
Almost every industry is operating in an era where whistleblowing seems to happen every day. Gone are the days when an individual would go straight to a compliance officer to report misconduct. Any individual can log onto the Internet and go to various forums such as
Facebook, Twitter, LinkedIn, Instagram, Reddit, Snapchat, YouTube, Tik Tok, or other social media channels to talk about what they have experienced or witnessed. There are concerns about the validity of such claims, especially when there is no gatekeeper on these channels to authenticate any claim. Those concerns should be taken seriously—one false claim can ruin one’s career and livelihood. I know of a peer who was falsely accused of sexual harassment and had to walk around for a month not knowing his fate. Once the claim was determined to be unfounded, he still believed he had to stay away from all female employees and refused to be alone with them in any capacity. 13
One of the most well-documented and studied U.S. scandals within the last 50 years is tied directly to the federal government: the Watergate Scandal in the early 1970s. Schudson
(2004) noted that the scandal began on June 17, 1972 after police were tipped off by a whistleblower that people had broken into the Democratic National Committee headquarters at the Watergate office and apartment complex. The reason why this was a major scandal stemmed from the then-President of the United States, Richard Nixon, and his administration attempting to cover up their participation in the attempted burglary. The whistleblower, “Deep Throat” (who was later identified as the FBI’s associate deputy director, W. Mark Felt) changed the course of
Nixon’s presidency and eventually led to his resignation. The scandal also impacted the way leaders—including those in top positions within the government—are held accountable for their role in misconduct (Gage, 2012).
With the influence of the Watergate scandal, many government and corporate entities saw a major increase in the number of people who were reporting misconduct to compliance officers at their workplace (Greenwood, 2011), even if that meant the whistleblower would encounter negative backlash and consequences, known as retaliation. Retaliatory behavior can include slander, demotion, termination, being blacklisted, or receiving death threats.
Additionally, retaliation can be used to silence or discredit the whistleblower (Parmerlee et al.,
1982). Corporate ethics and compliance policies can be subjective and very complicated, especially when trying to define misconduct, determining who knew about the misconduct and for how long, understanding all of the stakeholders that will be impacted once news breaks of the misconduct, and determining consequences and next steps for everyone involved in the organization. 14
My problem of practice aims to understand whether ethics officers believe they fairly enforce code of conduct policies, how such policies are communicated, and if the policies protect employees at every level, from individual contributor to senior leader. By definition, a well- written code of conduct policy explains a company’s mission, values, and principles, linking them with standards of professional behavior. An organization’s code enunciates the values and actions all employees should operate by. As a result, written codes of conduct can become benchmarks against which individual and organizational performance can be measured.
Additionally, a code is a central guide and reference for employees to support day-to-day decision making. A code encourages discussions of ethics and compliance, empowering employees to handle ethical dilemmas they encounter in everyday work. It can also serve as a valuable reference, helping employees locate relevant documents, services, and other resources related to ethics within the organization.
Because of my background working in the property and casualty insurance industry, this dissertation focused primarily on this space, although the primary research can be applied to many industries, including government, finance, healthcare, education, media, and manufacturing. This dissertation highlighted code of conduct policies from six of the largest property and casualty insurers from around the world: State Farm, American Family Insurance,
Chubb Limited (Chubb), Munich Reinsurance Company (Munich Re), United Services
Automobile Association (USAA), and Nationwide Mutual Insurance Company (Nationwide).
These were chosen because of their employee size, influence in the insurance industry, and ethics policies that are available for public consumption. I interviewed ethics and compliance officers from one of these six popular property and casualty insurance companies to understand their 15 experience with handling reported misconduct, which helped to understand the officers’ perspective on the corporate ethics and code of conduct policies they are entrusted to enforce.
This dissertation applied relationship management theory (RMT) to the research findings since the theory places a focus on how relationships between employees can influence the success of corporate ethics programs and whether someone can and should feel comfortable being a whistleblower if they witness misconduct in the workplace. Using the case study methodology by reviewing code of conduct policies and interviewing the officers from the property and casualty insurance industry, this dissertation highlighted the need for anti-retaliation protections, brainstormed realistic protections that can be implemented for whistleblowers, determined how influential RMT can be in outlining the success of corporate ethics policies and practices, and discussed new or improved ways ethics policies can be enforced.
Theoretical Framework
Relationship management theory (RMT) is the examination of the quality of relationships such as those in the business-to-business and fundraising spaces (Waters & Bortree,
2012). RMT provides a wide variety of points on how relationships are cultivated. The authors noted that “relationships studies have examined one organization at a time; however, to develop an understanding of the overarching nature of relationships that exist between organizations and publics, scholarship should compare how individuals evaluate multiple organization types” (p.
124). Hung (2005) described several relationship types:
• One-sided communal: One party gives to the other to the detriment of its own success or
existence.
• Communal/mutually communal relationships: One party works for the good of the
other even if it receives nothing in return. 16
• Covenantal relationships: The common good of all parties involved is the relationship’s
goal.
• Exchange relationships: Parties expect future benefits based on past exchanges.
• Contractual/symbiotic relationships: Agreements that may not be balanced between
parties are made where both sides get something in return.
• Manipulative relationships: Asymmetrical communication is used to achieve goals.
• Exploitive relationships: One party takes advantage of the other.
The works of seminal authors Miceli and Near and contemporary whistleblowing researchers such as Michael T. Rehg and Richard Moberly can be utilized to understand ethics and relationship management theory; the misconduct that leads up to whistleblowing; the immediate impact of whistleblowing; the after effects of whistleblowing; and the role retaliation and fear of retaliation play in an employee or former employee’s life. Seminal authors and contemporary scholars alike focused on how critical anti-retaliation laws are for implementing ethics policies. Many authors whose research focused on whistleblowing reported that without ethics laws, ethics officers, and anti-protections, many reports of misconduct would never be filed as potential whistleblowers would be afraid of various forms of retaliation including demotion, being blacklisted, termination, public humiliation, and in some extreme cases, threats of bodily harm or death.
Code of Conduct Policies
Pierson et al. (2007) described code of conduct policies as a primary way to express what defines unethical conduct and what the punishment will be for the bad behavior. These policies are found in the organization’s policy manuals (Bommer et al., 1987), and for many 17 organizations, these policies are distributed when an employee begins their employment with an organization and when they are sent out annually to be reviewed by all staff.
After reviewing the public code of conduct policies for six leading property and casualty insurance companies—USAA, Nationwide, Chubb, State Farm, Munich Re, and American
Family Insurance—a few common themes were present in each policy, including:
• Message from the CEO/Chairman of the Board: Most of the insurance companies
opened their code of conduct policies with a brief introduction from the top leader at
their company. Each message stressed the importance of integrity, identifying
misconduct, and a fair workplace where employees can feel safe and protected from
misconduct (should they experience it or witness it), and retaliation. (American
Family Insurance, Munich Re, State Farm, Chubb, USAA)
CHUBB: “As Chubb employees, we have an obligation to practice our craft with
integrity, and to uphold the Company’s reputation for ethical conduct. We are
ultimately defined by the choices we make and the actions we take, and our
customers, shareholders, business partners and co-workers expect honest and ethical
conduct from us each and every day. All of us are accountable for our actions, and we
must hold ourselves to exacting standards. The Chubb Code of Conduct reaffirms our
shared commitment to ethical behavior throughout the organization.”
AMERICAN FAMILY INSURANCE: “Integrity goes far beyond just knowing and
complying with the rules. It’s about doing the right thing even when no one is
watching—or there’s no specific rule about it. It’s about not cutting ethical corners or
taking shortcuts. And, it requires identifying and acting on problems, not ignoring
them.” 18
STATE FARM: “We hold ourselves to the highest standards of ethics and integrity.
When representing our Company, apply good judgment, be honest and treat others
with respect. We also have a responsibility—and an obligation—to question any
practice or business behavior that doesn’t measure up. If you see something that falls
outside the boundaries of appropriate behavior, I want you to speak up. No matter
what the issue is, no matter who is involved. We must have the courage and
confidence to act.”
• Code of Conduct Overview: The purpose of this portion of the code of conduct
policy is to give the reader a high-level view of why these policies are so critical to a
positive employee experience. The overview also listed a statement of values for each
company to explain the set expectations and why it is critical to review the code of
conduct as often as possible. (American Family Insurance, Munich Re, State Farm,
Chubb, USAA, Nationwide)
NATIONWIDE: “We work hard to build an environment of trust with each associate
and the members we serve. Acting with integrity, complying with applicable laws,
rules and regulations (both the letter and the spirit), and living up to the Code are
basic requirements to earn that trust. Even companies with the highest ethical
standards occasionally have issues. When we do, we want them reported so they can
be addressed. It takes courage to report a situation that is, or has the appearance of
being, contrary to these values. All associates have a duty to report such concerns.
We will listen to your concerns and take the appropriate action. You may remain
anonymous when reporting issues to the Office of Ethics.”
USAA: “Our core values of Service, Loyalty, Honesty and Integrity reflect the values 19
of the military and our membership and form the foundation on which we perform
our work and conduct ourselves. The USAA Standard sets expectations on our
behaviors, and speaks to the way we act, treat each other and show up every day at
work. The Six Elements of The USAA Standard are:
• Keep our membership and mission first.
• Live our core values.
• Be compliant and manage risk.
• Build trust and help each other succeed.
• Embrace diversity and be purposefully inclusive.
• Innovate and build for the future.”
STATE FARM: “We have an obligation to raise our concerns if we know of or
suspect improper conduct or a breakdown of business or security controls. This
includes situations where we believe we have observed or have been instructed to do
something that is illegal or unethical or violates State Farm policy. Remember that
resources are available to help, including those listed in this Code. You are expected
to cooperate fully with any investigative efforts.”
• Discrimination/Harassment: All six companies listed diversity and inclusion as key
principles of a successful organization. Because these companies are based in cities
around the world, they list as key priorities both the employment of individuals with
various beliefs and experiences and the acceptance of an individual’s background.
Each company states that they value different viewpoints and workstyles and will not
tolerate an individual or group who demeans, threatens, or intimidates other 20 employees. (American Family Insurance, Munich Re, State Farm, Chubb, USAA,
Nationwide)
USAA: “We are committed to providing employees with a work environment free of discrimination and harassment. If you believe that you are being discriminated against, harassed or subjected to unlawful conduct, or if you believe you have observed such conduct directed at other individuals, you are encouraged to immediately report it to a manager, an Employee Relations Advisor or the HR
Service Center. If you are unsure of to whom to raise an issue of harassment, or if you have not received a response after reporting an incident, please contact Employee
Relations or the Ethics Office.”
STATE FARM: “We will not practice, tolerate nor condone discrimination, including harassment, based on a person’s status, such as, but not limited to: age, race, color, religion, sex, national origin, sexual orientation, gender identity, disability, genetic information, veteran status or any other basis prohibited by law.
We will not tolerate sexual or any other form of harassment that interferes with work performance or creates a hostile or offensive work environment. Such behavior is inconsistent with our shared values of integrity and mutual trust.”
NATIONWIDE: “We value the contributions of each individual and are highly committed to providing an environment that supports and encourages each associate to do his or her best work. Should you have a concern about discrimination, harassment or other unlawful conduct, talk with your manager, call the Office of
Associate Relations, or contact the Office of Ethics.” 21
• Ethics Hotline: Five of the six organizations researched publicized their ethics
hotline phone number or website that employees could use to report misconduct. The
companies promise a confidential whistleblowing experience to the greatest extent
possible, and the hotline/website are available to employees 24 hours a day, seven
days a week. (American Family Insurance, State Farm, Chubb, USAA, Nationwide)
STATE FARM: “Contact the Compliance & Ethics Hotline by phone at 1-800-355-
2633 or online at https://statefarm.tnwreports.com/.”
MUNICH RE: “You may report concerns confidentially by calling the AMIG
(American Modern Insurance Group) Compliance Hotline at 866-739-4137 or by
visiting the website at https://speakup.alertline.com/gcs/welcome.”
NATIONWIDE:
. “Phone: 1-800-45-ETHIC (1-800-453-8442). This is the Ethics Helpline.
You may choose to remain anonymous when calling. No caller ID or
recording devices are used. A confidential case number will be assigned to
you, allowing you to follow up on your concerns.
. Fax: 614-249-8442 Access to this secure fax is restricted to the Office of
Ethics
. E-mail: [email protected]
. Mail: Office of Ethics
One Nationwide Plaza
P. O. Box 182653
Columbus, Ohio 43218-2653
Mail to this box is delivered unopened to the Office of Ethics” 22
• Conflicts of Interest: Protecting company assets, avoiding expensive gifts, and
releasing proprietary information are addressed in all the code of conduct policies for
all six companies. Each organization made it explicitly clear that there is a zero-
tolerance policy for any employee who chooses to participate in an illegal activity
that puts the company at risk of legal action or defamation. (American Family
Insurance, Munich Re, State Farm, Chubb, USAA, Nationwide)
STATE FARM: "A conflict of interest occurs when our personal interests or activities
affect our ability to make objective decisions on behalf of State Farm. We must avoid
situations that give rise to actual conflicts and/or situations that create the appearance
of a conflict.”
AMERICAN FAMILY INSURANCE: “You must exercise good judgment and make
good decisions, independent from any outside influence, avoiding activities and
personal interests that create an actual or perceived conflict between your personal or
separate business interests and the interests of the company. If a conflict of interest is
found to exist, you may be asked to end the activity causing the conflict and/or the
company may take appropriate action regarding your employment. Therefore, use
common sense and good judgment in determining whether a conflict exists and taking
action. When in doubt, contact an appropriate resource at your company.”
USAA: “We all have relationships and interests outside of USAA; however, they
should never influence the business decisions that we make. It is not unethical to have
a conflict of interest; it is unethical to fail to disclose it or address it. Although it’s not
possible to list every conflict of interest scenario, here are a few circumstances where
they typically occur: 23
. Accepting or giving gifts and gratuities to/from members, third
parties or government officials
. Obtaining outside employment
. Engaging in political activities during your USAA working hours or
using USAA resources
. Supervising or making employment decisions about a friend or relative
. Receiving personal benefits as a result of your position with USAA
. Investing in or conducting outside work with an entity that does, or
seeks to do, business with USAA
. Competing with USAA or taking advantage of opportunities
discovered through a connection with USAA
. Engaging in other external activities that conflict with your
employment at USAA
. Promoting or associating your USAA employment and position with
your outside activities
. Committing USAA resources to an organization or entity without
USAA approval
. Using your position with USAA to benefit friends or relatives”
• Whistleblowing and anti-retaliation: Although the companies did not explicitly use
the term “whistleblower” in their ethics policies, they did explain the importance of
those individuals who report misconduct and the organizations’ commitment to anti-
retaliation in the workplace. (American Family Insurance, Munich Re, State Farm,
Chubb, USAA, Nationwide) 24
MUNICH RE: “The Company does not tolerate any retaliation against anyone who, in good faith, reports possible violations of law, the Code, or other Company policies, or who asks questions about on-going or proposed conduct. Employees who attempt to retaliate will be disciplined. If you believe you have experienced retaliation for reporting possible violations you should contact your Strategic Business Partner in
HR or your Law Department.”
STATE FARM: “Retaliation against anyone who reports a concern in good faith is
never permitted at State Farm. If, after reporting such a concern, you suspect
retaliation (e.g., demotion, discipline, termination, salary reduction, job or shift
reassignment, etc.), you must contact your supervisor, another member of leadership
or Human Resources, use the Open Door policy or contact the Compliance & Ethics
Hotline.”
USAA: “At USAA, we do not tolerate any form of retaliation against anyone who
makes a good faith report of potential misconduct or helps with an investigation.
Acting in “good faith” means that, to your knowledge, you are making an honest and
complete report. We want you to be free to seek guidance or report concerns without
fear of retaliation, secure in the knowledge that you did the right thing by speaking up
and coming forward.”
CHUBB: “It is important that all employees feel confident that they can report conduct that may be contrary to our Code. We are committed to protecting those who, in good faith, make a report or participate in Code or other policy violation investigations. Retaliation, harassment and reprisals of any kind will not be tolerated.” 25
NATIONWIDE: “If you have a concern to report, your concern will be investigated
and handled in as confidential a manner as possible. You are assured that there will be
no retaliation against you for participating in an investigation or reporting a concern
with the reasonable belief that misconduct may have occurred. Retaliation against
anyone who makes a good faith report of misconduct is strictly forbidden. Reports of
possible retaliation will be investigated and appropriate action will be taken if
substantiated.”
AMERICAN FAMILY INSURANCE: “The Enterprise does not tolerate retaliation
against anyone who reports in good faith a suspected or actual violation of law,
regulation, or the Code. The Enterprise treats claims of retaliation seriously, and will
take reasonable and appropriate steps to address allegations of retaliation. If you
suspect that you or someone you know has been retaliated against for raising an issue,
you can immediately contact the EthicsLine or a resource at your company.”
Although each company went to great lengths to ensure their policies were clear, concise, and available to the public and employees alike, there was one glaring oversight made by most of the companies: The organizations failed to detail what type of protections whistleblowers would have if they chose to come forward to report misconduct to a compliance officer. Although the policies listed ethics hotline numbers and email addresses, went into detail on the importance of confidentiality, and expressed zero tolerance for discrimination and harassment, the policies did not go into explicit detail as to what protections whistleblowers would have if they reported misconduct and were later discovered to be the individual who blew the whistle. This omission is of significance because it fails to provide a whistleblower a necessary guarantee: protection from retaliation, in any form, should they choose to come forward and report wrongdoing to an Ethics 26
Hotline; to an ethics or compliance officer if an employee witnesses or experiences wrongdoing and wishes to consult; or to a Human Resources contact to determine what options the whistleblower has if he or she chooses to come forward. The omission is a problem because employees are never explicitly told how they will be protected if they believe they have been retaliated against.
27
Chapter 2: Literature Review
Cynthia Cooper. Sherron Watkins. Peter Rost. Michael Woodford. Antoine Deltour. One
may not recognize these names, but their impact on corporate ethics and whistleblowing has left
a historical mark in the business world. These individuals played a part in exposing WorldCom
[2002], Enron [2002], Pfizer [2004], Olympus Corporation [2011], and PricewaterhouseCoopers
[2012], respectively, for the mostly financial fraud they were committing and the negative impact they made on the employees and customers they were serving.
Cynthia Cooper outed WorldCom for arranging a scheme to inflate earnings in order to maintain WorldCom's stock price. Cooper, a vice president on the internal audit team, discovered over $3.8 billion of fraudulent balance sheet entries, which led to the company admitting that it had overstated its assets by over $11 billion.
The Enron scandal came to light after whistleblower Sherron Watkins, vice president of corporate development, blew the whistle on the company using accounting loopholes, special purpose entities, and poor financial reporting to hide billions of dollars in debt from failed deals and projects. Senior leaders within the organization and the company’s accounting firm were pressured to ignore the issues. The Enron scandal led to their accounting firm being dissolved.
The Pfizer scandal arose after the company was accused and found guilty of illegally promoting certain pharmaceutical products, including Bextra (an anti-inflammatory drug),
Geodon (an anti-psychotic drug), Zyvox (an antibiotic), and Lyrica (an anti-epileptic drug) for improper usage by doctors and patients. This resulted in the company paying $2.3 billion in settlements.
With the Olympus scandal, the company was found guilty of trying to conceal more than
$1.5 billion of investment losses and other fees and payments that dated back to the late 1980s. 28
The company was also accused of sending suspicious covert payments to criminal organizations.
Then-CEO Michael Woodford was fired after blowing the whistle on the company’s
misconduct—which is one form of retaliatory behavior - but later won a defamation lawsuit for
wrongful dismissal.
PricewaterhouseCoopers found itself involved in a scandal after whistleblower and
former auditor, Antoine Deltour, discovered that the company had been intentionally allowing large multinational corporations to avoid tax liabilities in countries where they were conducting business. Deltour shared his findings with a journalist who went on to expose the fraud happening at the company; he had to go through years of litigation to avoid being thrown in jail—another form of retaliation—for leaking confidential company documents. Deltour was determined to be a whistleblower, essentially saving him from serving a prison sentence for speaking up.
Robinson et al. (2012) found that whistleblowing typically happens “following mismanagement (covering-up poor performance or making false performance forecasts), sexual harassment, and legal violations relative to theft, safety violations, and discrimination” (p.216),
all of which are major corporate ethics violations. Whistleblowing is on the rise. McCutcheon
(2014) noted that the Securities and Exchange Commission (SEC) documented that reports from
corporate employees under the Dodd-Frank financial industry reform law’s whistleblower
program are increasing. This is certainly evident in several public government misconduct
scandals in the late 2010s.
Unethical business practices are not exclusive to the business world—local and federal
governments, nonprofits, the armed forces, schools, law enforcement agencies, and small
businesses are all subject to fraud and other unethical behavior. One cannot mention the phrase 29
“corporate ethics enforcement” without thinking of major scandals like Watergate in the early
1970s; the 2008 bankruptcy of Lehman Brothers at the peak of the subprime mortgage crisis; the
2015 Volkswagen emissions scandal; and the 2007 neglect allegations made by The Washington
Post regarding The Walter Reed Army Medical Center. However, for the purpose of this
dissertation, the primary focus was on the importance of strong, clear, and transparent corporate
ethics policies—and the trustworthy ethics officers that enforce them—in the business world; the
impact whistleblowing can have on a corporation and an industry; and understanding why many
whistleblowers are reluctant to come forward. Research was utilized from various organizational
ethics practitioners and seminal researchers (such as M.P. Miceli and J.P. Near) to guide the
reader on the importance of business integrity in the corporate space.
This literature review defines corporate ethics and examines the challenges whistleblowers may face when reporting misconduct. The main questions surrounding this literature review are simple in theory, yet complex in implementation: First, why are corporate ethics policies so important? Second, what are compliance and ethics leaders doing to ensure employees are refraining from participating in misconduct? Third, besides being terminated, what other fears do employees have? What can be done to help encourage individuals to come forward more than they currently do?
Whistleblower Protections
Whistleblowing protections are not a new phenomenon that was introduced in the United
States within the last twenty years. Greenwood (2011) highlighted major anti-retaliation laws and protections that have been implemented for more than 100 years in the U.S., including:
• 1863 federal False Claims Act (later amended in 1986): Enacted during the Civil War
to combat the fraud committed by companies that sold supplies to the Union Army, any 30
individual who knowingly submitted false claims to the government was liable for double
the government’s damages plus a penalty of $2,000 for each false claim. The amended
1986 act increased damages and raised the penalty from $2,000 to a range of $5,000 –
$10,000.
• 1958 federal Code of Ethics for Government Service: Established to create a set of
ethical guidelines for persons serving the U.S. federal government, the rules are as
follows:
1. Put loyalty to the highest moral principles and to country above loyalty to
Government persons, party, or department.
2. Uphold the Constitution, laws, and legal regulations of the United States and of
all governments therein and never be a party to their evasion.
3. Give a full day's labor for a full day's pay; giving to the performance of his duties
his earnest effort and best thought.
4. Seek to find and employ more efficient and economical ways of getting tasks
accomplished.
5. Never discriminate unfairly by the dispensing of special favors or privileges to
anyone, whether for remuneration or not; and never accept for himself or his
family, favors or benefits under circumstances which might be construed by
reasonable persons as influencing the performance of his governmental duties.
6. Make no private promises of any kind binding upon the duties of office, since a
Government employee has no private word which can be binding on public duty.
7. Engage in no business with the Government, either directly or indirectly which is
inconsistent with the conscientious performance of his governmental duties. 31
8. Never use any information coming to him confidentially in the performance of
governmental duties as a means for making private profit.
9. Expose corruption wherever discovered.
10. Uphold these principles, ever conscious that public office is a public trust.
• 1966 Freedom of Information Act: Signed into law by President Lyndon Johnson, the
law gave the public the right to access records from any federal agency, which helps keep
the government transparent and accountable. The act has been used to expose various
government misconduct, including threats to the public’s health and safety. All federal
agencies are required to make requested records available unless the records are protected
from disclosure by one of nine Freedom of Information Act exemptions.
• Civil Service Reform Act (CSRA) of 1978: Partially in response to the Watergate
scandal, the CSRA established protections for employees disclosing illegal or improper
government conduct.
o United States Merit System Protection Board: as part of the CSRA, the agency was created to protect federal merit systems against unlawful personnel practices
and to guarantee adequate protection for federal employees against abuses by
agency management.
• Whistleblower Protection Act of 1989: This act protects federal whistleblowers who
report activity that is in violation of a law, rules, or regulations, or mismanagement, gross
waste of funds, abuse of authority or a considerable and specific danger to public health
and safety. The act prohibits a government agency from acting or threatening to act
against an employee or applicant for disclosing information that he or she believes is in
violation of a law, compliance rule, or another regulation. 32
• Notification and Federal Employee Antidiscrimination and Retaliation (No FEAR)
Act of 2002: No FEAR requires the federal government to be accountable for violations
of antidiscrimination and whistleblower protection laws. Additionally, No FEAR requires
the government agency to inform former and current employees about the rights and
protections they have available to them under federal whistleblower and
antidiscrimination laws.
Although this list has a major focus on federal employees and does not include all anti-
retaliation acts and laws, one can see how influential these regulations have been in the private
and public sectors.
Theoretical Framework
Greenwood (2011) used relationship management theory to frame her problem of practice, research questions, methodology, and analysis of whistleblowing in the management and public relations fields. Her problem of practice centered around why more research has not been done to report the positive and negative whistleblowing experiences public relations professionals have encountered. Ledingham (2008) noted that relationships between employees can impact whether someone decides to blow the whistle. But because so little research has been done on these relationships, Ledingham used a quantitative methodology—a survey—to find out for herself.
Greenwood’s survey was broken into five sections including, but not limited to: gender, race, age, education, and pay; employees’ whistleblowing activities within their organization; and whistleblowing activities in which they witnessed their colleagues participating. Section IV focused on relationship management theory by asking “respondents to characterize their relationship with their current organization” (Greenwood, 2011, p. 60), which is a primary 33 feature of RMT. Ledingham (2008) used four tenets to measure relationship quality outcome, including: trust, control mutuality, commitment, and satisfaction. Items included:
Trust
• Whenever this organization makes an important decision, I know it will be
concerned about me.
• This organization can be relied on to keep its promises.
• I feel very confident about this organization’s skills.
Control Mutuality
• This organization believes my opinions are legitimate.
• In dealing with me, this organization tends to throw its weight around.
• This organization really listens to what I have to say.
Commitment
• There is a long-lasting bond between this organization and me.
• I can see that this organization wants to maintain a relationship with me.
• Compared to other organizations, I value my relationship with this organization
more.
Satisfaction
• Both the organization and I benefit from the relationship.
• Most people like me are happy in their interactions with this organization.
• Generally speaking, I am pleased with the relationship this organization has
established with me.
When analyzing the data collected from the survey, Greenwood relied heavily on demographics. The most significant demographic findings showed that “more than two-thirds of 34 respondents were top-ranking public relations executives in their Fortune 1000 corporations, and more than half were males” (Greenwood, 2011, p. 113). Greenwood also reported that 93.2% of respondents viewed their relationship with their organization as mutually beneficial, 84.5% rated their happiness with their company as high, and 82.8% were pleased with the relationship the organization had established with them (Greenwood, 2011). Through RMT, Greenwood discovered that the higher the positive sentiment of the responder, the lower the likelihood they felt they needed to whistleblow or witness their colleagues blowing the whistle.
In an effort to investigate themes around relationships in more detail, I used a qualitative case study methodology that relied on interviews with a small group of participants from one insurance company. Additionally, I believed it to be especially important to include direct quotes from the interviews to give the reader an elaborate understanding of each participants’ lived experiences as an ethics officer. Starman (2013) noted that case studies are especially valuable in practice-oriented fields, which can include the work the participants do as compliance and ethics officers. The author went on to state, “Qualitative research is characterized by an interpretative paradigm, which emphasizes subjective experiences and the meanings they have for an individual. Therefore, the subjective views of a researcher on a particular situation play a vital part in the study results” (p. 30). Based on the nature of the work my participants did as ethics officers, I was interested in learning more about their experiences, with the hope that they would go into detail about the challenges they may face when trying to enforce their company’s rules and regulations.
Based on my basic knowledge about the importance of having strong ethical compliance within an organization, there were two foreshadowed statements that I believed before participants were interviewed for this dissertation: 35
Statement 1: Ethics and compliance leaders in the insurance industry have a high confidence
that employees at their respective companies know what the organization’s policies are
surrounding ethics and know where/how to report misconduct.
Statement 2: Compliance and ethics leaders believe that ethics policies, practices, and
reporting methods can be improved.
The remainder of this literature review is broken into three main categories: a look into why corporate ethics programs are so important; a comprehensive definition of whistleblowing and why individuals hesitate to become a whistleblower; and a look at the protections an employee may have when reporting unethical behavior.
Why Are Corporate Ethics So Important?
In most cases, whistleblowing is done when an egregious behavior or decision has taken place, or when a business ethics initiative which is supposed to help “formulize norms of acceptable business practices and behavior” (Laufer & Robertson, p. 1032), has been violated.
Sherron Watkins, one of the most well-known whistleblowers in modern U.S. history for her
Enron whistleblowing, showed why speaking up about witnessed unethical behavior can be difficult, even if it is the right thing to do. When reflecting on how she went about becoming a
whistleblower, Watkins said, “I should have found a few more people to go with me [to blow the
whistle on Ken Lay] because then they could not have dismissed me as one lone person”
(Beenen & Pinto, p. 286). What is even more interesting is the fact that Watkins implicated
herself in the ethical wrongdoing and talked about how she had a part in the fraud that took place at Enron (Beenen & Pinto, 2009). She went on to become both an active and passive whistleblower—she spoke up about what was happening on her own, but she also provided information to authorities and testified against her former colleagues. 36
This Enron scandal (and others like it) have proven why corporate ethics—along with checks and balances to ensure ethics policies are being enforced—are so critical. If Watkins had not spoken up, who would? Would anyone else at Enron have had the courage to risk everything because it was simply the right thing to do? Who oversaw compliance, and why were they not aware that so much gross misconduct was taking place?
Miceli (1999) explained that everyday employees, whether they are low-level workers, compliance officers, or senior leaders, can decide that the wrongdoing they are witnessing or have witnessed can be reported for the greater good of internal and external stakeholders.
Although the act of whistleblowing has been documented in the United States since the late
1700s, the decision to come forward is never easy. Reaching the point where one decides they are going to speak against their organization—even if they are profiting from the unethical behavior—shows how conflicting it can be to step up and blow the whistle on one’s employer.
The Importance of Communicating Ethical Awareness
Schlegelmilch and Pollach (2005) created the figure below to visually explain how the corporate ethics process should be enacted:
Figure 2.1
A Framework for Communicating Corporate Ethics 37
The authors believed that ethics communication should be an inside-out process, where
the company is continuously assessing how they are viewed by the external stakeholders while
also monitoring the company’s behavior. Doing this allows the organization to control their
image, even when they face challenges such as an employee involved in misconduct.
Additionally, Trevino et al. (1999) emphasized the importance of employees being familiar with
ethics awareness at their company. The authors explained that “if employees are aware of relevant ethical and legal issues, they will more likely ask the right questions and ultimately do the right thing when faced with a dilemma” (p. 133). In other words, the researchers believed that a major organizational campaign that is not focused on ethics, but ethics awareness, will help employees understand what the rules are for the company, and can, in turn, improve employee confidence in their organization. Additionally, ethics awareness allows the individual to understand that there are accountability programs in place and will help them easily identify wrongdoing. Kaptein (2010) supported this concept by explaining the influence an ethical corporate culture can have on employee behavior. 38
Corporate Culture and Media Influence
Barsh and Lisewski (2008) noted that a strong ethical climate within an organization encourages good will, trust, and commitment for stakeholders, both internal and external. Like many of the other researchers, Barsh and Lisewski (2008) tied ethical corporate culture with enhanced customer service, strong diversity of thought and inclusion of people, solid trust among stakeholders, stronger strategic planning, and an overall reputation that the employer has the employee and customers’ well-being at front of mind. In a world that is currently seeing an influx of publicized corporate ethical scandals, these small initiatives can, together, help positively impact a company’s reputation. We are living in a world where a 24-hour news cycle is king. Many members of the news media know that scandals sell, even if the scandal is taking place within their own media organization. Salacious news sells. All it takes is one misstep, and media trucks are barreling down the street of an organization, looking for a headlining quote from a disgraced leader. The media has the power to negatively impact the reputation of an individual, a company, or an entire industry.
Corporate Ethics Programs
In addition to corporate ethics officers, corporate ethics programs provide even more protection and peace of mind for an employee (De Colle &Werhane, 2008). Schlegelmilch and
Pollach (2005) argued that these programs provide an extra layer of anonymity for the whistleblower, which helps them to feel protected and can decrease the likelihood of retaliation.
On a more basic level, a manager should provide protection for their employee. Verschoor
(2012) explained that managers should try to curb potential retaliation: When employees feel their manager is trustworthy and committed to implementing ethics, the employee is less likely to fear retaliation and may be more willing to report misconduct. 39
If an individual cannot find protection from a corporate ethics officer, an internal corporate ethics program, or their manager, a whistleblower should be able to look to retaliation protection from federal agencies. Ting (2008) explained that “laws such as the Works Progress
Administration (WPA) typically provide procedural guarantees such as promises of confidentiality to facilitate employee reporting” (p.260). Protections from the federal government is another safeguard for workers who may believe their organization is not doing enough to enforce ethics policies or have strong anti-retaliation rules.
Additionally, Berkowitz et al. (2011) noted that there are numerous statutes that should protect whistleblowers, including:
1. The Occupational Health and Safety Act, which protects workers from health and
safety hazards while at work; The Clean Air Act of 1963, a comprehensive federal
law designed to control air pollution on a national level.
2. The Clean Water Act, which is another federal law that regulates the discharge of
pollutants into water and regulates quality standards for surface waters.
3. The Asbestos Hazard Emergency Response Act, which requires local educational
agencies to inspect school buildings for asbestos-containing building material,
prepare asbestos management plans, and perform asbestos response actions to
prevent or reduce asbestos hazards.
4. The Federal Mine Safety and Health Act was implemented to ensure annual
inspections and regulations be implemented at all underground mines.
5. The Comprehensive Environmental Response, Compensation, and Liability Act,
which ensures the clean-up of uncontrolled or abandoned hazardous-waste sites as 40
well as accidents, spills, and other emergency releases of pollutants and
contaminants into the environment.
6. The Migrant and Seasonal Agricultural Worker Protection Act, which protects
migrant and farm workers by establishing employment standards related to wages,
housing, transportation, disclosures and recordkeeping.
The authors also put a special spotlight on the more recent 2010 Dodd-Frank Act, which
provided significant updates to the Sarbanes-Oxley Act of 2002, also known as SOX. Schultz
and Harutyunyan (2015) noted that SOX was passed in response to significant fraud in the
financial markets in the late 1990s and early 2000s involving companies such as Enron,
WorldCom, and other private sector companies where it seemed as though there was a
systematic pattern in fraudulent corporate behavior. SOX is one of twenty laws that are enforced
by the United States Department of Labor.
The Dodd-Frank Act, which is enforced by the U.S. Securities and Exchange
Commission, was passed in response to the financial meltdown and scandals that led to the
economic crash of 2008. In this, the federal government explained that the statute of limitations for filing anti-relation claims was 180 days after the date an employee became aware of retaliation. Additionally, “Dodd- Frank in some cases provided bounties or financial incentives to whistleblowers whose complaints successfully led to a SEC investigation and imposition of a penalty sort of a qui tam action against private companies committing securities fraud” (p. 90).
Berkowitz et al. (2011) explained that Dodd-Frank provides more incentives for whistleblowers to report wrongdoing to the SEC or the Commodities Futures Trading
Commission (CTFC) instead of using internal reporting processes, which may or may not report the misconduct to the appropriate ethics monitoring organizations. Some of the Dodd-Frank 41
incentives include: a bounty for reporting to the SEC or CTFC; more statutes covered; some
claims being brought directly to federal court; no mandatory arbitration; right to jury trial; and
double or single back-pay damages (Berkowitz et al., 2011).
In short, employees should understand that should they choose to become a
whistleblower, there are federal laws that would protect them from any sort of retaliation.
However, Modesitt’s (2013) qualitative analysis of whistleblower court cases showed that
whistleblowers may not see a court decision ruled in their favor, which, in turn, provides them
little protection from retaliation. Verschoor (2012) cited the Ethics Rights Center’s 2012 report,
Retaliation: When Whistleblowers Become Victims, as a source that details “the practices of reporting illegal and unethical conduct in U.S. companies” (p. 13). Verschoor (2012) explained that “retaliation against workplace whistleblowers is now extending to previously safe groups such as senior managers and is involving more acts of physical violence” (p. 13). So, in other words, those who felt as though they would be completely protected under federal laws are now seeing that employees at any level can see some form of retaliation from another employee, their leader, or the company at large.
Modesitt (2013) argued that the court system needs to provide additional protections and anti-retaliation laws for those who are rightfully alerting others to wrongdoing they have witnessed. The research used for this literature review explained that the current laws and regulations that are supposed to protect whistleblowers are simply not enough. If an individual is abiding by a corporate ethics program, sees that other individuals are violating the rules of said program, and feels confident that an ethics leader will support them if they decide to come forward with information, the employee should feel empowered enough to become an informant or whistleblower. By having strong protections in place that are enforced by a compliance 42
officer, whistleblowers may be more likely to come forward since the risk of retaliation from another employee, their leader, or the company would seem like much less of a threat.
Conclusion
Stronger corporate, state, and federal protections enforced by ethics officers are needed for whistleblowers to feel they are completely protected from retaliation they may incur after reporting unethical behavior or business practices. Within the past two decades in the United
States, two major whistleblowing protections– the Dodd-Frank and Sarbanes-Oxley Acts—have given whistleblowers the motivation needed to bring their information to federal regulated organizations such as the SEC, if applicable. On a basic level, employees should feel as though they can approach an ethics leader to report any wrongdoing. This only happens if the employee feels that their ethics or compliance leader is trustworthy and is looking out for their well-being.
Overall, researchers have placed a major responsibility on managers and ethics leaders to ensure that ethics initiatives are implemented properly, and that their employees feel they can come forward with confidential information and will not be at risk of losing their job, being demoted, or becoming a victim of violence. Additionally, researchers found that employees, especially those on a lower level, did not wholeheartedly trust company ethics officers. This was mainly because these individuals saw the ethics officers as loyal to senior leaders—who may be the wrongdoers—and not to the employee reporting the misconduct. Researchers suggested companies work with more third-party organizations who can anonymously review and report wrongdoings; this would take the pressure off the individual employee.
What is Whistleblowing?
Berkowitz et al. (2011) define whistleblowing as any time an employee complains of unethical, illegal, or harmful behavior perpetrated by an employer. Sims and Keenan (1998) 43
define it as “present or past organization members reporting illegal, unethical, or illegitimate
activities under the control of organization leaders to parties outside of the organization who are
willing and able to take action to correct the wrongdoing” (p.411). More research is being done
on whether demographics such as gender, age, and educational level influence the likelihood of
an individual becoming a whistleblower (Sims & Keenan, 1998). This additional exploration is
needed to indicate whether one’s background will lead them to be a more likely candidate for
whistleblowing.
This phenomenon of alerting an internal and/or external audience is not new. For
decades, lower-level employees, managers, and even senior leaders have spoken up and spoken
out to internal and external stakeholders and stockholders (Gao et al., 2015) when they have witnessed wrongdoing happening within their organization. Dixon (2016) explained that in the
past decade alone, whistleblowing has become one of the most effective ways to expose and
eradicate corruption, fraud, and other forms of misconduct in the public and private sectors.
Furthermore, employees have been far more likely to be a whistleblower when the unethical behavior has become a part of everyday life at an organization, even when it comes at the expense of others—usually the company’s customers. Of course, there are minor infractions
that happen every day. However, as Near (2004) explained, the type of wrongdoing that takes
place at a company can determine whether the company gets a slap on the wrist, is fined, or
creates a major shake-up within the organization. (This is addressed later in this literature
review.)
Miceli et al. (1991) also believed that whistleblowing may be more likely to happen if the
whistleblower can empathize with the victim of the wrongdoing, whether that be a fellow
colleague or a customer. The authors wrote, “People may be more emotionally involved when 44
someone in their ‘we group’ is in trouble, and they are likely to be more motivated to help a
person from that group” (p.116). Alford (2001) also believed that a whistleblower’s
identification with the victim involves a concern for others, but “identification with the victim is
at least as much about refusal to identify with the aggressor, who is usually in a position of
authority” (p.85). The whistleblowers that are featured in this literature review were individuals
who witnessed major ethical violations, empathized with the victims (who could have been other employees or customers) and decided to take a major risk and report the misconduct.
Types of Whistleblowers
There are two types of whistleblowing: active and passive. Active whistleblowing is when an employee takes concrete steps in ensuring their company’s wrongdoing is exposed to a larger audience. Passive whistleblowing occurs when an employee reacts to a request made by a governing body about any potential wrongdoing at their company (Berkowitz et al., 2011). As a seminal author on ethics and whistleblowing, Miceli (2008) has written several research articles on why both types of whistleblowing are necessary: They each expose wrongdoing in an organization that would otherwise be ignored or accepted as commonplace.
A recent example of both active and passive whistleblowing occurred during the
Volkswagen (VW) scandal that rocked the automotive industry in September 2015. Rhodes
(2016) gave a background on VW and highlighted the company as an industry leader due to their catchy advertisements, known longevity, and reliability. With a large fleet of cars—from the famous Beetle to the always popular Jetta—and notoriety around the world, almost no one outside of VW would have guessed that they were covering up environmentally harmful emissions results that had been going on for years. 45
Rhodes (2016) explained that once the falsified diesel emissions scandal became
common knowledge within households around the world, the entire auto industry was put on
high alert. Instantly, Volkswagen became a case study on the importance of compliance and
ethics officers, and on why ethics policies are so important. Active whistleblowers at VW spoke
up about how diesel VW cars were being programmed to report incorrect information about
emissions results. Passive whistleblowers came into play when government agencies, such as the
Federal Trade Commission (FTC), demanded more information once they understood and
realized how widespread of a problem this emissions issue was. After a series of investigations by the FTC and other compliance agencies around the world, VW was ordered to pay more than
$9.5 billion dollars to car buyers.
One could argue that the reason this unethical behavior was allowed for so long at VW was because lower-level employees witnessed their leaders condoning the falsification of emissions testing with the diesel cars. One could also ask themselves how culpable compliance officers were if they knew about the misconduct taking place at the company. Were they held accountable if they knew what was going on but failed to act for fear of losing their jobs or facing other consequences?
Since the VW scandal broke more than five years ago, several top leaders at the organization were fired because they knew what was going on, condoned the decisions being made, and disregarded the rules and laws set in place. With a company as large as Volkswagen, it was expected that drastic measures were taken to right the wrong, especially because they are an industry leader with major influence within the automobile business. Greenwood (2015) explained that when you are a large international corporation with strong influence both internally and externally, employees—and the company as a whole—must recognize that they 46
are held to a high standard. Corporate wrongdoing, from minor infractions to major scandals,
certainly happens within companies all over the world. The authors included throughout this
paper, including seminal authors Near and Miceli, argued that whistleblowing is therefore essential to providing a checks and balances system for corporate entities.
Zhu (2004) and Park et al. (2015) noted that employees look to their senior leaders to be
ethical and authentic when leading a company to financial success. “Developing ethically and socially conscious leadership is critical in human resource development (HRD) in that leaders’ values and behaviors influence responsible and ethical organizational cultures” (Park et al., p.
386). If the trust is not there between an employee and a leader—or the management as a whole—the entire morale of the team, and potentially the company, is at risk (Gao et al., 2015).
Conclusion. Whistleblowing is not a new phenomenon. For decades, employees and
former employees have alerted internal and external stakeholders of major misconduct that has
taken place within an organization. Active and passive whistleblowers have changed the way
businesses and industries conduct business, and these whistleblowers have also helped new laws
and statutes be created to prevent similar wrongdoing in the future.
The Volkswagen Emission Scandal showed how whistleblowing pushed a global
automotive company to admit they had been falsifying emissions data on cars, to recall countless
automobiles, and to be further scrutinized by their customers, their employees, and governments
around the world. The VW brand may have taken a temporary hit to its reputation, but they,
along with other automobile brands, now realize how important corporate ethics are and
understand that they are being watched by internal and external automotive regulation
organizations. 47
Importance of the Whistleblower
Cooper (2008) explained that the journey of a whistleblower can be a treacherous one.
An individual is risking their job and the threat of retaliation because, on an ethical level, they know the wrongdoing is too much to just let slip by without a consequence. One can only imagine what would have happened with Enron had Watkins not risked her livelihood to alert stakeholders, specifically Enron customers, about what was going on within the organization.
Cooper (2008) described whistleblowing as an extraordinary circumstance, and it can be easy to see why this is true—an individual could potentially be risking their well-being for a cause that may not wind up being investigated or taken seriously in the long run by a compliance officer or corporate ethics leader.
It is important to note that not all whistleblowers experience some form of retaliation.
Baltaci and Balci (2017) noted that a whistleblower can strengthen their working position within a company and gain social position if reporting the wrongdoing will positively impact the organization. In other words, if a company can get rid of the wrongdoer, but the organization is positively impacted because that individual is gone, the whistleblower may be able to increase their social capital with the company, and quite possibly the industry.
Conclusion. Corporate ethics programs should be implemented at every organization by individuals at all levels, but especially by ethics leaders. Research shows that when employees have guidelines on the way they should conduct business, behave, and interact with one another and their customers, they are ensuring they understand the rules of the organization and the industry. These rules should constantly be reviewed and pushed out by compliance and ethics officers to ensure that the well-being of the employee, customer, and external stakeholder is front of mind. However, when an individual, no matter at what level they are, decides to go against 48 these rules, the roles of the ethics leader and the whistleblower become even more important.
The Enron scandal was exposed because one woman decided that the company’s wrongdoings were too much to ignore, and she reported them. She understood that she would have to implicate many high-ranking individuals within her company, including then-CEO, Ken Lay.
Corporate ethics programs help whistleblowers understand that ethics means something in the business world: The programs ensure that employees, at every level, are being held accountable.
Most of the research in this space notes that an increasing number of companies are increasing the number of ethics officers employed in businesses in various industries. In order for a company to maintain a positive reputation, grow their business dealings with business partners, and be held accountable for the way they conduct business, ethics initiatives will need to be communicated more to employees, and whistleblowers will need to be encouraged to come forward if they witness any wrongdoing.
Role of an Ethics or Compliance Officer
According to the Ethics Officer’s Association, the role of an ethics or compliance officer
(both titles are used interchangeably) is to be a leader in the area of business conduct (Abodor,
2019). The author noted that other titles can also be used interchangeably for these officers, including:
• Assistant vice president and director of compliance programs
• Director of ethics and compliance
• Corporate manager, compliance
• Vice president, ethics, compliance, and internal audit
• Director of corporate compliance
• Director of integrity, security, and compliance 49
Heineman (2016) explained that compliance officers must ensure that there is a coherent
compliance approach. In other words, employees at every level need to be able to understand the
rules that the staff is expected to abide by. Compliance resources should be in plain language,
easily accessible, and strictly enforced in order to maintain a fair and equitable workplace where a misconduct allegation will be investigated.
Gutterman (2016) noted that the following requirements are necessary for compliance
officers:
• Officers need to have a thorough understanding of the essential elements of their
compliance programs.
• Officers should be able to advise the leaders of an organization with respect to
educating them on their compliance duties and obligations.
• Officers should be prepared to guide the organization through the preliminary
steps on creating a compliance infrastructure.
Ethics and compliance officers have a duty to ensure ethics policies are communicated,
followed, and enforced by employees. Tenure, gender, education, role, or level should not factor
into whether punishments are handed out for misconduct. Officers are entrusted to fairly enforce
rules and prevent retaliation within their organization. These officers should also be acting as an
advisor to senior leaders on compliance concerns while also reporting any misconduct trends that
could impact the organization’s reputation and culture.
What Prevents Employees From Becoming a Whistleblower?
Most of the readings used for this literature review highlighted one major theme:
Employees hesitate to blow the whistle due to the fear of retaliation. Verschoor (2012) stated that
“the rate of retaliation against whistleblowers is increasing far more quickly than the rate of 50 people reporting misdoing. Since 2007, the rate of reporting misconduct, or whistleblowing, has increased from 58% of those who observe improper behavior to 65%. Of the reporting group, the rate of employees experiencing retaliation increased from 12% in 2007 to 22% in 2011” (p.13).
So, in other words, the number of people who are reporting unethical practices has increased, but so has the amount of retaliation.
McGlynn III and Richardson (2014) explained that “since reporting wrongdoing is a voluntary act by whistle-blowers, they are at the risk of even greater retaliation, scorn, and rejection from members of their professional networks, as stigmas perceived as controllable by the individual are viewed more negatively than those that are involuntary” (p.229). This theme was found in many of the readings centered on whistleblowing retaliation. When an individual chooses to be an active whistleblower, they are more likely to encounter someone who reacts negatively towards them, especially if the information implicates the wrongdoer. Again, the active whistleblower is seen as someone who is voluntarily offering up information. The passive whistleblower tends to experience slightly less retaliation since the information they are providing is seen as involuntary, with an individual mandated to give clear, honest accounts of events to the best of their knowledge.
Dixon (2016) noted that “while society, shareholders and employees all benefit…a whistleblower is often typecast as a snitch that ‘betrays a sacred trust largely for personal gain,’ and faces a very real threat of retaliation” (p. 173). This type of pressure can weigh heavily on an individual that is deciding whether they will alert others of wrongdoing happening at their company. As we will continue to learn in this literature review, being typecast and labeled can deter an individual from coming forward with information as it could negatively impact their career and future earnings. 51
Power and Status. Sunmath et al. (2011) stated that “situation characteristics, such as
wrongdoer power and status, the seriousness and type of wrongdoing, and the use of external
whistleblowing channels were all positively related to retaliation…The more powerful the
wrongdoer, or the more dependent the organization is on the wrongdoer—all other factors being
equal—the more retaliation will be directed toward the whistleblower” (p.169). Gao et al. (2015) mirrored this notion with their own research that explained how the wrongdoer’s status and power within the company can influence the whistleblower’s intention via perceived seriousness and personal cost.
Cortina and Magley (2003) also discussed the intimidation factor that surrounds reporting the misconduct of a senior leader. The authors explained, “Exposing the misbehavior of a highly placed member of the organizational hierarchy—thus characterizing that person as unlawful, unethical, or inappropriate—questions that hierarchy” (249). In addition to this, Miceli and Near
(1992) noted that after the wrongdoer—specifically when he or she is in a position of power—is reported, the whistleblower’s peers may retaliate to show the whistleblower that he or she has deviated from behavior defined by social-structural norms.
One can imagine how intimidating it would be to report a manager, director, vice president, chief operating officer, chief executive officer, president, or any other senior leader when they hold so much power. Cortina and Magley (2003) explained that “the greater the power disparity between wrongdoer and victim, the more that the victim’s resistance deviates from behavior described by his or her social position” (p. 260). When the wrongdoer has the power to reprimand an employee for whistleblowing, fire the individual, or force the individual to feel so uncomfortable in the workplace that they decide to resign, it can be easy to see why whistleblowing may not be as popular as it should be. Again, it is critical to note the importance 52
of compliance and ethics officers: Their roles are to ensure that the likelihood of retaliation is
kept to a minimum and rules are enforced, no matter the status of the wrongdoer in the
organization.
For many years, individuals, groups, and companies have attached a sense of shame to
whistleblowing (Andrade, 2015). People see unethical behavior happening often within their
organization (Cortina & Magley, 2003), and the range of severity influences whether they speak
up to others about what they have witnessed. Alford (2001) and Rehg (2008) explained that
employees recognize the power and influence their organization has, so when the employee
decides to report fraud, harassment, or other types of unethical behavior, they recognize the
damage they could be doing to their careers, reputation, and influence within the company (Gini,
2004)—and in some cases, an entire industry if they are put on an industry blacklist.
Additionally, the hassle that may be involved with going through an entire process to announce
unethical behavior may, for some, be too great of a risk in which to participate (Dworkin &
Baucus, 1998).
Modesitt (2013) and Mesmer-Magnus (2005) highlighted how crippling the concept of retaliation is for potential whistleblowers. As mentioned earlier with the VW and Enron scandals, there was a lot at stake—mainly, the threat of severe financial loss for both companies—that made the fear of retaliation real for anyone thinking about reporting the fraudulent acts in which these companies were participating. Being an active whistleblower is tough enough; an individual is essentially accusing a company of doing something unethical. It is the employee’s word against the organization. However, once an individual or group becomes a passive whistleblower, an external governing organization (such as the Federal Trade
Commission) may begin asking for specific information and cooperation. Things get complicated 53
and uncomfortable for the company because an external governing body, with the power to
implement penalties, is now involved. No one likes it when someone with ruling power –such as
the federal government—is coming around asking questions, businesses included.
However, for some, the risk of retaliation is still worth taking because the wrongdoing is
too outrageous to ignore. For example, if an employee observes sexual harassment or assault that humiliates a colleague, they may be more likely to speak up about what they have witnessed
(Cortina & Magley, 2003). There are types of wrongdoing like insubordination or the theft of office supplies that may go unreported; however, gross misconduct may not be as easy for some to overlook.
It is important to note that retaliation is the primary fear of a potential whistleblower but is not the only reason why an individual remains quiet. Bjorkelo et al. (2011) explained that misconduct, such as medical scams or economic fraud, can create major economic and human costs. In situations such as these, the whistleblower understands that reporting major misconduct could ultimately impact their colleagues in a negative way, with several individuals inadvertently losing their jobs due to the whistleblowing. Enron is the most well-known American example of this: Because of Watkins and others bringing attention to the unethical business practices, thousands of employees lost their jobs, the company went bankrupt, and key leaders within the organization went to prison. Who would want to carry that type of whistleblowing responsibility on their conscience?
Conclusion. The research for this section focused on retaliation being the primary fear for potential whistleblowers. Reporting or discussing misconduct could result in the whistleblower experiencing micro-aggressions such as social isolation and professional devaluation, and can even lead to demotion, especially if the wrongdoing involves key leaders 54 within an organization (Cortina & Magley, 2003). Several of the researchers discussed how the potential whistleblower’s status versus the wrongdoer’s status greatly impacted whether the individual reported the ethical violation. The theme in this section was clear: The more senior the wrongdoer is, the more tentative the whistleblower will be at alerting internal and external stakeholders. An individual may also hesitate to be a whistleblower if they know they will be implicated in the wrongdoing as well. Watkins understood that she would be tied to the Enron scandal, but decided to come forward anyway. Research showed that most people would not come forward under those circumstances. The researchers noted that an individual is more likely to come forward if the wrongdoing is against a colleague or someone else with whom they feel they can empathize.
How Can Employees Be Protected From Retaliation?
The biggest deterrent from alerting internal and external stakeholders about illegal or unethical activity or behavior within an organization is retaliation. Cortina et al. (2001) explained that whistleblowers can experience psychological conditions such as stress, depression, and anxiety, which may make the fear of retaliation even more unnerving. Employees who want to become a whistleblower may also be fearful of being ostracized within their organization, being demoted, encountering verbal (and in some cases, physical) abuse, or being terminated soon after alerting others to the unethical behavior. How can employees feel it is safe to alert others of wrongdoing without wondering what type of retaliation they may encounter? Although anti- retaliation laws have been around for decades in the United States, there has been a stronger push for corporate ethics officers to come in and provide protection for employees within the past thirty years due to an increase in publicized scandals, along with a need for stricter enforcement, regulations, and sanctions (Heineman, 2016). Ethics officers, if they are performing their job in 55
an ethical manner, act as a shield between the whistleblowing employee and the organization that can retaliate against them. They allow the whistleblower the right to come forward with information without the fear of having their reputation tarnished, losing their job, and being shamed for making an ethical decision (Rashty, 2015).
On a basic level, corporate ethics officers are there to enforce ethical behavior within an
organization. Adobor (2006) explained that these internal activists are charged with being the
advocate of the employee, not the organization. It is easy to see how an employee would be
skeptical of these types of officers, because the officers are also employees of the organization.
Who is to say that an ethics officer stays true to the mission of ensuring ethical practices are
being implemented within an organization, and not ensuring that their employer saves face and
avoids a scandal? Adobor (2006) argued that corporate ethics officers should make it their duty
to be as transparent as possible to both the employee and the organization. In other words, if an
employee blows the whistle on fraud, sexual harassment, or other forms on unethical behavior,
the corporate ethics officer has a duty to investigate the claim(s), protect the employee from
retaliation, and be cooperative if legal action is being taken.
McGlynn III and Richardson (2014) suggested a list of questions compliance officers can
use when speaking to a whistleblower, including:
1. Can you recall when you first began to suspect something was wrong?
2. As you decided what to do about the situation, what factors were important in that
process? (e.g., fear over losing your position)
3. Did you seek advice or talk it over with anyone before reporting? If so, whom?
4. Did you know where to go to report the situation? Why/why not?
5. What do you think motivated you to blow the whistle? 56
6. Did you experience retaliation?
a. From whom?
b. Can you describe it?
7. Did you feel or receive support from and individuals or organizations? What effect did it
have on your experience?
8. Do you think your gender had any effect on the whistle-blowing process or the response
to your report of wrongdoing?
9. What have been the long-term effects on your career?
10. Would you blow the whistle again if you had to do it all over?
Although this is not an extensive list of questioning that can be used by ethics officers, the authors believed that this is a good starting point when speaking to a whistleblower. Some of the questions could be challenging for the whistleblower to answer, including who else the whistleblower has talked to about the wrongdoing and whether any form of retaliation was experienced. However, these types of questions show the whistleblower that the ethics officer
(and in some cases, their manager) is taking their report of misconduct very seriously. Ethics leaders should feel empowered to step outside of their role and become an advocate for the employee, especially if the whistleblowing information that is being provided is valid and factual.
Summation
Although many organizations worldwide recognize the importance of having strong corporate ethics leaders and ethics practices and programs that ensure an organization is focused on environmental, customer, and employee well-being (Andrade, 2015), this mentality is hard to realize without strong enforcement. A number of the research articles in this literature review 57
noted that although more investigation is needed, it can be difficult to obtain qualitative and
quantitative data because employees know there are potential consequences they may face if they
become a whistleblower. This could influence whether potential whistleblowers want to step
forward—if they do not see anyone else doing it, or if they hear through the grapevine that there
will be consequences, they may choose to remain silent in order to avoid any type of retaliation.
Corporate ethics, compliance, and whistleblowing are topics that are not openly and
frequently talked about in the workplace. Although many individuals have a basic understanding
of what company ethics and whistleblowing are defined as, they are not clear on what sort of
protections are afforded them should they choose to report misconduct. They also are not aware
of how long a court trial may take if they are involved in testifying or being an informant for a
federal agency. The Volkswagen and Enron scandals were tied up in the courts for years, with
thousands of employees losing their jobs in the aftermath. Who wants to be known as the
individual that reported the misconduct, but was also indirectly responsible for all their colleagues losing their job? This question is asked as food for thought, and as a way for the reader to understand that whistleblowing can be a major responsibility.
Some may argue that it is easy to understand why whistleblowers choose to remain silent:
The threat of retaliation, and the lack of protection from companies and the court system could instill a logical fear within a whistleblower. Potential whistleblowers quickly understand that implicating their business area or company may also implicate themselves. One example of this is Mark Whitacre, who, in 1995, alerted federal authorities to price fixing at his company, Archer
Daniels Midland, but wound up serving more than eight years in prison for his part in embezzling money from the company. This example goes to show that one may blow the whistle, but immunity may not always protect the whistleblower. 58
Many of the authors noted that the whistleblower and corporate ethics initiatives serve an important role within an organization because they provide the most authentic attempt at a checks and balances system within an organization. Laufer and Robertson (1997) explained that having a strong corporate ethics program is critical in the business world because: (a) external stakeholders and non-stakeholders are able to have a positive perception of the organization; (b) there is a positive perception that the company’s mission and climate are legitimate; (c) employees behavior and practices can be influenced; and (d) the program can have a strong influence on the organization’s culture and ethos. Participants interviewed and spotlighted in
Chapter 4 of this case study would agree—strong ethics programming is critical to corporate culture and an organization’s reputation.
Some of the research from this literature review highlighted the importance of a corporate ethics officer and a corporate ethics program, but not surprisingly, some whistleblowers do not believe ethics officers and ethics programs completely protect the employee from retaliation (De
Colle & Werhane, 2008). With the addition of more anti-retaliation protections for whistleblowers by the court system and corporate ethics programs, it is hoped that employees will feel more at ease alerting internal and external stakeholders of wrongdoing and will be honored, not disparaged, for doing the right thing.
When researching the importance of corporate ethics and preventing retaliation, the same authors, themes, and findings were in several journal articles. Seminal authors Alford (2001),
Kaptein (2011), Mesmer-Magnus (2005), Miceli (1991b, 1994, 2005, 2008), and Near (2004) were cited in many academic articles regarding corporate ethics and whistleblowing. Almost all the articles used for this literature review noted that not enough data are available to understand 59 whistleblower motivators; cases where federal protections did not safeguard the whistleblower; and what personal ethics are more likely to push someone to become a whistleblower.
Chapter 3: Research Design
The purpose of this case study is to understand whether compliance officers at one property and casualty insurance company believe their corporate ethics protections are strong, are fairly enforced at every level, and prevent retaliation in any form. My aim is that other corporate ethics and compliance officers can utilize my results and analysis to have a better understanding of what they can do in order to improve the protections for their employees once they report misconduct. It is one thing to have a code of conduct policy in writing; it is another thing to have those policies implemented in a way where all employees feel protected.
The mission of this chapter is to focus on the research design. The case study approach, which falls under qualitative research, will give the reader an understanding of the various perspectives and experiences compliance officers go through when thinking about how they can protect employees. The goals of this study are to influence the way corporate ethics and compliance officers in the insurance space conduct their investigations of misconduct, and to help them eradicate the belief that retaliation is inevitable. If insurance is supposed to be there when a client needs it the most, so should code of conduct policies for employees.
Research Questions
Two research questions guided this study: 60
1. Based on the whistleblowing reporting experiences of compliance and ethics officers,
do employees believe that code of conduct policies protect everyone from negative
consequences, such as retaliation?
2. Do employees feel any immediate action will be taken once they have reported
misconduct to an ethics or compliance officer?
Role of the Researcher
Due to my interest in business ethics and compliance, I believe investigating the
efficiency of corporate ethics policies and the officers who enforce these rules is important for all organizations. Working closely with various human resource departments in my career has given
me an intimate view of how critical it can be to broadcast ethics policies as frequently as
possible. Additionally, because of my current role as a diversity and inclusion (D+I) officer, I
have seen first-hand how tough it can be for an employee to be vulnerable and share parts of
their life most people do not know about. Because I have seen a situation from the compliance
side and the employee side, I found the topic of corporate ethics compliance to be even more
interesting. Because of my role as a D+I officer and the special bonds I build with employees as an advocate, I understood that I needed to keep my own biases and assumptions away from my
interviews in an effort to keep the case study participants’ opinions separate from my own
beliefs. I am not in a supervisory role with any of the case study’s participants; having such a
role could possibly impact the data collection process (Smyth & Holian, 2008). I have included
additional details about the participant selection process in the next section on selection
benchmarks.
As mentioned above, I am aware of the sensitivity around corporate ethics compliance
and implementation. Because my peers frequently confide in me to listen to their experiences 61 surrounding misconduct, I am very aware of how a lack of action on the part of compliance officers can negatively influence whether that employee is willing to speak up again in the future. My human resources peers educate me on some of the misconduct stories they hear from employees; it is because of this—and my role as a D+I officer—that I am asked to keep an ear out for any wrongdoing I may hear about around the office.
Asking employees whether they feel protected by their employer is an important topic to delve into because organizations must understand they should always look for new ways to protect those that work for them. Anti-retaliation protections should be of the utmost importance for ethics and compliance officers. New whistleblowing claims appear quite frequently in government and the entertainment industry, and one could argue the frequency is due to the world’s appetite for a new misconduct claim. We have seen various examples of misconduct in the auto industry and federal and local governments, sexual harassment and assault claims in the entertainment industry, and financial fraud with countless organization for decades.
The researcher is a key player in the qualitative research process. I write from a position of privilege because my colleagues feel comfortable confiding in me due to my role, and my HR and compliance colleagues respect me enough to share some of the claims that are reported to them. Not many employees at any company can state they have heard both sides of various misconduct claims. I have formed opinions through my professional networks and technology which I brought to this case study; this could have worked for or against me (Unluer, 2012). To minimize my biases and opinions, I ensured that I did not tell my participants my sentiments regarding the stories they shared with me. I acted solely as a listener who was determined to uncover additional actions their company could take to help employees feel heard and ensure some sort of action is taken to prevent the wrongdoing from happening again in the future. 62
Research Tradition
When a researcher chooses to utilize the case study method, he or she is opting to study
the various perspectives and experiences from data sources in the same industry, field,
profession, or organization to understand what themes and viewpoints are common and
repetitive. Feagin et al. (1991) explained that the case study method is ideal when the researcher
understands a holistic, in-depth analysis is required. Yin (2017), a leading methodologist in the
case study space, identified several types of case studies: exploratory, explanatory, and descriptive. Exploratory case studies can be used as a preface to social research. Explanatory case studies can be used for doing causal investigations and research. Descriptive case studies typically require a descriptive theory to be developed before starting a research project. Stake
(1995), another case study methodologist leader, included three additional types of case studies: intrinsic (when the researcher has some sort of interest in the research), collective (when a group
of case studies are analyzed), and instrumental (when the study is used to understand more than
what is obvious to the observer). In all the above types of case studies, there can be single-case
or multiple-case applications. For the purpose of this research, the single-case study model was used since a single group was studied and analyzed. Additionally, the single-case model is
traditionally used to challenge age-old theoretical relationships and explore new ones; this allows
the researcher to get a deeper understanding of the subject matter (Gustafsson, 2017).
Additionally, Yin (2017) described four applications for a case study model:
1. To explain complex causal inks in real-life interventions.
2. To describe the real-life context in which the intervention has occurred.
3. To describe the intervention itself. 63
4. To explore those situations in which the intervention being evaluated has no clear set
of outcomes.
Single cases may be used to check or challenge a theory, or to represent a unique case
(Yin, 2017). Single-case studies also work well in instances where the researcher may have
access to a phenomenon that was previously unattainable or inaccessible (Yin, 2017).
Additionally, Yin believed that a case study approach is appropriate when evaluating a program.
The mission of the study covered in Chapter 4 was to evaluate the code of ethics program, its
implementation by compliance officers, and its efficiency at one property and casualty insurance
company. Additionally, the research attempted to understand the variety of perspectives
surrounding the whistleblowing experience, the ramifications of coming forward to an ethics or
compliance officer, and the protections employees believe they have after they have reported
wrongdoing.
Procedures
To conduct a thorough qualitative research procedure via case study, I included participant and industry selection criteria, recruitment and access, data collection and management, data analysis and interpretation.
Case Study Approach
As mentioned earlier, a single-case, phenomenological study was utilized. Based on
Stake’s (1995) types of case studies, the research took the intrinsic and instrumental approach.
These two approaches were applied based on my previous interest in corporate ethics policies
and implementation, along with whistleblowing protections. Additionally, I aimed to uncover
obscure whistleblower experiences and sentiments that are not immediately obvious to an outside
observer. 64
Participant Selection Criteria
The research cited in Chapters 1 and 2 explained the complexity of ensuring corporate ethics are being implemented by compliance officers. To gather and analyze the officers’ experiences from a single, specific population, a group of six ethics officers were selected based on the following criteria:
• Participants work for the same organization.
• Participants are familiar with their organization’s code of conduct and/or code of
ethics policy.
• Participants can clearly discuss their role as an ethics officer.
• Participants can discuss the type of misconduct they have heard about or investigated,
including, but not limited to:
o Sexual harassment or misconduct.
o Financial fraud.
o Racial harassment or misconduct.
o Blackmail.
o Intimidation or retaliation.
o Theft.
o Damage to company property.
o Insubordination.
• Participants have investigated during an 18-month period between 2019–2020.
• Participants can explain in detail the experience they recorded and/or investigated as
it is tied to unethical behavior. 65
• Participants can articulate the social, emotional, or psychological impact
whistleblowing can have on the life of an employee.
As a note, a participant’s race, ethnicity, gender, education, or sexuality will not positively or negatively impact their qualification for this case study.
Although the participants interviewed are a part of one organization in one industry, the research should be applicable and useful to ethics and compliance advocates and enforcers in a variety of industries, from large conglomerates to small organizations.
The target organization for this case study is one of the largest property and casualty insurance companies in North America. This company is highly respected in the insurance industry and is well-known for the top-tier service it provides to hundreds of thousands of customers. With offices and employees in various cities across the United States, this organization (which hereafter will be referred to as P&C Insurer) has a diverse group of employees from various socioeconomic, racial, and religious backgrounds. Additionally, because the organization is established within the industry, employee tenure ranges from one day to a few decades.
In order to investigate the research question, interviews were conducted and data collected from P&C Insurer’s ethics officers who were enforcing ethics policies within their organization in 2019 and 2020. Because of the sensitivity of the misconduct reported to compliance and ethics officers, and to protect the identity of the participants, pseudonyms were used to identify each individual. The assurance of an alias encouraged participants to be open and candid during their interviews. From my experience within my organization, the fear of discussing retribution—from both a whistleblower’s or a compliance officer’s perspective—can be very real and very intense, and in many instances results in individuals being reluctant to step 66
forward and report unethical behavior within their organization. It was my aim to have
participants voice their opinions and concerns during their interviews to help express the ethics
officers’ perspectives. This can potentially help other ethics and compliance officers understand
how they can better protect and support their employees.
Recruitment and Access
The recruitment process commenced after IRB approval from Northeastern University
was granted. With the guidance of the participant selection criteria, the participants were
recruited via my student email. After researching the names, titles, and locations of the ethics and
compliance officers, I emailed these individuals with the subject line, “Seeking Compliance
Officers to Discuss Code of Ethics Policies.” The email informed participants to message me directly through my student email address if they were interested in participation. Once participants expressed interest, I responded with more information regarding the study’s goals, the case study’s requirements, interview protocol, and how the interviews could potentially help educate ethics and compliance leaders on how ethics policies and protections can be improved.
The interviews took place via phone at the convenience of the participant. No compensation was provided to participants.
Prior to the recruitment process, I completed the training offered by the National
Institutes of Health on the protection of human subjects in research, a critical step that is required before beginning outreach to potential participants. The case study was reviewed by the
Institutional Review Board (IRB) of the primary investigator. It was only after receiving approval from the IRB that I started contacting potential participants within one organization.
The participants were asked to review and sign informed consent forms. I frequently reminded the individuals that their participation in the phenomenological case study was 67
confidential, and that the confidentiality of their organization would be protected as well.
Additionally, participants were reminded that participation was voluntary, and they would not be
forced to answer all questions if they chose not to. They could also withdraw from the case study
at any time. Finally, I allowed each participant to review their individual interview before it was
used in this case study.
Participant confidentiality is of the utmost importance. Because of the sensitivity around
corporate ethics compliance and whistleblowing, participants were asked to refrain from
discussing the interview and the case study with their peers until the study was concluded. I
encouraged the participants to share the business area they work in, or refrain from answering if
they chose to do so. Only I have access to a participant’s identity.
The primary source of data collected for the case study was phone interviews with
participants. These interviews were compared against the code of ethics policies reviewed and highlighted in Chapter 1, primarily to determine if the misconduct reported was handled properly. Throughout the data collection process, all files and transcripts were stored on one computer that is password-protected, and participant confidentiality was maintained.
As stated previously in this chapter, interviews were conducted at the participant’s convenience. In the interest of time and conciseness, the interviews did not last longer than forty- five minutes. The 12 case study interview questions created were derived from the officers’ organization code of ethics policies; the McGlynn III and Richardson (2014) suggested list of questions that can be used when discussing misconduct reporting; and the relationship management theory. After asking each individual about their background (including their role, years with the company, and overall employee experience), I questioned the participants on their experience as an ethics/compliance officer, retaliation prevention their company has 68 implemented and communicated to employees, and whether they administer punishments fairly based on the wrongdoer.
I reviewed the ethics policies from the participants’ company, a large property and casualty insurer in North America. The organization’s parent company and other operating companies within its enterprise have a total employee population of 12,000, with four of the five operating companies having employee populations of more than 1,000 employees. The ethics policies addressed the participants’ organizational definition of harassment, the anti-retaliation policies, and ways employees can report misconduct in person, on the phone, or anonymously.
Data Management
Once the data were collected, I utilized the information collected for interpretation and analysis. The data were managed in the following ways:
• Transcription: The interviews were recorded with an audio device provided by me.
Once the interviews were conducted, I listened to each conversation and transcribed the
conversations using the password-protected laptop. Once the interviews were transcribed,
I reviewed each transcript for accuracy.
• Data storage: Since the interviews were conducted using the same audio recording
device, each interview was downloaded and stored on the same password-protected
computer for privacy. Signed digital consent forms are stored in a locked drawer in my
home office. One year after the formal conclusion of this case study, signed consent
forms, notes, and any documents tied to the study will be shredded. All electronic
documents, transcripts, and notes will also be deleted.
• Data Analysis: Maxwell (2013) detailed three primary categories of data analysis that
can inform a researcher’s study: memos, coding, and analytical analysis. I placed a great 69
emphasis on coding properly and ensuring there was a strong focus on understanding the
analytic analysis of the data collected. After the conclusion of each interview, I reviewed
each transcript for commonalities in the misconduct reporting experiences of compliance
officers, as well as any unique experience reported by a participant. My next step was to
begin coding each interview. Saldana (2015) noted how concept coding can use
expansive descriptors to give meaning to the data collected. Microsoft Word was used to
code transcripts. After each interview was coded, I reviewed the codes for any
commonalities or ongoing themes, which fell into the following six categories: describing
a feeling; moments of pause to contemplate an experience; a comment of “I should have
done more” or “employees are less likely to say something;” describing a reported sexual
harassment experience; compliance officers expressing a perceived lack of trust or
confidence in the employees’ view of their role as an ethics/compliance officer; and the
mention of a relationship. Once the interviews were transcribed, reviewed, and analyzed,
I checked for themes identified from the six interviews.
Interpretation
Once I established coding themes from the officer interviews, analytic memos
allowed me to understand how the data collected can inform and educate compliance and
ethics officers on how their company’s code of ethics policies can be improved. All six
interviews were given a comprehensive interpretation using the contextual integrity heuristic
(Sar & Al-Saggag, 2014). Through interpretation, I wanted to learn whether the compliance
officers believe the larger employee population understands the company’s code of ethics
policy; if the officers believe more can be done to persuade a whistleblower to report 70
misconduct; and whether the company’s current whistleblowing process encourages or
discourages employees from coming forward again.
Standards for Valuable Qualitative Research
Tracy (2010) noted that top-tier qualitative research possesses a focus on credibility, ethics, and transferability. Additionally, the author noted the importance of an ethical researcher, the validity of the data, and unbiased and reliable methods used for the case study (Tracy, 2010).
For the case study and subsequent research findings to be credible, I ensured the utmost care was taken to conduct the research in an ethical way and to report all themes and findings of interest. Because the research centered on ethics and compliance protections, retaliation, and whistleblowing, I ensured ethical measures were taken throughout the study.
The IRB review and approval were necessary to protect the study’s participants. All six participants were promised confidentiality, which was ensured through pseudonyms and referring to their organization as P&C Insurer. Although I am interested in each individual’s experience as a compliance officer enforcing their organization’s ethics policies, the primary focus was on identifying themes and experiences that can be used to help educate other compliance and ethics officers not only in the property and casualty insurance space, but industries around the world.
Finally, the study triangulated experiences by identifying multiple perspectives on code of ethics guidelines, anti-retaliation policies, and the overall sentiment on whistleblowing. Yin
(2017) explained that various viewpoints on the same topic can add a deeper understanding and better analysis. 71
Potential Research Limitations
I understand that several limitations may impact the outcome of this study. These
limitations are broken into three categories: the impact of the COVID-19 virus and its potential to impact the way ethics officers connect with employees; the whistleblower’s relationship to the wrongdoer; and the number of ethics and compliance officers that agreed to participate in this case study.
The 2020 COVID-19 virus has changed the way people across the world interact with one another, which includes the way people work and collaborate in the workplace. The deadly virus may change the way employees interact with one another, which can include the way employees report misconduct of their peers. The interviews that were conducted for this case study were conducted with ethics and compliance officers via telephone due to the pandemic, so the participants’ accounts of reported wrongdoing may be prior to the pandemic’s impact on the way employees work and collaborate with one another.
Second, RMT suggests that the relationship between employees—whether that relationship is between friends, a manager and his/her direct report, a leader and an employee from another business area, or employees that do not know each other very well—can influence whether an individual decides to report wrongdoing. Compliance officers are in the workplace to serve all employees while enforcing corporate ethics policies, but I was curious to discover whether these officers believe reporting is impacted based on the whistleblower’s relationship with the wrongdoer.
Next, this case study could be limited because it only focused on compliance officers, their company’s policies, and reported misconduct from one organization. Participants could have the groupthink mentality where they believe ethics policies are good as is and 72 whistleblower protections are strong. Part of the researcher’s mission was to understand whether past experiences in the compliance space have influenced the way officers view their overall role as ethics officers within the organization.
Conclusion
This research aimed to understand whether code of conduct policies created by compliance and ethics officers truly protect employees from retaliation once the individual reports misconduct. I understand that each experience shared by the whistleblower is subjective; however, that should not devalue the experience of the individual who chooses to report misconduct. A qualitative, phenomenological case study approach was beneficial in understanding the data collected and experiences shared during each interview. Understanding the gaps in employee protections can help improve ethics policies for employees at companies around the globe.
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Chapter 4: Results
In this chapter, research findings have been analyzed from data collection. To structure the interview, I presented 12 primary questions that were asked and answered by all six participants, including follow-up questions from statements that necessitated a more extended answer. The questions were posed to meet the need of the research objective, which was to understand whether compliance and ethics officers believe they are enforcing ethics policies and punishments for employees, no matter their level within the organization. The results of the findings have been presented in a manner that is logical and based on research objectives.
I made the decision to interview compliance and ethics officers from the same property and casualty (P&C) insurance company. For the purpose of this study, compliance and ethics officers were from the human resources and legal departments. After getting interview approval from the leader of compliance, an email was sent to the compliance officers from my student email address seeking volunteers to participate in the study. Only six participants opted to participate in the case study. Participants were told that they could only contact me through my student email, which meant they could never contact me through our work email addresses or any work platforms at any time. Participants were also advised that the only contact with me would be through my student email address or via phone calls, and if any messages came through any other means, they would be deleted with no response. Finally, participants were informed that all correspondence would be virtual or via telephone due to the COVID-19 pandemic that made it unsafe to have direct contact with participants.
Once I identified each participant, I explained the goal of the case study. Before initiating the interviews, I reviewed an informed consent document and encouraged each participant to ask questions before, during, and after the interview to ensure that they were comfortable with the 74 study. Once each participant confirmed that they understood the project’s mission and all aspects of the study, I asked participants to virtually sign and date the digital consent document. Due to the sensitivity of the topic, I informed each participant that a pseudonym would be used to protect their identity. Participants were also reminded that they could withdraw consent at any point of the interview, which would end their participation in the study. Every participant made it through the end of their individual interview and answered all questions asked. Table 4.1 gives a brief overview of participants, including their highest level of education and their department.
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Table 4.1
Overview of Interview Participants
Overview of Interview Participants Company Industry Participant Department Most Frequent In-person or Highest Name (Pseudonym) Misconduct Phone Call Level of Reported Interview Education
P&C Property Charlotte Human Sexual Phone Call Four-year Insurer and Deveraux Resources harassment college Casualty degree Insurance P&C Property Scarlett Chandler Human Intimidation Phone Call Four-year Insurer and Resources college Casualty degree; Insurance Society of Human Resource Managem ent (SHRM) certificati on P&C Property Barbara Ann Human Insubordination Phone Call Graduate Insurer and Resources degree Casualty Insurance P&C Property Paul Hazel Human Financial fraud Phone Call Four-year Insurer and Resources college Casualty degree Insurance P&C Property Ana Joshua Human Sexual Phone Call Graduate Insurer and Resources harassment degree Casualty Insurance P&C Property Debbie Haney Legal Sexual Phone Call Graduate Insurer and harassment degree Casualty Insurance Source: Researcher (2020) 76
Age and Gender
Due to participants varying between the ages of 34–48, I grouped participants into four age groups: 30–34; 35–40; 41–44; and 45–50. The first age category was comprised of only one participant, a male, with a little more than six years of experience in the compliance space. The second age category, 35–40, also had only one participant, a female, with more than four years of experience in compliance. Next, the 41–44 age category had two participants, both female, who had more than 10 years of experience as compliance officers. The final group, the 45–50 age group, also had two participants, both women, who had between 10–20 years of experience as compliance officers.
Table 4.2
Age and Gender of Case Study Participants
Name Gender Age Charlotte Deveraux Female 37
Scarlett Chandler Female 46
Barbara Ann Female 47
Paul Hazel Male 34
Ana Joshua Female 44
Debbie Haney Female 44
Tenure & Job Satisfaction
I wanted to investigate if there was a relationship between a participant’s tenure as a compliance officer and job satisfaction. As displayed in Figure 4.3, five of the six participants were either satisfied or strongly satisfied with their roles as ethics officers. Only one officer had 77 no opinion either way as to whether they are satisfied or dissatisfied with the work they are currently doing.
Table 4.3
Participant Tenure and Job Satisfaction
Name Tenure Job satisfaction
Charlotte Deveraux 6 years Strongly satisfied
Scarlett Chandler 12 years Strongly satisfied
Barbara Ann 18 years Strongly satisfied
Paul Hazel 5 years No opinion
Ana Joshua 9 years Satisfied
Debbie Haney 10 years Satisfied
Interview Statements and Questions
The following statements and open-ended guided the semi-structured interviews. The responses to each were analyzed.
Statement: My Organization Has a Strong Ethical Culture
I understood the importance of exploring whether participants believed their organization had a strong ethical culture in which values and ethics are appreciated and employees believe they can speak up when they witness or hear about wrongdoing. Chadegani and Jari (2016) noted that “corporate culture is a framework that guides day to day behavior and decision making of individuals in an organization and directs employees to reach the organization’s goals” (p. 52).
The authors went on to write that, “perceived ethical culture is an encouragement by top management and also from an organization to make ethical decisions and avoid unethical 78 behaviors. In fact, perceived ethical culture is the perception of individuals who had faced ethical and unethical dilemmas in the workplace” (p. 53).
Schwartz (2013) developed the Ethical Corporate Culture (ECC) model as a multi- dimensional example of what a corporate ethical culture should look like. The ECC model has three dimensions, which include:
1. Core ethical value
2. Formal ethical program
3. Ethical leadership
Figure 4.3 shows the three dimensions of Ethical Corporate Culture (ECC) model developed by Schwartz (2013).
Figure 4.1
Dimensions of Ethical Corporate Culture Model
Adapted from Schwartz (2013)
All participants for this research study were briefed on Schwartz’s model and agreed that strong ethical culture is backed by an organization having a set of core values, formal ethics programs and policies, and a leadership team that believes in and promotes an ethical workplace.
“This theory very much aligns with our organization. As officers, we know that the tone is set at 79
the top, and our leaders fully support the work we do as ethics officers. They understand the part
they play as well. I think we, as officers, also understand that ethical programming and core
values also build out the foundation we need to create an ethical workplace.” (Chandler)
Statement: A Whistleblower’s Relationship With The Wrongdoer Impacts Their Likelihood Of
Reporting Misconduct
Next, participants were asked whether they agree with the statement, “A whistleblower’s relationship with the wrongdoer impacts their likelihood of reporting misconduct.” Only one
participant—the youngest compliance officer to partake in this study—noted that he was unsure
as to whether the whistleblower’s connection to the wrongdoer influences whether they come
forward with information. This participant also noted that he “will probably have a different
answer for this question” once he has a few more years of experience. (Hazel) Half of the
respondents strongly agreed that the whistleblower’s connection to the wrongdoer has impacted
whether an employee has come to them to report misconduct. As one participant stated, “I can
only imagine how daunting it is to report someone you know, especially if it’s someone’s boss or
their boss’ boss. We want whistleblowers to know we are here for them, and it is our duty to
back them up—no matter the role or job responsibilities of the person they are reporting.”
(Chandler)
Statement: I believe whistleblowers are fully protected from retaliation.
The case study participants were split on their belief that “whistleblowers are fully
protected from retaliation,” with three officers strongly agreeing with the statement. One
participant stated, “I know our leaders believe in our company’s values and ethics policies, but
I’m not sure if they are truly ready to hold everyone accountable for their crimes. Are they ready
to terminate a peer at their level the same way they are ready to cut someone at a lower ranking? 80
Are they prepared to protect a whistleblower from backlash if the employee comes forward with a bombshell revelation the likes of Enron?” (Deveraux) Another participant stated, “I want to support anyone when they are a whistleblower, or the victim of wrongdoing. I will do what I can to protect them from retaliation. I will outline what retaliation looks like, and if they feel as though they are being retaliated against, I tell them to always speak up to me.” (Chandler)
Question: What type of misconduct is most frequently reported to you?
Although several forms of misconduct were discussed during participant interviews, the most common and most frequently reported were sexual harassment accusations. At some point during their interview, all female participants mentioned the influence of the “Me Too” movement, and how it encouraged men and women who have been victims of sexual harassment and assault to come forward with their experiences. Half of the participants answered that the most frequent type of misconduct reported to them were claims of sexual harassment. “You would be surprised at how prevalent this type of harassment is reported within an organization.
Many of the accusations aren’t tied to physical contact, it’s so a comment that’s an innuendo to something else. Perhaps it’s someone being flirty or cheeky and thinks it’s all in good fun, not realizing how uncomfortable they just made their colleague.” (Haney) Another participant noted,
“We do hear whispers or rumors of sexual harassment allegations, but it saddens me to think about the misconduct we don’t hear. Employees are either too scared to come forward, dismiss what has happened to them, or believe there is no point in reporting because of this belief that we won’t help them.” (Joshua) 81
Question: Based on your experience, employees at what level have the most misconduct reported against them?
Participants were asked which employee level sees the most misconduct reported. Each participant was given four categories to choose from: individual contributor, first level manager, second level manager, and senior leader. As shown in Figure 4.4, five of the six participants believe that first level and second level managers have the most misconduct reported against them. Four of the six participants believed second level managers are reported the most, while one participant believed first level managers are reported the most. I found this feedback to be interesting since managers have a direct influence and impact on the way culture is defined and implemented within their organization. Another participant noted, “Typically, individual contributors get reported when they are in the wrong, but I have found the more egregious type of wrongdoing is being done by managers. I think this has a lot to do with their power, or a belief that they can get away with the crime. The thing I find most alarming is the fact that employees do all of their reporting during their exit interview instead of while they are fully employed with the company.” (Ann) Another participant stated, “The most senior leaders in the organization are rarely the ones being reported, it is the level below them. It is those individuals at the supervisor level who I hear about the most.” (Deveraux)
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Table 4.4
Employees at What Level Have the Most Misconduct Reported Against Them?
Name Employee level most likely to be reported
Charlotte Deveraux Second Level Manager
Scarlett Chandler First Level Manager
Barbara Ann Second Level Manager
Paul Hazel Individual Contributor
Ana Joshua Second Level Manager
Debbie Haney Second Level Manager
Statement: Leaders encounter the same consequences as everyone else within my organization.
Next, case study participants were asked if they believe “leaders encounter the same consequences as everyone else within my organization.” Participants were split on their responses with half disagreeing with this statement and the other half either agreeing or strongly agreeing. Most participants had very strong opinions about this statement which included:
• “I know of a leader who has been accused of sexual harassment a few times—he is still
employed with the company because the investigations lacked the appropriate evidence.
Had that been someone else at a lower level, they would have already been gone.”
(Haney)
• “We are the team that is here to enforce the law of the corporate land. We have policies,
it is all in writing. We have employees go through trainings. Yet, I know it can
sometimes feel like an uphill battle to bring down certain consequences against a 83
manager. It can be tough to feel supported by our senior leadership team when we bring
allegations against a well-known manager to their doorstep. The fervor to remove a high-
performing manager is not there in the way it is for an individual contributor.” (Joshua)
• There is a tale I hear from folks about a long-term employee, who is a man, who sexually
harassed a team member on a business trip. He also harassed another woman in a
meeting, and she was mortified. Both instances were reported, both accusations were
investigated—and nothing happened. These alleged events took place before I started
with the company. Here is the thing—if a leader can commit blatant acts of misconduct
and get away with it, what type of credibility do we really have as compliance officers?
How can we be taken seriously?” (Deveraux)
• “Although I generally agree that leaders can be hit with the same penalties as everyone
else, even I feel that if someone reported me for misconduct, I would be gone.” (Hazel)
Question: Are the company’s ethics policies understood by employees at every level?
I understood that there needs to be a fundamental understanding of a company’s ethics and compliance policies by all employees. The question asked was, “Are the company’s ethics policies understood by employees at every level?” One participant disagreed with the question and stated, “People are breezing through our compliance policies.” (Joshua), while four participants either agreed or strongly agreed that employees understand the company’s ethics and compliance policies. The sole participant who strongly agreed that employees know what the policies are stated, “I believe we do a very good job of pushing out our policies at the beginning of every year, and we hold employees accountable for knowing the rules.” (Chandler) 84
Question: In your experience, is the punishment for misconduct handed down fairly, no
matter the employee’s role within the organization?
The next question posed to participants, “In your experience, is the punishment for
misconduct handed down fairly, no matter the employee’s role within the organization?” Five of
the six participants agreed with the statement. Although the group was split on whether managers are found guilty of the misconduct they are being accused of, most participants do agree that when found guilty, the punishment—including termination—fits the crime.
Statement: There is more I can do to enforce an ethical workplace.
I wanted to get a better understanding of whether the participants believe they can do more to encourage and enforce an ethical workplace. Of all of the topics discussed in this case study, this statement garnered the most discussion. Almost every participant agreed there is always more they can do. Respondents said:
• “I want to communicate more to employees what our roles are and how we are here to
protect them from retaliation. We can let them know through email, Workday, or our
intranet site that we are enforcers, but we are also here to support everyone.” (Deveraux)
• “I work with many employees in the call center, and I sometimes feel like they don’t
think they have a voice. I want to proactively reach out to them and let them know I am
here for them. They can speak up. Their voices should be heard.” (Chandler)
• “I want to continue to build relationships with employees at all levels. I want people to
come to me. Even if an investigation is inconclusive, I will always tell a whistleblower
that retaliation is not tolerated—I have a zero tolerance for that.” (Ann)
• “There is always more that I can do, that this compliance team can do, to enforce the
rules. I know that overall, we are ethical at this company. But there is always a bad egg, 85
and we want to get those types of folks out of here. I would be more than happy to get
those folks out of here.” (Joshua)
• “I am not sure if there is more we can do. We do it all. We communicate with employees
that we have a zero-tolerance policy against retaliation. We investigate. We send out the
policy acknowledgements in January and February each year. Maybe we can do more,
maybe not. I think we go above and beyond as is.” (Hazel)
• “All leaders, both new and old alike, need to have more frequent reminders of what the
company’s values and rules are. We should be briefing our leaders every quarter on what
is being reported, whether there is an investigation conducted. Enforcing an ethical
workplace not only gives employees the confidence to come forward when necessary, but
it is also really good for business.” (Haney)
Conclusion
This case study aimed to discover what role compliance and ethics officers believe they play regarding enforcing an ethical workplace. I determined through interviews with six ethics and compliance officers that: 1) Their experience shows that first and second level managers have the most misconduct reported against them; 2) Employees, especially individual contributors, fear retaliation after reporting misconduct, so some wait until an exit interview to speak up about wrongdoing they witnessed or heard about; 3) These six officers believe there is a strong ethical culture within their organization; and 4) They believe there is more work they can do as compliance officers to enforce an ethical workplace.
Data from the interviewed participants revealed that five of the six interviewees understood that a poor ethics enforcement strategy would result in a decline in corporate culture, including a decrease in confidence that compliance officers would protect them from retaliation. 86
The results also revealed that there is a positive relationship between an ethical work
environment and organizational performance. In other words, abiding by corporate values and
rules is good for business and instills confidence in the company’s leaders as well as the
compliance officers.
The findings of this study support research done by seminal authors discussed in
Chapters 1–3, many of whom explained the importance of a strong ethical climate, as well as
rules and regulations that will encourage more good will, commitment, and trust from employees
(Barsh & Lisewski, 2008). Case study participants stressed the need to enforce the rules, protect
those who alert the officers of misconduct, and punish those who break the rules; all three acts
must be implemented in order to maintain employee confidence that the officers are doing their
jobs effectively. Employees at every level should be held accountable. It can be argued that there
is no real way an organization can be unethical in its dealings (or, at least, not bring wrongdoers
to justice) and maintain a reputation of having ethical workplace culture.
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Chapter 5: Discussion & Future Considerations
Summary
The mission of this dissertation was to discover whether compliance and ethics officers at
a well-known U.S. property and casualty insurance company believe they are enforcing code of
conduct/code of ethics policies equally and fairly within their organization. In Chapter 2, a
background was given on the history of whistleblowing, which explained that unethical behavior
and decisions are not taking place only in the business world—nonprofits, academia,
government, the armed forces, law enforcement agencies, and small businesses all experience
their own types of misconduct.
The research and subsequent interviews highlighted in Chapter 4 centered around how
compliance and ethics officers view the code of conduct/code of ethics policies within their
organization, and whether these individuals believe the rules are fair and just for all employees.
Did these officers believe the rules are being enforced with senior leaders within an organization,
or if the expectation is to “let things slide” depending on the role and influence an individual has
within an organization? This research aimed to answer that question.
In Chapter 2, two foreshadowed beliefs were stated, which include:
Statement 1: Ethics and compliance leaders in the insurance industry have a high confidence that employees at their respective companies know what the organization’s policies are surrounding ethics and know where/how to report misconduct. This belief was supported in this case study. When asked, every participant stated their strong belief that their company’s employee population know how they can report misconduct and understand that every misconduct claim would be investigated. Participants also referenced annual code of 88 conduct acknowledgements that employees must take at the beginning of every year, which solidified their belief that employees understand how they can report wrongdoing.
Statement 2: Compliance and ethics leaders believe that ethics policies, practices, and reporting methods can be improved. Participants for this case study acknowledged that although policies are in place and enforced, there is still room for improvement. One participant proposed having employees report misconduct to a third party and letting the third party investigate the misconduct to help eliminate any bias that can be attached with an employee’s name or position with the organization. Additionally, each participant noted that if employees believe justice will not be served if they are reporting the misconduct of a senior leader to a compliance officer, either the policies need to be updated or the way they are enforcing consequences needs to be improved.
Themes
Although there were several unique data points from the six interviews conducted, a few themes stood out from the interviews:
Strong Ethical Climate
Each participant believed their organization had a strong ethical compass which most employees follow. The company’s ethics policies are talked about in new hire orientation and in leadership meetings, and are part of corporate vernacular. Each participant understood that having a strong ethical foundation is tied directly to corporate culture. If employees do not trust that they are protected, they are likely to leave the company much sooner than they would if they believed they would not face retaliation should they report misconduct to a compliance officer. 89
Real-world Events Influence on Ethics Policies
Five of the six participants discussed the influence the “Me Too” movement had on the way ethics policies were being reviewed by their company. One participant noted that leaders are
“a little out of touch with some of the ‘Me Too’ stuff that is going down.” (Deveraux) Another
participant explained that there is a “heightened awareness of the risk involved with reporting a
‘Me Too’ type of situation, so every complaint is taken very seriously.” (Chandler) Another
participant stated that they had their own “type of ‘Me Too’” experience at a previous employer,
so they know how “scary it can be to step forward and detail what transpired, still knowing that
person was still working at the company.” (Haney) Instead of focusing on the “Me Too”
movement, the sixth participant explained how male leaders within the organization started
learning from other companies about the importance of having an inclusive workplace that
includes more women in leadership roles, including the board of directors. “There was a change
in how mindful men were being when it came to who they were promoting into positions of
power within the organization. In essence, they began to understand that perhaps only having
other employees who looked like them could influence what type of wrongdoing they were able
to get away with—that maybe having a balance of women in leadership would help ensure things
were more fair and equitable when it came to compliance.” (Ann)
Importance of Protecting the Anonymity of Whistleblowers
Another common theme was a desire to keep whistleblowers anonymous, if possible.
Each participant spoke to how most whistleblowers are afraid to come forward for “fear of being
found out or having thoughts that we would not protect them when it came down to it.” (Joshua)
One participant even went so far as to say, “I wish we did not know names of the reporter and
the perpetrator before recommendations are made for next steps.” (Deveraux) This participant 90 was not alone in her sentiment regarding knowing as little about the name and title of the parties involved. Several other participants expressed that they would be open to having a third party do the initial investigation and being brought in towards the end of the investigation when it may be time to dole out a punishment for the wrongdoer.
Retaliation Prevention
Finally, four of the six participants spoke at length about the importance of preventing retaliation within their organization, with one participant stating that “we need to do a better job of outlining what retaliation looks like—if an employee feels as though they are being retaliated against, I want them to feel comfortable speaking up. I want to be able to support someone when they are the whistleblower, or when they are the victim of wrongdoing.” (Chandler) Another participant noted the importance of keeping an employee protected during the investigation process, and post-investigation if the wrongdoer is not punished. “We have to be realistic about the whole investigation process. Unfortunately, not everyone is found guilty, but both the reporter and the wrongdoer still work for the company. That can be a very scary and unsettling feeling for the person reporting misconduct. We must protect them and their reputation. They did their job by reporting—even if someone was not found guilty—so we need to do our job by ensuring they can continue to do their job without being retaliated against.” (Hazel)
Recommendations
Based on the interviews conducted with ethics and compliance officers for this study, the following recommendations can assist in improving employees’ confidence in organizational ethics policies and procedures. Ethics and compliance officers, as well as senior leaders for an organization, should make the assurance of an ethical workplace a top priority to improve 91
organizational performance, which can be done through accountability and improved
communication.
Accountability
Quarterly Reminders That Compliance Officers Are There to Serve All Employees.
Each participant noted that employees often believe compliance and ethics officers are only there
to look out for certain employees, specifically those in leadership roles within an organization.
These ethics officers want to dispel that myth. Each of the six participants wants their employee population to understand that they are there to represent and serve everyone, no matter their level or relationship to the wrongdoer. This type of accountability can show employees that ethics and compliance officers want to be held responsible when it comes to doing their job, which includes protecting employees from retaliation if they are a whistleblower. Refer to the section below entitled “Communication” to learn how ethics officers can communicate their accountability to employees.
Implement Stricter Consequences for Senior Leaders. Employees should feel as though their organization will uphold consequences for wrongdoing, including those individuals at the senior leadership level. Every compliance and ethics officer interviewed for this case study
expressed a common theme: Employees at lower levels believe senior leaders get away with
more wrongdoing—that a leader’s title and influence within the organization can determine
whether they are likely to get away with misconduct if it can be covered up or not investigated.
By implementing stricter consequences—which could include being suspended without pay, a
loss of a bonus and other compensation, or termination with no severance package—leaders may
be a bit more conscious about their behavior and make a stronger effort to follow code of
conduct policies. 92
Additionally, leaders should go through additional ethics training at the beginning of their
employment with the company and be required to take extra training each year to ensure they are
up to date on all policies and rules regarding reporting misconduct, anti-retaliation policies, and the right to terminate without cause.
Use an External Vendor to Investigate and Manage Whistleblowing Reports Against
Senior Leaders. One final recommendation is to utilize a third-party vendor to investigate any
accusations of malignant wrongdoing by a senior leader. The interviews conducted for this case
study found that employees believe that reporting leader misconduct (especially if that leader is at the senior level) will go nowhere, that these top employees will get away with whatever wrongdoing they have committed. Lower-level employees fear retaliation in response to reporting top leaders, so they are hesitant about coming forward. These feelings of inaction are not unique to this organization; studies show that employees believe a company will “do nothing” in dealing with reports of wrongdoing (Miceli & Near, 1994). The authors explained that “even if management believes that the whistleblower is incorrect in his or her allegations, or that the person is a chronic complainer, a do-nothing approach presents many of the same risks as a retaliatory one. Similarly, adopting policies designed to protect whistleblowers from retaliation is desirable but difficult to enforce (Miceli & Near, 1994).”
By bringing in an outside investigator who specializes in misconduct accusations, the organization is doing their due diligence by allowing a neutral third party to investigate a complaint. The third party should not have any allegiance to employees within the organization.
Their job will be to investigate the complaint presented, interview necessary employees, and see what (if any) code of conduct violations have taken place. If wrongdoing is confirmed, 93 compliance and ethics officers within the organization will need to take next steps in implementing a punishment for the employee.
The external investigator recommendation was by far the most popular suggestion made by the compliance officers who participated in this study. Each participant acknowledged that they were aware of employees who were afraid to step forward to report misconduct because the employee felt uncomfortable with not being anonymous in their whistleblowing. A third party can help with anonymity and could also make the employee feel more comfortable with coming forward since the vendor should not be influenced by names or job titles.
Communication
Communicate Disciplinary Consequences To Employees More Frequently. In addition to implementing tougher consequences for senior leaders, the penalties should be widely communicated to employees at all levels. This communication could be disseminated at the start of one’s employment with the company. Additionally, compliance and ethics officers should send out an annual report on the type of misconduct that is reported in a calendar year. Doing so may help employees understand the frequency with which wrongdoing occurs in the organization and may help them feel comfortable knowing they are not alone in their whistleblowing.
Compliance officers should also meet with their senior leadership team to go over the types of misconduct that are reported year over year. Doing so can help leaders have a better understanding of the wrongdoing that is taking place within an organization, which may help them identify trends and weak areas related to wrongdoing. Additionally, leaders may be able to avoid potential litigation in the future by understanding what wrongdoing is taking place; if they are aware of misconduct and do nothing about it, the accuser can file a lawsuit against the company. 94
Openly communicating consequences could, in theory, convince employees that the organization is serious when it comes to enforcing the rules. Holding employees accountable in a very public way could, perhaps, go a long way in helping employees at all levels understand that everyone must follow the company’s ethics policies.
Be Intentional in the Communication Surrounding Reporting Misconduct. As mentioned in the above section on accountability, it is critical for an organization to be intentional about the way they communicate ethics policies within their organization. A quarterly ethics email reminder could go a long way in reminding employees at every level that whistleblowing will be taken seriously, and any form of retaliation will not be tolerated.
Reminders could also be placed on the organization’s intranet site, as well as communicated via employee screen savers once every three months. There could also be compliance signs posted around the physical office space as a daily reminder to employees about the importance of following the company’s ethics and compliance policies.
Implications of Results
Based on the results of this study, I understand that organizational performance can be influenced by factors tied to corporate ethics, such as the way an organization governs their ethics policies. The organizational ethics space continues to be updated at a rapid pace due to external influences such as federal and state ethics laws, as well as domestic and international ethics scandals, some of which are attached to government. Core ethical competencies are being updated, along with standards of practice and quality indicators. It continues to be critical that leaders in the ethics and compliance space understand that the strength and reliability of an organization’s ethics policies have the potential to influence corporate culture. Employees can confidently report wrongdoing without fear of retaliation or negative consequences. But again, 95 the company’s ethics policies must be updated as needed and implemented fairly across the organization and be applicable to employees at every level. Policies should be updated because:
1. An organization’s ethics policies may only apply to issues tied to conflicts of interest,
sexual harassment, fraud, gifts, and use of organization assets; however, the policies may
not go in depth to address contemporary issues such as digital data sharing and the
improper dissemination of proprietary information.
2. The company wants to ensure that employees at every level are held responsible for
following the rules, especially leaders at the senior level. Chadegani and Jari (2016)
noted that corporate culture is influenced by the leaders at the top—which can be known
as “ethical tone at the top”—so it is imperative that consequences for wrongdoing are
communicated and adhered to, especially at the leadership level.
3. Companies are constantly hiring new employees from various industries and experience,
so periodic training with new and tenured employees alike would be beneficial. This
training can be taught in person by compliance officers, or can be online tutorials that are
obligatory for employees. Additionally, officers should consider supplementary training
for senior leaders.
4. An organization’s code of conduct might focus heavily on compliance instead of also
including a set of value-based rules that provide guidance on how to handle ethical
predicaments. Particular industries have regulatory rules that must be followed, but an
organization should also set up some values (including its value proposition) that should
help determine company priorities. These can influence the way employees work and
collaborate with one another. 96
5. Based on the interviews conducted for this case study, whistleblowers need reassurance
that the information they share will remain confidential (if possible) and there is no threat
of retaliation for reporting misconduct. Code of conduct policies usually include a very
brief section on whistleblower protections, and that needs to change. In short, there needs
to be additional effort put into whistleblower protections, and those extra efforts need to
be frequently communicated to employees.
Limitations of the Case Study
There were several limitations that impacted the outcome of this study. These limitations are broken into seven categories: the impact the 2019–2020 COVID-19 virus has had on the way employees interact with one another, which includes the type of wrongdoing that is currently taking place within the officers’ organization; the lack of quantitative data to support participant feedback; the whistleblower’s relationship to the wrongdoer; interviewing compliance officers
from only one company; securing only six participants for the case study; the lack of participants
from a global organization; and a lack of whistleblower perspectives.
The global pandemic changed the way people interact with one another in the workplace.
Instead of collaborating with a colleague in a physical office location, employees had to work
remotely. The change in employee interactions and the frequency with which misconduct was taking place could have an impact on the misconduct transpiring and being reported. Due to the
pandemic, all interviews with ethics and compliance officers were conducted via telephone.
Their accounts of reported wrongdoing reflected past in-person experiences that took place prior
to the pandemic. Although these officers still felt an obligation to enforce their company’s code
of conduct policy, the frequency with which misconduct was reported was impacted due to
COVID-19. 97
Second, there was a lack of quantitative data to back up participants’ recollections of misconduct reporting, primarily because this case study is qualitative with a limited number of participants. I realized after the first interview with Charlotte Deveraux that quantitative data would have been a good supplement to the qualitative information shared, especially if a larger group of compliance officers had been interviewed. Quantitative data could have come in several forms, including:
• The types of misconduct reported within one year at the organization
• The number of investigations conducted due a whistleblower coming forward
• The percentage of accusations that turned into investigations which resulted in
an employee’s demotion, suspension, or termination
• The number of employees who were reluctant to share information due to fear
of retaliation
• The amount of corporate ethics training employees are required to take within
a calendar year
Next, relationship management theory suggests that the relationship between employees
(whether that connection is between friends, a manager and his/her direct report, a leader and an employee from another business area, or employees that do not know each other very well) can influence whether an individual decides to report wrongdoing. As an example, every participant in this case study explicitly stated that employees are much less likely to report misconduct if the wrongdoer is a member of the senior leadership team, due to fear of retaliation. And, although compliance officers are there to serve all employees while enforcing corporate ethics policies, each participant admitted that they are certain all gross misconduct is not reported due to employee relationships. Because of this, I—or any researcher for that matter—cannot have 100% 98
accuracy in identifying whether a whistleblower will report unethical behavior, no matter the
relationship to the wrongdoer.
Fourth, this case study only interviewed compliance officers from one organization. More generalizable data could be collected if officers from various organizations were included in the study. Although choosing a sample size of one organization could prove to be limiting at first pass, the feedback collected could, in fact, have a major impact on the way that one organization updates and enforces their corporate ethics and reporting policies. And because this organization is a part of a larger enterprise that is comprised of five other insurance companies, the reach of this study could influence the way the other companies think about the way ethics policies are enforced.
Next, the study is limited due to only six interviews conducted with compliance and ethics officers. Although the point of the study is to determine whether employees at P&C
Insurer feel protected by ethics policies, interviews with additional ethics officers may have offered a different perspective on the complexities surrounding code of conduct policies and the difficulty of proving the validity of wrongdoing when there is lack of physical evidence. It is important to note that it is challenging to secure interviews with employees such as compliance and ethics officers when a major function of their role is to keep information confidential.
Additionally, the case study was limited because all participants worked for the same
U.S.-based property and casualty insurance company. Research findings could have varied more had the participants worked for global companies or had most of their compliance experience come from an organization outside of the United States. Misconduct can happen at any organization in any industry, and research should be done to explore how ethics officers in public 99
and private industries view their role in ensuring employees feel safe and supported in the
workplace.
Finally, this study lacked direct first-hand accounts of whistleblowing from employees
who have stepped forward to report misconduct. Although this case study had a primary focus on
learning about ethics policies and compliance from ethics officers, it may have been interesting
to hear from whistleblowers as to whether or not they felt the company’s code of conduct policy
was implemented fairly with employees at all levels, including senior leaders, and whether they
believed whistleblowing protections are strong enough to protect them against potential
retaliation from a wrongdoer.
Areas for Future Studies
As mentioned in the “Limitations of the Case Study,” section of this study, interviewing
participants from only one company could be a limitation for research in the corporate ethics field. In the case of this study, the compliance officers interviewed are part of a larger enterprise that is comprised of four additional companies, so this research could go on to influence the way the other companies evaluate their ethics policies and whistleblower protections.
Additionally, future research can be done with participants from a variety of other fields, including government and the nonprofit sector. All the participants interviewed for this case
study have work experience that is tied directly to private industries where a priority is given to
profit margins and bottom lines. It would be interesting to see if the sentiment around ethics and
company values is stronger in the nonprofit sector, or education, or government. Future research
can explore if ethics compliance is viewed differently when the entity is mission-driven, or
places great value on helping others and making sure their voices are heard and respected. 100
Next, it may be worthwhile to use quantitative data to compare public and private
compliance rates as they are tied to ethics policies. Future researchers can use empirical data to explore what type of misconduct is most prevalent based on the industry. Is sexual harassment more prominent in the entertainment industry? Is fraud more prominent in the financial services space? Are there more instances of intimidation or conflicts of interest in government? Using quantitative methods to examine these types of questions can help with updating ethics policies for a wide range of organizations.
Learning about the types of stress and anxiety whistleblowers experience pre-reporting and post-reporting misconduct should also be considered for future researchers. Many studies on corporate ethics have some understanding about how stressful whistleblowing can be, but it would also be interesting to investigate in greater detail how stressful the whistleblowing process can be for those reporting wrongdoing. Do they fear retaliation from just the person being reported, or do they believe their colleagues will turn on them as well? Are whistleblowers able to concentrate on their work after reporting wrongdoing to a compliance officer? Does the whistleblower’s work performance start to drop post-reporting because of fear of consequences?
These questions and more can be explored through future research.
Finally, future research could also incorporate a document review of current ethics policies of each participant in the study. It will be important for the researcher to have a starting
point to understand what type of rules are already in place within the organization, and what
additional rules and protections need to be added to company policies.
Conclusion
The research reported in this case study explained how complicated and
subjective corporate ethics policy enforcement can be in the workplace. With so many variables 101
involved (including the actual act of wrongdoing, the individual reporting the misconduct, the
employee who committed the act, the investigation process, the way the ethics officer enforces
the consequence, and the retaliation protections in place for the whistleblower), the entire process can be daunting and can discourage employees from coming forward. In addition to employees seeing or hearing about wrongdoers “getting away with” misconduct, they can also look at numerous real-world examples of wrongdoers getting away with misconduct such as sexual harassment, fraud, intimidation, accepting bribes, or conflict of interest violations. Why, then, would they have confidence that their report of ethics violations would be taken seriously?
Although those fears are valid, compliance officers do not have any influence on what other companies or entities do to prevent misconduct, but they can impact how they enforce their organization’s ethics policies and the punishment that is doled out to those who violate the rules.
Trust was a theme that was highlighted in all interviews with participants—trust that the ethics policies are applicable to all employees, including senior leaders; trust that ethics and compliance officers would do their job and enforce the rules; trust that a thorough investigation would be conducted when a misconduct claim is reported; trust that the whistleblower would be protected from retaliation; trust that the reporter’s reputation would not be tarnished because they spoke up. Without each of the aforementioned examples of trust being implemented within an organization, companies will have a tough time getting employees to feel safe coming forward.
Instead of “having employees do all of their reporting during their exit interview,” (Ann) compliance officers should be more proactive about the protections they can communicate to their employee base. Doing so will truly help these officers be seen as enforces of law and order within their organization.
102
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Appendix A: IRB Approval
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Appendix B: Recruitment Email
Greetings, I am currently enrolled in a doctoral education program at Northeastern University in Boston, MA, and my dissertation focuses on corporate ethics, whistleblowing, and anti- retaliation policies. I am writing today to ask that you be a part of my research on the implementation of Code of Ethics policies within the American Family Insurance Enterprise.
This is solely my student work and not a part of my or your jobs at one of American Family’s operating companies. I have received permission from a compliance leader to request your participation. The purpose of my research is to explore and understand the insights of compliance and ethics officers regarding their role in enforcing corporate ethics policies in the workplace. As you know, corporate ethics policies can be a challenge to implement, so talking with you can give me an understanding on how you believe these policies are enforced at your company, and how they can be improved.
It is important to note that I will be using pseudonyms to protect each participant’s identity, and the identity of their organization. Up to this point, I’ve done foundational research on why ethics policies are so important within a corporate setting, but my research will be greatly enhanced by the insight from ethics officers who are tasked with upholding these policies in the workplace. Your participation is entirely voluntary. If you do not contact me with questions or to volunteer, you will not be contacted again regarding my student research. If you are interested in participating, you can send a message to my school email: [email protected]. Per Northeastern University IRB, all correspondence regarding this study must be from and to my student email account. From there, I can send you more information about my study, and educate you on what I would like to do with my research in the future.
Thank you in advance!
-Shirley J. Knowles, MLD, MA, MSc |Doctoral Candidate in Organizational Leadership