Assignment 3

NUST Business School
MGT-320 – Enterprise Management

Assignment no. 3
Submitted to:
Anooshe Zia
Submitted by:
Kalsoom Sajjad (268319)
Muhammad Ahsen Fahim (244476)
Muhammad Abdullah Iqtidar (246983)
Saanvel Abdullah Khalid (243202)
Sahaam Mehmood (249974)
Date: 26th May 2021.

Q1: What is Whistleblowing?
Before looking into the importance of whistleblowing we need to first understand the term and
process. One of the most powerful ways to detect and avoid corruption and other malpractice is
through whistleblowing. It is a term used to describe the dissemination of knowledge about
wrongdoing in or by an organization, such as corruption or sexual harassment. A whistleblower
is someone who may reveal details about wrongdoing to the organization itself, to appropriate
authorities, or to the general public.
Whistleblowing has helped in exposing numerous wrongdoings that have had a positive effect on
the world; due to whistleblowing millions of dollars have been saved and health disasters have
been prevented. Whistleblowers are supposed to act for the benefit of the general public. There
are several real-life examples of individuals trying to do so, the most notable of which include
tax evasion cases like the "Panama papers," government scandals like "Edward Snowden," and
money laundering scandals like the "Danske Bank scandal."
Risks Involved
Whistleblowing comes with its own set of risks; whistleblowers put their jobs, personal lives,
and safety on the line for the greater good of the public or the organization. Whistleblowers face
being terminated, sued, blacklisted, intimidated, or, in the worst-case scenario, attacked or killed.
Many cases of corruption that could have been reported to authorities or the media are not
revealed as a result of these risks. Whistleblowing is often regarded as a form of betrayal rather
than a public service. Fear of legal, financial, and reputational repercussions are some of the key
reasons why people are hesitant to report cases of corruption. People assume that nothing will
happen if they do so, and that it will make no difference even if they are exposed. Apart from
that, some people are completely unaware of where to report and whom to report. Whistle
blowers will be encouraged to report more cases if they are protected from all of these fears and
unjust treatment, their identities should be protected and a reward should be offered for
whistleblowing.
The Importance
The act of whistleblowing is essential to not only protect an organization but it plays a much
vital role in securing the interests of the stake holders. Introducing anti-whistleblowing policies
is a practice of fraud capturing that builds the element of trust in the organization, both internally
and externally. The means created against the internal corruption attracts the investors as they are
ensured that their assets are being rightfully used and if they were to be exposed to a threat, an
employee will raise the red flag.
Whistleblowing is exercised as a transparency tool in terms of both corporate governance and
corporate social responsibility. As whistleblowing holds a stance against deception and integrates
it within a business’s employees, board and the shareholders, it provides a higher level of
corporate governance status for the company. In terms of corporate social responsibility, as
whistleblowing is an act used in order to protect the stakeholders it is seen as an effort to care
about the society rather than only profits.
Impact from a whistleblowing event can have a positive turn, it can guide back the misled
managing partners to their original vision and mission they intended to pursue and achieve. The
more a company faces the whistleblowing situations the more it is likely to avoid fraudulent
practices in order to avoid the bad reputation and financial lose in legal terms. This has helped
companies like Uber in highlighting that the issue they face is that how toxic environments can
be a downfall for the company in short and long terms.
Effectiveness of Whistleblowing
There are various factors involving in the whistleblowing process. The case of Enron exemplifies
how an organization’s culture can affect the take on whistleblowing, as if a company has an
overall culture of unethical practices than the employees might not come forward due to either
fear or element of self-interest. Culture of communism can also alter the effectiveness of
whistleblowing as the employees believe they are a family and by exposing one of them would
bring dishonor to all.
The case of Douglas Durand from TAP Pharmaceutical Products shows how due to greed he
elongated the case despite knowing that the doctors were overcharging the Medicare and yet
instead of exposing the corrupt, he settled for a high amount of money after 8 years.
Whistleblowers need a secure environment to expose more cases of corruption and fraud without
fear of losing their job or life, so international authorities and regulatory bodies are trying to
create a mechanism of such sort and advocate whistleblowers to reduce misconduct. These
regulatory bodies are working to make it easier for people to blow the whistle, how to do it,
when to do it, whom to report and what law applies on the misconduct with staying unanimous.
Q2. Suggest ways in which organisations can build a culture supportive to practices like
whistleblowing.
(10 Marks)
Practices like whistleblowing are important to prevent any form of unethical practices from
happening in the company and these practices can never thrive in a culture that is toxic in nature,
a culture in which in the name of competition other members of the company will rat someone
out, where an employee will always have a fear of not being accepted after whistle blowing and
this problems will only exist in a culture that is unjust in nature where the people who are
committing a wrongdoing will not be held accountable only to come after the person who got
them caught in the first place. A few ways in which a supportive culture can be built are listed
below.
Strong Ethical Vision: An organisational Culture is made after the vision and objectives of the
organisation if strong business ethics will be promoted in the vision along with the business side
of the vision than it will create a strong basis of the formation of policies with deep ethical
foundations.
Responsible Hiring: The Human Resource team should make a recruitment mechanism which
will filter out people who show ethical behaviours when put through various situations, people
who have high morals and ethical standards high enough to stand up against anyone in the
organisation if they breach the ethical code of conduct. This can be done by evaluating the
personalities of the candidates via various personality tests online and on-field assessment as
well.
Employee Training: Employee training programs should be carried out which enable and train
the employees to uphold high moral practices, do what is ethically right and the refrain from
protecting others when they are doing something wrong. Employees should be taught to
understand that whistleblowing is actually for the benefit of the employees, the organization and
the customers.
Justice Task Force: A formation of an independent Justice Task force in an organisation can
also pave a way for the facilitation and encouragement of the whistle-blowers in an organisation.
This force should report directly to the Board of Governors or the CEO of the company and work
in collaboration with the external justice authorities of the nation to create an efficient system of
justice which will have really high standards of corporate governance.
Confidentiality: Employees should feel comfortable talking about the issues of the company.
Whistleblowing policy should be framed in such a way that it clearly protects the whistle blower.
To express the maintenance of confidentiality the top leadership should let go of the hierarchical
formalities and establish a model for the employees to follow.
Conclusion:
For an organization to thrive, it must have a healthy company culture. Malpractices take place
everywhere; it is up to the management to develop a system which put the company goals at the
core of organization and presents its ethical stance before its employees. A company which
exhibits a strong sense of justice and ethics will instil a sense of righteous in its employees from
day one from hiring. We know from numerous past examples where organizations crumpled
because of mal culture. Therefore, it is essential that we set up a culture supportive of
whistleblowing where employees work for the betterment of not only the firm but also the
society.
References:
https://industrytoday.com/the-role-of-the-whistleblower/
https://astronsolutions.net/the-importance-of-whistle-blowing/
https://www.mondaq.com/whistleblowing/792660/how-whistleblowing-benefits-your-
organisation
https://complianceline.com/3-reasons-whistleblowing/
https://whistleb.com/wp-content/uploads/2020/07/whistleb-white-paper-benefints-of-
organisational-whistleblowing.pdf
https://knowledge.wharton.upenn.edu/article/whistleblowers-in-business/
https://smallbusiness.chron.com/hazards-whistleblowing-effects-workplace-15733.html
http://www.ijesrt.com/issues%20pdf%20file/Archive-2018/February-208/74.pdf
https://www.econstor.eu/bitstream/10419/187539/1/S2214462516300895-main.pdf
https://www.linkedin.com/pulse/organizational-culture-how-enron-did-wrong-jason-martin-mba

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NUST Business School

MGT-320 – Enterprise Management

Date: 26th May 2021.

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