There are few words that strike fear into the heart of business leaders - whistleblowing is one of them, and it’s on the rise.
The Wikileaks and Cambridge Analytica cases piqued public interest, painting an unpleasant picture of the turbulent times likely to await a business caught up in such a scandal, with negative press attention, associated reputational damage, and often the end of an illustrious career.
Yet, while the term conjures images of systemic wrongdoing, and cover-ups on a global scale, the reality is often very different.
Whenever an employee alleges that there has been a breach of a legal obligation, it could potentially be a whistleblowing issue, and the outcome can still be incredibly damaging. However, to qualify as "true" whistleblowing, any disclosure must be "in the public interest".
Typically, this would be something as serious as exposing a breach of health and safety rules, or some form of criminal activity such as falsifying accounts, but not always (and employee lawyers often look to stretch the definition).
The law protects a whistleblower immediately upon making their disclosure, so managers and those implicated must tread carefully. The whistleblower mustn’t suffer any disadvantage after making a complaint though the consequences for the business can be significant, with potentially unlimited damages.
So, what happens if a serious complaint should land on your desk, setting out in detail a series of alleged unlawful practices it says have been happening right under your nose? Even worse, what if the allegations implicate you personally?
It’s often a difficult balance to strike.
Typically, one or a small number of people are implicated - more often than not at senior management or board level. Not only are you discovering potentially unlawful practices, they may be taking place at the top.
Leaders must broach the issue without sounding accusatory or threatening. When a CEO or MD is implicated, this creates a real dilemma for compliance teams, and angry emails from the board can make it look like they are asking compliance to compromise their own obligations and safeguard senior leadership.
Protection and support
To stay on the right side of the law, it’s vital to protect the whistleblower from any backlash which could be either directly or indirectly linked to their complaint.
Show support and indicate gratitude that they raised the issue so it can be investigated. This will calm the waters and makes it harder for the whistleblower to take matters into their own hands.
The whistleblower cannot be silenced
Never allow anyone to approach the whistleblower and take them to task.
The leadership team must not be seen to be interfering with the case. This will only compound allegations and could result in a situation akin to the one Barclays’ CEO Jes Staley found himself in, eventually being forced to hand over £1.1m as punishment for his efforts to unmask a whistleblower.
Avoid costly mistakes
All senior leaders must be familiar with their own whistleblowing procedure and be ready to commit to a full investigation.
Be prepared to line up independent people to investigate, making sure any compliance team is consulted.
Document everything, and do not make accusations in the absence of evidence to support them.
For any leader faced with a whistleblowing allegation - whether implicating them personally or someone else - the key is to recognise that quickly and manage it accordingly.
Be alert to the risk and take legal advice before making any decisions. A well-managed response can resolve the issue and allow everyone to move on - while the price for mistakes can be costly.
Kate Ledwidge is senior associate at JMW Solicitors
Image credit: Justin Sullivan/Getty Images