Retaliation: Case Study on Prevention Strategies

9/20/2013

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AMY BLOCK JOY, Ph.D. Faculty Emeritus & Author | University of California Davis

Retaliation: Case Study on

Prevention Strategies Encouraging organizations to protect employees who report wrongdoing


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Disclaimers Some things to keep in mind during this presentation

1.Information summarized in this presentation include published research,

documents, articles, interviews, and recollections.

2.The presenter would like to acknowledge the many professionals who worked

on (1) the whistleblower retaliation case, and (2) the fraud case, including:

Michael Hirst, Esq., university investigators and internal auditors, as well as other

investigators, and federal agents.

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Outline

1.Whistleblowing 101

2.Retaliation: What and Why

3.Case Study

4.Prevention Strategies


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Whistleblowing 101

Why Organizations Need Whistleblowers

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Definition:

Whistleblower

An employee who discloses

information that s/he reasonably

believes is evidence of illegality,

gross waste or fraud,

mismanagement, abuse of

power, general wrongdoing, or a

substantial and specific danger

to public health and safety.

“

” Source: Government Accountability Project (GAP) web site, 2013.


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Whistleblowers are

Essential for Fraud Detection 2010 Global Fraud Study by the Association of Certified Fraud

Examiners

Tips were by far the most common detection method…catching more than

three times as any other form of detection…employees were the most

common source. (1)

Fraud costs a typical company about 5% of it’s revenue and that whistle-

blowing is the single most common form of fraud detection. (2)

“

”

1. S.M. Kohn, The Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting

Yourself. Lyons Press, CT 2011.

2. M. McMillian, “Retaliation against Whistle-Blowers: No Good Deed Goes Unpunished.” Enterprising Investor, CFA

Institute, October 24, 2012.

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Cost of Silence Business Ethics Survey

• 25% said they had observed unethical

behavior within the organization

• 11% said they had felt pressured to

participate in unethical behavior

• 13% said that they did not feel that

they could report unethical behavior

without fear of reprisal

• Only 66% said they believe that

unethical behavior in the company

would be detected and punished

Source: S. S. Lightle, J. F. Castellano and B. T. Cutting, “Assessing the Control Environment”, Internal Auditing,

December 2007.


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Retaliation Retribution exacted by co-

workers or managers against

an employee who has reported

misconduct.

Source: Ethics Resource Center Summary of the July 2012 ERC Fellows Meeting: “Retaliation in the Workplace—Why it

Matters and What Companies Can Do About it.”

“ ”

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Observation: Reporting

Wrongdoing of Higher Ups May

Lead to Retaliation

In theory … anyone who speaks out in the name of public good within the

organization is a whistleblower … Rarely do employees get fired for reporting

the misbehavior of subordinates … She [/he] becomes a whistleblower when

she [/he] experiences retaliation … If there is no retaliation she [/he] is just a

responsible employee doing her [/his] job to protect the company’s interest …

“

” Source: C.F. Alford, Whistleblower: Broken Lives and Organizational Power, Cornell University Press, NY 2001.


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Trends in

Retaliation • Over 22% of those who reported

misconduct in 2011 perceived

retaliation for doing so (1).

• This trend calculates to an additional

$2.3 million more workers than

reported in 2009 (1).

• In 2010, whistleblowers received

$2.877 billion in compensation (2).

1. Ethics Resource Center: Retaliation: “When Whistleblowers Become Victims. A supplementary report of the 2011

National Business Ethic Survey,” 2012.

2. S.M. Kohn. The Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting

Yourself. Lyons Press, CT 2011.

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Research on Retaliation

1.Study by ERC (N=4,683 employees)

2.Study by Sociologist Dr. Rothschild (N=374 whistleblowers)


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Ethics Resource

Center Retaliation: When Whistleblowers

Become Victims “ ”

Source: A supplemental report of the 2011 National Business Ethics Survey, 2012.

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Types of

Retaliation • Excluded from decisions and work

activities (64%)

• Given cold shoulder (62%)

Source: Ethics Resource Center: Retaliation: “When Whistleblowers Become Victims. A Supplement of the 2011 National

Business Survey,” 2012.


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Types of

Retaliation • Verbally abused by supervisor (62%)

• Verbally abused by co-workers

(51%)

• Harassment (31%)

Source: Ethics Resource Center: Retaliation: “When Whistleblowers Become Victims. A supplemental report of the 2011

National Business Ethics Survey”, 2012.

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Types of

Retaliation • Demoted (32%)

• Hours or pay cuts (46%)

• Almost lost job (56%)

Source: Ethics Resource Center: Retaliation: “When Whistleblowers Become Victims. A supplementary report of the 2011

National Business Ethics Survey,” 2012.


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Retaliation

“Harm” 31% experienced physical harm to

person or property

Source: Ethics Resource Center: Retaliation: “When Whistleblowers Become Victims. A supplemental report of the National Business

Ethics Survey,” 2012 .

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Hallmark of Retaliation Research on 374 Whistleblowers 39% Internal (I) and 61% Eternal (E)

• Fired or forced to resign (69% of I and 84% of E)

• Work closely monitored (68% of I and 82% of E)

• Criticized by co-workers (68% of both)

• Were blacklisted in their field (64% of both)

• “… it is the intensity of the adverse actions that senior managers sometimes take … from demotions and firing to public humiliation ceremonies ….the complete demonization of the whistle blower, that is the hallmark of retaliations and cover ups.”

Source: J. Rothschild, “Freedom of Speech Denied, Dignity Assaulted: What Whistleblowers Experience in the US,”

Current Sociology 56:884-903, 2008.


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Disclaimer: Identifying information for some places and employees have been changed.

Retaliation: Case Study

Substantiated Whistleblower Retaliation Complaint

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Sounding the

Alarm! • Allegations of $1400 embezzlement

(February 2006)

• Internal Report (Ignored)

• Allegations of $20,000 in travel fraud

(August 2006)

• Whistleblower “sounds the alarm”

(August 2006)

Source: A.B. Joy, Whistleblower, Bay Tree Publishing, CA 2010.


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Multiple

Investigations Results of Fraud Investigations

• $2.3 million case

• Fraudster went to prison

• University paid back agency

Source: P. Bailey. UC Dateline News Report: “Whistleblower writes memoir about UC Davis case,” January 28, 2011,

University of California, UC Davis.

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Exposure Can spark retaliation!

• Media attention

• Adverse publicity

• Public exposure of wrongdoing

Source: A.B. Joy, Retaliation, CreateSpace Publishing Platform, SC 2013.


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Retaliation Wrongdoing exposure leads to:

• False allegations

• Threats

• Intimidation

• Harassment

• Isolation/Exclusion

• Fear

• Malicious rumors

• Reputation damage

• Privacy violations

• Blacklisting

• Harm to person and property

Sources: A.B. Joy, Retaliation, CreateSpace Publishing Platform, SC 2013.

A.B. Joy, Whistleblower, Bay Tree Publishing, CA 2010.

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Retaliation

Investigation:

Quick Response • Complaint filed (September 2007)

• Investigator hired (September 2007)

• Process (September – December)

• Report (December 2007)

Source: A.B. Joy, Retaliation, CreateSpace Publishing Platform, SC 2013.


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Retaliation

Prevention Retaliation can happen to anyone,

anywhere!

• Resources

• Challenges

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Resources Managers need to educate the workforce on the policies and laws that protect “reporters”

• Anti-Retaliation Policy

• Complaint procedures

• Standards of conduct

• Responsibility

• Official in charge

• Enforcement protocols


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Use Technology

• Post policy

• Post complaint process

• Post contact person(s)

• Post resources

• Keep current

• Update frequently

• Distribute widely

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Retaliation

Hotline Allows for anonymous reporting

• Anti-Retaliation policy

• Retaliation definitions

• Complaint procedures

• Contact person(s)

• Protection protocols

• Forms


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Protection from Retaliation Organizational Challenges

• Distribute anti-retaliation policy

• Train managers and supervisors

• Educate workforce

• Create “protection” forms

• Respond to allegations immediately

• Investigate promptly

• Communicate with “reporter”

• Reduce gossip: communicate facts to workforce

• Establish safeguards against post-employment retaliation

• Survey employee attitudes regarding retaliation

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Enforcement

• Strongly worded standards: Zero

tolerance policy!

• Be credible: Violators will be

disciplined

• Demonstrate commitment to

enforcement: Post

results/consequences on valid cases


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Ethical Culture Workforce needs education

• Develop written ethical standards on

workplace conduct to increase

employee trust, collegiality, and

morale

• Train mangers and employees on

workplace ethics

• Develop workplace safeguards for

reporting wrongdoing

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Preventing

Retaliation Is good public policy

Source: A.B. Joy, “The high cost of whistleblower retaliation: Why institutions should prevent it”, Compliance & Ethics

Professional 10 (4): 37-40 July/August 2013.


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Acknowledgements: Power Point Presentation by Computer Courage, Berkeley, CA. www.computercourage.com. Template inspired

by “Clean White Keynote Presentation” by graphicriver

Thank you! [email protected]

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Retaliation: Case Study on Prevention Strategies