This essay is aimed at discussing such a topic as whistleblowing which is related to both business administration and law. This notion can be defined as reporting illegal or unethical practices within private and public organizations (MacGregor, Robinson, and Stuebs 37). In particular, it is necessary to explain the importance of this activity for the protection of investors and customers. Furthermore, one should examine the ways of protecting whistleblowers. On the whole, one can say that these people play an important role in improving the work of businesses in the long term. Moreover, it is important to use legal and institutional safeguards to protect such employees from retaliation and empower them. These are the main questions that should be discussed more in this paper.
This topic has become particularly important during the last decade due to the growing number of corporate fraud scandals which affected many stakeholders in the United States and other countries. The most notorious one is the Enron case. It should be noted that this organization inflated its revenues by $800 million and misled many investors who believed that the shares of this corporation could be purchased with safety (Ieron 55). Some people knew about this accounting hoax and its possible impacts, but only very few of them were willing to speak about illegal practices in this corporation (Iron 55). On the whole, whistleblowing is particularly important for the protection of investors who place their trust in the integrity of senior executives or the board of directors. The importance of this issue can be better illustrated if one speaks about people whose life savings were destroyed at the moment when Enron stock plummeted (Iron 55).
Secondly, this topic is important because it is related to the protection of consumers’ safety. In some cases, manufacturers may conceal information about the defects of a product, even if these defects are extremely perilous. For example, there were cases when car manufacturing companies forced engineers to falsify the results of safety tests (Foust 164). In other words, these people could unwillingly endanger the lives of many customers. To a great extent, they were forced to resolve a conflict between two critical priorities, namely professional integrity and job security (Foust 164). Under such circumstances, whistleblowers can play a critical role because they can raise buyers’ awareness about possible problems and even threats to their lives. One should bear in mind that such scandals often gave rise to new regulations which eventually increased the security of clients. So, they can be viewed as agents who eventually bring improvements to the work of entire industries.
It should be noted that policy-makers accept the importance of whistleblowing for promoting the welfare of the public. This is why there are several legal acts that are supposed to protect these people who disclose information about the illegal activities of clients. In many cases, employers can be afraid of speaking openly, because such a step can imperil their job security in the future. Moreover, their professional reputation can be destroyed. There are many legislative acts that are supposed to safeguard this person. For example, one can mention the Sarbanes-Oxley Act adopted in 2002 (Sweeney 56). According to this law, public companies can be penalized for any retaliation against whistleblowers. Moreover, people, who are responsible for such practices can be imprisoned. This is one of the precautions that should be taken into consideration. Additionally, it is possible to mention the 2013 Consumer Protection Act which guarantees more protection to whistleblowers (Sweeney 56). Finally, policy-makers lay stress on the Dodd-Frank Wall Street Reform according to which such people can be entitled to some material rewards (Sweeney 56). Therefore, there are legal tools that can help law enforcement agencies protect these individuals and encourage whistleblowing in various organizations. This is one of the points that can be identified.
Admittedly, it is possible to say that current regulations can have some limitations. For example, they can give rise to blackmail or even “bounty” hunting (Sweeney 55). In other words, some people will have an incentive to search for possible malpractices, instead of eliminating them. Nevertheless, such measures can protect people from corporate retaliation which is also a widespread phenomenon. This is why such legal safeguards are important. It is vital to rely on them in order to improve the work of many organizations and their sustainability.
One should bear in mind that many companies understand the importance of whistleblowers for the sustainability of organizations. The main issue is that such people can help senior management to eradicate possible malpractices at an early stage and avoid potential problems. Their reasoning is based on the assumption that the losses, which originate from public scandals, usually outweigh the gains of unethical or illegal behavior. This is why researchers believe that it is necessary to hire people who can become whistleblowers (MacGregor, Robinson, and Stuebs 37). Moreover, researchers emphasize the idea that corporate scandals usually originate from some minor violations of ethical rules (Gallagher 21). Moreover, in many cases, inefficient organizational procedures can lead to ethical violations (Gallagher 21). In other words, business administrators should eliminate the opportunities for fraud or dishonesty (Gallagher 21). Furthermore, researchers speak about the institutional safeguards which are needed by whistleblowers. In some cases, they have to be transferred to a different division or department; otherwise, they can be mistreated by their co-workers (MacGregor, Robinson, and Stuebs 39). Furthermore, senior managers should ensure their confidentiality. So, researchers fully recognize the need to promote the culture of whistleblowing in order to eliminate the risks of fraud, theft, and embezzlement. This is why business administrators should not turn a blind eye to the benefits of whistleblowing because it is critical for the long-term sustainability of many companies.
On the whole, this discussion shows that whistleblowing performs several important functions. First of all, such activities are critical for promoting the rights of customers and investors who need to know more about businesses in which they put their trust. In their turn, people, who choose to disclose information about possible malpractices, can eventually bring improvements into the work of many businesses. These organizations are forced to change their practices in response to new regulations and the demands of clients. Apart from that, such people can help businesses avoid considerable financial losses which may be the result of fraud, embezzlement, or public scandals. Therefore, it is critical to shield these individuals from discrimination or retaliation. In turn, managers and law-enforcement agencies should rely on institutional and legal tools in order to protect such people from possible threats. These are the main aspects that can be singled out.
Works Cited
Foust, Matthew. Loyalty to Loyalty: Josiah Royce and the Genuine Moral Life, New York: Fordham University Press, 2012. Print.
Gallagher, Chuck. “Whistleblowing: How to build a culture of ethics.” Leadership Excellence 30.11 (2013): 21. Business Source Complete. Web.
Ieron, Julie Allyson. “Taking On Enron.” Today’s Christian Woman 26.5 (2004): 54. MasterFILE Premier. Web.
MacGregor, Jason, Michael Robinson, and Martin Stuebs. “Creating An Effective Whistleblowing Environment.” Strategic Finance 96.3 (2014): 35-40. Business Source Complete. Web.
Sweeney, Paul. “Will New Regulations Deter Corporate Fraud? (Cover Story).” Financial Executive 27.1 (2011): 54-57. Business Source Complete. Web.