Whistle Blowing Survey- Reasons Why Surveys are Unreliable

Last night I was reading the report issued by Ethics Resource Center “Blowing the Whistle on Workplace Misconduct” issued in December 2010. Now in my previous post “The Problem with Questionnaires on GRC Departments’ Functioning” I had highlighted why these survey questions miss the point entirely and do not consider the subjective factors within the organization. This reports highlights why the information should be taken with a pinch of salt. One has to be really naïve to believe any of this information can really be applicable in real situations. I have taken some of the paragraphs of the report (given in italics below) and explained why the information is irrelevant and redundant.

1.    Women Report Wrongdoing More Often Than Men (page 7 & 8 )

“We found that women are consistently more likely than men to report misconduct, but that men have been narrowing the gap. During 2009, 66 percent of women who were aware of misconduct said they reported it, compared to 60 percent for men.”

Now doesn’t this statement make you think that 66% of the women are super women? They are the torchbearers of ethical conduct. See the overall reporting chart on page 8, it contains they reported to senior managers when co-workers are lying about time sheets, stealing, breaching customer privacy etc.

The list does not contain whistle blowing for frauds conducted by senior management. Actually, the list doesn’t contain any of the whistle blowing issues relating to fraudulent reporting, mismanagement of assets, money laundering, corruption, bribery or high-risk behavior of senior management. A report showed that percentage of women committing frauds in US has increased due to women equality and they might beat the men at the game soon.

2.       Percentage Who Reported Misconduct They Observed: 2000 – 2009 (Page 2)

More than three-quarters surveyed by the ERC say they would not “look the other way” if their em­ployer did something questionable Between 2000 and 2009 about 59 percent of employees on average said that they observed and reported misconduct, usually to an internal company authority. To an optimist, that data say the ethics glass is about 6/10ths full.

Now this sounds that we really have good employees. Are we issuing feel good reports or really something relevant to ethics? KPMG India Fraud Report 2010 states that 75% of the frauds are conducted by the employees of the organization.  Therefore, if the employees were so vigilant about reporting misconduct of colleagues to their seniors, why are the crooked employees so successful in conducting frauds?

The survey on civil services of India states that 80% of the government bureaucracy is corrupt and the honest officers are harassed. How did this occur when human psychology is to report misconduct for the benefit of the organization? If such cases, none of the systemic risks should occur, and they are bringing nations down.

Survey results: New faces of fraud, a report issued by SMG Information Security Group states that 76% of the frauds in banks are detected when the customer reports the incident.

3.     Reporting Rates Rise Along With Management Level (Page 9)

During 2009, 82 percent of top management said they reported misconduct. That number has been relatively steady throughout the past decade, dipping below 80 percent only in 2005, a year in which all levels of workers and managers say they were less diligent in re­porting bad behavior. Almost seven in ten middle managers (69 percent) and two thirds of line supervisors also reported misconduct in 2009, compared to 55 percent of all non-management personnel

Huh, please pinch me. I used a magnifying glass to see the percentage, and then also it came to 82%. Did I miss something in the last few years? I thought financial crises occurred and most of the senior managers of the banks were held responsible for it. Are we saying that actually financial crises occurred because a bunch of juniors were unable to use excel worksheets to create the right financial models.

Reports indicate that all multi-million dollar frauds, CXOs are involved. If senior management is reporting so frequently how come the public reads one fraud case after the other be it Wall Street Journal or Economic Times of India. My personal view is that most CXOs who took the survey thought it would make them look good if they say yes. When they can take big fat bonuses after causing the financial crises, a small lie is not going to affect their conscience.

4.    Who the Whistle Blower Tells (Page 4)

 But, it turns out, that when employees report misconduct, the company hotline is one of the last places they go. Although hotlines provide confidentiality or even anonymity for employees nervous about tattling on a co-worker, only three of 100 reports about internal misconduct come to company hotlines, according to data collected by the ERC

This is the only figure that is somewhat realistic, though in my view it is more likely to be 3 out of 1000 or 10,000. Employees in their sane mind are not likely to use hotlines.

Let me be an honest and dedicated employee. I found out that my CFO has authorized an outside consultant to pay a bribe to income tax officials. I being a nice person with best interest of the organization at heart, use the hotline to report the case. Well, small trouble! The hotline complaints are looked into by the Chief Audit Executive (CAE) who reports to the CFO.

I think there is a solution; I am working in a global multinational. I can use the global hotline. The hotline complaints are looked into by Global Head of Compliance. He is a good friend of the India CEO and is obligated to him for recommending him for the position. Actually, the CFO authorized the bribe after CEO’s approval.

This isn’t the end of the world. I am sure that there must be some global risk managers who would understand the issue and help me. But, will they really help me. They are all really thick and present a cohesive front whenever any junior says anything. They might have politics between them, but are united against the middle and junior managers. Not much luck there also.  Now could I have found a better way to commit a career suicide? I wonder why I am facing retaliation and job loss, when I should be appreciated for my ethics.

I recommend you read the report for the sake of entertainment if you have no other alternatives available. The point I am making is that these reports are far removed from reality. The data can be churned out any way possible, and reported with a few fancy graphs and charts. Relying on them can cause organization and career disasters.

References:

  1. Ethics Resource Center -Blowing the Whistle on Workplace MisconductDecember 2010
  2. KPMG India Fraud Report 2010
  3. India Civil Services Corruption Survey – 2010
  4.  SMG Information Security Group – Survey results: New faces of fraud- 2010
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