Whistleblowing programmes Part 3

Open culture in practice: Lessons from aviation

The aviation industry operates something called ‘Just Culture’, an ongoing progressive part of the fabric of that industry. They say it takes years to establish, but only a moment to destroy.

An effective and open reporting programme depends on how organisations handle blame and punishment, which is where the Just Culture concept began. People needed to know that they had a voice, and if they felt uncomfortable about something, no matter what, they could share their concern without fear of retaliation - even if their concern was unfounded.

What is needed to drive an “open culture” is a “just culture”, an atmosphere of trust in which people are encouraged to speak up when something isn’t right, or they just sense that something isn’t as it should be. It is important that an environment exists where concerns can be raised, necessary processes are in place for investigation and for the development of preventative actions such as additional communication, system changes or improved supervision.

The ’Just Culture’ of aviation may be looked at as a safety-related programme that isn’t related to the financial sector; however, the FCA report makes it very clear that safety of employees, other stakeholders and the general public is very much in their sights.

Prevention, not clean-up: The role of whistleblowing in an FCA-regulated business

How to be proactive, not reactive, with cultural issues in financial services organisations It’s clear that having a well-run and well-promoted effective whistleblowing programme is no longer best practice, it is standard practice. However, not every organisation has the processes and procedures in place to handle these “speak up” scenarios. If that sounds like your organisation, here is fair warning: you continue to ignore these needs and issues at your peril.

First and foremost, this is about protecting your employees’ wellbeing – but undoubtedly it makes good business sense to foster an open culture of speaking up. Plus, it’s increasingly part of FCA expectations that a financial services organisation should have this in hand; as Jonathan Davidson stated in his introduction to the report “healthy cultures are purposeful and they are safe.”

Without an effective whistleblowing programme, businesses put themselves at risk, perhaps inadvertently:

• Risk of violating laws and regulations
• Risk of engaging in unethical activity
• Risk of committing fraud
• Risk of environmental damage
• Risk to employee safety
• Risk of people “covering up” any of the above in a bid to protect reputations

The whistleblowing programme, a place where concerned employees can report activities and people who are putting their company and lives at risk, helps to mitigate these risks. It also means that, when and if the regulator comes a-calling to investigate, it will be helpful if they can see you’ve done all you can to put the right reporting processes in place - that the issues were out of your control, not that employees knew and didn’t or couldn’t do anything about it.

The role of middle management in instilling purpose and culture

And while the Board and company leaders should be setting the tone from the top, building a culture that encourages employees to raise concerns about wrongful conduct - and, better yet, to not engage in wrongdoing in the first place - the reality is the frontline employee is highly unlikely to go to the CEO to voice their concern. It’s middle management that forms the day to day contact, acting as conduit between the frontline and the senior leadership.

“A focus on purpose should start from the top, but engaging those in the middle is key as it is our direct line managers who set the tone every day for each of us,” writes Jonathan Davidson, Executive Director of Supervision - Retail and Authorisations, in the FCA’s Driving Purposeful Cultures report. “Aligning decision-making, recruitment and internal progression with organisational purpose is needed for it to resonate throughout an organisation and really be authentic. And firms should be encouraged to act by showing them the advantages of doing so.”

Managers should be fully equipped to handle any scenario, including what to do if they either see wrongdoing, or if a member of their team comes to them with concerns. Unfortunately this key connection is not always recognised. Many managers, especially ones in their first management position, have had little or no training in how to handle concerns raised directly. Initial and ongoing training programmes and strong two-way communications are vital to keeping managers up to date, ensuring they have both the knowledge and confidence to deal with things in a way that protects the individual and the organisation.

Take charge and empower employees

While it’s advisable under FCA guidelines to have a whistleblowing programme in place, treating that programme as a tick-box exercise won’t meet the expectations of the regulators. A well-designed whistleblowing programme combines the rigorous processes of investigation and appropriate response with embedding of a culture that actively encourages employees to raise concerns. Evidence suggest there is still some way to go on empowerment.

Willis Towers Watson employee research data shows that only 69% of UK employees are satisfied with their involvement in decisions affecting their work. Also while 65% of employees feel their company has established a climate where traditional ways of doing things can be challenged, a third do not. Even with a culture of openness within an organisation, people can fail to report wrongdoing or concerns for a number of reasons:

• They’re unsure of who to talk to
• They feel that internal channels are blocked or the concern will not reach someone who can 1make a difference
• They do not want to challenge the status quo
• They fear a lack of anonymity
• They fear reprisals, such as losing their job
• They worry they may not be taken seriously and nothing will be done

Sarah Jackman, Counsel,
Dentons UK and Middle East
"As well as making clear to employees how they can raise concerns, training is also essential for those handling the concerns that are raised. Those receiving concerns should learn how to do so in a supportive and effective way.

The expectation of the FCA is that concerns relating to sexual harassment, or other nonfinancial misconduct, should be treated as "reportable concerns" and investigated under the whistleblowing procedure. These concerns tend to be complex and highly sensitive. Collaboration is often needed between HR, Legal and the Whistleblowing Case Handlers.

It is vital that the different areas of an organisation are clear on their responsibilities for these matters. Collaborative cross department training sessions can be very effective."

The most valuable programmes make raising concerns a normal activity, something that is welcomed by the organisation. These programmes can only operate effectively in an environment that encourages, protects and values these reports - one where employees are empowered to speak up.

Be proactive, not reactive, with cultural issues by focusing on your whistleblowing processes and ensuring all employees know their rights and responsibilities; and know that you will support them if they do speak up, even if their concern appears to be of a minor nature.

Best in class speak up programmes are designed by multi-disciplinary teams, supported by Boards, reinforced by managers and promoted widely throughout the business - not just when first introduced or during employee onboarding, but on an ongoing basis. Employees should have regular training about how to raise concerns - and, if appropriate, how to receive concerns, too. Those brave enough to speak up need to be supported, and protected from retaliation.

How to build an effective reporting system that promotes open culture

Effective whistleblowing services encourage a speak-up culture and empower your people The importance of whistleblowing programmes and open culture cannot be denied - but they can be hidden. It’s not enough to develop a policy and put it on the intranet; to truly embed the culture of openness requires a long-term commitment, regular updates to training and reviews of policies, and plenty of communications to anyone who deals with your business.

Effective speak up programmes are based in metrics and results-oriented. They have as their primary goal the reduction in incidents of improper behaviour, with this achieved by championing the desired open culture.

Regular, open communication at all levels enables issues to be resolved at an early stage, before they grow in severity. This communication ensures all employees are aware not only of their rights and responsibilities, but what they can do if they see any wrongdoing or improper behaviour occurring in the name of the organisation or by people working for it. Communication also shows shareholders, regulators and nonexecutives that the financial services organisation in question is taking concerns - and its own responsibilities - seriously.

An open and transparent culture also means any claims of wrongdoing are investigated and reported back in a swift and efficient manner. Findings of an investigation should include the steps taken to investigate the issue raised as well as what was done to remediate the behaviour, and ensure it doesn’t happen again. Follow up of the person or persons concerned with the investigation is vital; you must be able to evidence a clear audit trail of the support you have provided post investigation.

What stops someone from reporting an incident of wrongdoing?

Without open communication and an open culture, businesses risk employees turning a blind eye to the issues. People might know they could make a report, but don’t feel they are able or worry about what will happen if they do.

The reasons for not reporting issues are varied, but include:

• The issue involves the person they would report to
• They’ve previously reported the issue and nothing happened
• They fear reprisal or retaliation
• They don’t know how to raise a concern
• The methods of reporting aren’t easily accessible
• They can’t make an anonymous report
• They don’t believe the business will take their report seriously

All of these issues relate directly to the culture of an organisation. If an employee feels intimidated or worries about bullying, that’s a failure of culture. If policies or lines of communication are unclear, that’s a failure of culture. If they don’t trust management or don’t believe their concerns will be taken seriously, that’s a failure of culture.

This is why encouraging and instilling an open culture and ensuring employees have the psychological safety to speak up is so critical in the modern financial services industry. It’s not just something HR or compliance or even the regulator says you should have; it goes directly to employee safety, engagement and satisfaction.

Remember to communicate - and include everyone involved in the business

“The promotion of all methods of reporting is vitally important to the success of a whistleblowing programme,” says Safecall co-founder and CEO Graham Long. 

“The awareness campaign needs to take into account every member of the organisation. How they hear about the service - whether through a poster campaign, the company intranet or ideally word of mouth - is personal to every business.”

The most critical factors for a successful awareness campaign include:

• A senior manager as your whistleblowing champion
• Buy-in and full support of the board
• A strong, clear and consistent message
• A clear understanding of how to best engage with employees at all levels
• A robust internal process to deal with reported issues as laid out in your Code of Conduct, policy, or ethics programme
• Training for all employees
• All of the above to be readily and easily accessible to all working and operating within the business

Long reiterates the importance of including contractors and suppliers in this communication campaign as a way to of creating an effective sphere of influence. Many of these non-permanent employees can be closest to the issues, but don’t always have resources and facilities made available to them as they aren’t considered “employees” as such.

These programmes should also offer a range of methods to allow employees to raise their concerns, as not everyone will feel comfortable talking in person or over the phone, and will prefer to collect thoughts and submit a written report electronically. By providing these different reporting channels, by having an ongoing awareness campaign, and by embedding an open culture in financial services, you greatly reduce the risk of a person just ignoring the problem or taking the problem to the regulator or the press and cutting the organisation out of the initial reporting chain.

“The awareness campaign needs to be a part of your organisation’s communications strategy and continually be refreshed, not allowed to stagnate,” says Long. “A one-off notification will not deliver long-term results. It is vital your speak up programme is at the heart of the organisation and promoted regularly - and in a regulated business, an effective programme is essential, not a nice to have.”