Whistleblowers have revealed some of the largest scandals and been the catalyst for some of the biggest government investigations and lawsuits in history. In some places, for example the United States there is a long history of incentivising whistleblowers by rewarding them with a share of any fines levied against businesses flowing from information supplied by the whistleblower.

Against this backdrop a common misconception is that whistleblowing should be discouraged. However, this is wrong. Businesses seeking to protect themselves from a whistleblowing scandal are recommended to ensure that they have in place their own internal whistleblowing program and actively encourage "speaking up".

The importance of a whistleblowing policy

Whistleblowers are frequently motivated by a desire that the truth be known or that suspicions of misconduct are investigated by someone and dealt with as appropriate. Whistleblowers are also afforded legal protections in different jurisdictions. Anecdotal evidence is that whistleblowers will often be satisfied if the investigation is impartially undertaken, and any problems are dealt with, by their employer. In contrast, a whistleblower report to the press, law enforcement, regulators etc. is often the last resort and frequently made after attempts to use internal channels have failed.

An effective internal whistleblowing process provides an internal channel for suspected problems and enables the company to get to the bottom of allegations and...

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