Ethics and compliance has to stand strong when new trends suddenly spring up. Organizations are always ready to embrace the new-fangled shiny object – in this case ESG.  Not to be a nattering nabob of negativism (see Spiro Agnew’s comment in 1966 crafted by William Safire), but organizations have to take a deep breath and renew a review of its ethics and compliance program fundamentals. 

Why, might you ask?

Well, the ECI recent Global Ethics and Business Survey identified a big problem – retaliation against employees who report misconduct is rapidly increasing.  This is a significant issue that requires immediate attention.  Two years earlier, ECI found a very high rate of retaliation – this rate, however, in the 2021 survey, doubled!

Companies are rapidly increasing resources to ESG initiatives and programs.  Let’s remember that ESG includes a G for Governance.  And Governance has to include a company’s Speak Up culture.  To ignore the importance of a Speak Up culture and the implications of retaliation against employees who report concerns, inevitable leads to major corporate scandals.

Companies have to take a deep breath and review their Speak Up culture before turning to the ins and outs of an ESG initiative.  Stakeholders are pressuring companies to move fast to address ESG factors.  Companies have to act quickly and address the retaliation issue.  Such a review has to be comprehensive, robust and detailed.  A company with a weak Speak Up culture will quickly find evidence of significant deficiencies.

A Speak Up culture is built on trust and organizational justice. Employees will report observed misconduct when they trust the company’s reporting system. 

As an initial requirement, companies have to communicate a consistent message from senior leadership and other managers that employees have a duty to report misconduct. Trust cannot be earned by words alone. Action is critical.  This is why companies have to treat employees who report concerns with respect.  Such respect has to be exercised at every step of an investigation.

My shorthand for an effective internal investigation program is organizational justice, meaning an internal justice system that is fair, prompt, and built on trust and respect.  An investigator should regularly communicate with the employee-reporter to ensure that he/she is apprised of developments in the investigation.  This does not mean the substance of the investigation should be disclosed.  In fact, the investigator should not discuss information gathered during the investigation.  The investigator’s communications with the employee-reporter should be limited to general status and progress. 

The investigator should be aware of potential retaliation against the employee-reporting.  As the ECI survey revealed, most retaliation occurs within four to six weeks after the initial report. 

During this critical time, the investigator should check in with the employee-reporter to identify any potential retaliation – subtle or overt — by a supervisor against the employee- reporter.  It is difficult to uncover retaliation since it can take so many forms, often subtle and with cover justifications and explanations.

Companies have to review and evaluate their internal investigation programs by conducting internal investigation audits and employee-reporter assessments.  If evidence of retaliation is uncovered, it should be aggressively pursued.  The most effective way to demonstrate a commitment to non-retaliation is to uncover and substantial such conduct and then punish the wrongdoer.  If retaliation rates are really increasing, companies should find it relatively easy to uncover such conduct and reinforce the message of protection of employee reporters.