The Whistle-Blower’s Dilemma

Instruction Details

The Whistle-Blower’s Dilemma:

 Whistle-blowing often creates a particularly challenging type of ethical dilemma. People do wrong, unethical, and even illegal things at work, and you and other employees know about the misconduct and may have even witnessed it firsthand. The dilemma is what to  about it—should you keep quiet or do you notify management or the authorities? Sharing your knowledge may indeed seem like the “right thing to do,” and depending on the situation you may even profit, but it might cost you dearly.

Whistle-blowers can have many motives. Some are inspired by their personal sense of fairness or morality, while others may act out of greed or revenge. The Government Accountability Project (GAP) is a whistle-blower protection organization, whose director, Tom Devine, makes recommendations for those inclined to speak out.

Think of Yourself. What are the potential benefits and costs to you personally?

Test Internally. Raise the Issue within the organization before going to the authorities or media. Most organizations have mechanisms in place (such as hotlines) and chains of command. Use them, even if you don’t expect them to work.

Recognize That It Will Be Personal. Many organizations will attack you and your character, regardless of what they do the issue. Retaliation often occurs, and not just by the accused and offending individual(s), but by others too. HR and legal departments are there to “protect” the organization, not you.

Whistle-Blowing for Profit: The Dodd-Frank Act of 2010 and some regulatory agencies provide incentives for whistle-blowers who report financial fraud which is both illegal and unethical. Some can receive up to 30 percent of any settlement if regulators collect more than $1 million due to the infraction. The largest awards to date were paid in 2018 when $83 million were paid to three whistle-blowers from Merrill Lynch who reported the misuse of funds.

The Costs: Although whistle-blower protection laws exist, they often do not sufficiently protect employees. For instance, a vice president at Chase Bank, Linda Almonte, was asked to review more than 20,000 past-due credit card accounts before they were sold to another company. Almonte’s team reported back to her that nearly 60 percent contained some sort of major error, including discrepancies about the amount or whether the court had indeed ruled for the bank. Concerned, Almonte went up the chain of command, flagging the errors and encouraging management to halt the sale. Instead, the bank fired Almonte and completed the deal. Nobody would hire her, which ruined her professionally and financially. She and her family ultimately moved to another state, where they lived in a hotel while she continued to look for work.

Ultimately, Chase was ordered to pay $200 million in fines and restitution. The company also settled a suit for an undisclosed amount with Almonte.

What’s the Lesson? Doing the right thing is just that, doing the right thing. While it is noble, doing the right thing can also be very costly. Losing your job or suffering other forms of retaliation are unfortunately common, and there isn’t much recourse. Suing your employer, even if legitimate, rarely results in future job offers for the whistle-blower.

  1. What can employers do to encourage whistle-blowers?

Complete Answer:

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