Leadership matters when it comes to corporate whistleblowing

The death of John Barnett, the Boeing employee who exposed the company’s shoddy safety practices, spotlights the enormous pressure that corporate whistleblowers face.

Barnett, a former quality control engineer, was found dead from an apparent self-inflicted gunshot wound in his truck in a hotel parking lot in Charleston, South Carolina, where he was testifying in a deposition about the safety of the company’s aircraft. Barnett tried to raise concerns internally, but was ignored and eventually transferred, the New York Times reported.  He retired in 2017, but went public with his story in 2019.

It’s an experience Sherron Watkins knows well. Watkins is the former vice president of corporate development at Enron who spoke out about the energy company’s fraudulent accounting practices. That, in turn, led to a 2001 SEC investigation that brought down the company and its accounting firm, Arthur Andersen, and sent several former executives to prison, including former CEO Jeffrey Skilling.

“I’ve certainly met a lot of people with whistleblowing experience and the actions against a whistleblower are very, very predictable” Watkins said. “Enron was attempting to do all those things to me, but they imploded too fast so my period of suffering the same fate as most whistleblowers was shorter.”

From a communications and PR perspective, whistleblowing incidents are fraught with their own set of personal and professional risks. But they’re also an opportunity to set up or reinforce safe channels for employees to report misdeeds and prevent internal concerns from blowing up into a public crisis.

The plight of the whistleblower

“Most whistleblowers don’t have much power and they’re speaking about wrongdoing in a very powerful organization,” Watkins said. “And the powerful organization is trying to discredit them, maybe fire them, blackball them, spread rumors about them and also isolate them. And that … is probably when they’re at their lowest.”

Sadly, it’s not unprecedented for someone to take their own life. Watkins pointed to the example of Enron executive Cliff Baxter, who killed himself in January 2002. While not technically a whistleblower, Baxter, the company’s vice chairman, had protested the suspect transactions and retired when that went nowhere. He was later sued along with all the company executives.

Baxter expressed concern that he “was painted with the same brush as the bad guys,” Watkins said. “His suicide note said, ‘Where there was once great pride, now there is none.’”

So, what’s a communicator to do?

Set up a safe channel to report wrongdoing

One way companies, and communicators, can support whistleblowers is by taking preventative steps and setting up safe channels for employees to report bad behavior, like a private tip hotline. These reporting channels should be managed by a third party and ensure that tipsters remain anonymous in order to be effective, Watkins said.

“Companies ought to strive for having a really good robust system where you never try to figure out who is blowing the whistle,” she said. “Instead, you investigate what they’re reporting and you fix it. In that situation, the person doesn’t bear the brunt of whistleblowing, all the negatives. They’re never discovered (and) they see the company correct it.”

That approach builds employee loyalty, but it’s also just good business. Watkins cited studies by George Washington University professor Kyle Welch that prove that companies with robust reporting systems have a higher return on investment and lower litigation costs.

Share what you’re doing with tips

It’s at this point that communicators can make a difference by strengthening the lines of communication between employees and company leaders. Comms teams can report on what’s being shared via the hotline, express thanks to those reporting it and how the company is addressing any issues raised.

“From a communication standpoint, it’s very important that the communications internally from upper management speak to the good ideas that have come out of the hotline system, the problems we averted that came out of the hotline system,” Watkins said.

That kind of preventative approach to wrongdoing is preferable to the other option: an employee going to the media or the Securities and Exchange Commission (SEC).

“That means they’ve tried internally and it’s falling on deaf ears,” she said.

A moral decision point for PR and comms

Whistleblowers become enemies to the company when they go public, Watkins said, and PR departments will be pressured to follow the company line and attack the messenger.

“That was happening to me at Enron,” she said. “The PR people were ready to start smearing you, dropping little things, use other people to smear you.”

“I think that’s morally demoralizing for PR departments to be forced to do that kind of stuff, but they are nine times out of 10, if they’re working for a company that doesn’t want the truthtellers’ information out there.”

Just as whistleblowers face personal and professional risks, so do PR and comms professionals charged with crafting a response. It’s potentially a career terminating move to fight back against leaders dead-set on retaliation, Watkins said, and circumventing executives by going to the board of directors is problematic.

“I don’t have the right answer for PR folks,” she said, but suggested trying to slow responses down, using influencing skills to get people on your side and playing devil’s advocate to executives. “A lot of the problem within Enron is they really thought they could bluff their way through things.”

One other option is to hire an attorney and become a whistleblower yourself. The whistleblower program created under the Dodd-Frank Act, passed by Congress in 2010, offers protection and a cash payout from the SEC if the company is found to have engaged in wrongdoing.

Leadership matters

From Watkins’ perspective, things have improved greatly in the 20-plus years since the Enron debacle. The Dodd-Frank Act and the SEC’s creation of the Office of the Whistleblower following the 2008 financial crisis have forced companies to clean up their act.

“Companies should adopt the philosophy that, ‘We might as well know where our skeletons are, know where the elephants in the room are and correct it ourselves,’” Watkins said. “Preventative is better than being exposed.”

More broadly, the bigger message is that safety and accountability actually can save the company money in the long run. That’s where communicators can play an important and influential role. Boasting about their fantastic employee hotline is a critical first step in having an effective internal reporting system, according to Watkins.

“Leadership matters and what the leaders are saying really matters,” she said. “What they’re rewarding (and) what they’re talking about is just so important.”

Sherron Watkins is a distinguished advisor, business ethicist and member of the advisory committee for Ragan’s Communications Leadership Council, our members-only group of senior-level communications leaders. Members also have exclusive access to in-depth resources, including insights from Watkins and a whistleblowing compliance kit.

Mike Prokopeak is director of learning and council content for Ragan Communications. Follow him on LinkedIn.