Circumventing the Whistle-Blower Incentive

whistleblowerAt the NACD’s Director Professionalism training in Houston this week, a group of seasoned directors were discussing the pending Securities and Exchange Commission’s rules for the whistle-blower incentives that would circumvent the company’s own internal reporting processes.

The discussion centered on the role of the board in encouraging employees to use the internal system to report any concerns.

“We do employee surveys at our company,” said Roberta S. Brown, a director at several regulated energy companies. “The HR Committee asked to see all the written comments that accompanied the surveys,” she said as a way to better understand employee issues and concerns.  “And we learned that employees were impressed to hear we read them.”

The board’s action sent a message to employees that their opinions were valued and concretely conveyed that the board was concerned about employee sentiment on all issues.  In that way, the board encouraged the use of the internal mechanism to report concerns.  It also conveyed the importance of “tone at the top” in terms of the board’s commitment to hear the employees’ perspective on issues.