Limits of a whistle-blower culture

Who likes a tattletale?

Sherron Watkins, an Enron vice president, was named Time magazine's "person of the week" in January after investigators seized her memo warning then-chief executive Kenneth Lay about suspicious irregularities in her firm's financial records.

But not all whistle-blowers are applauded, say experts. More are like Shannon Doyle.

Mr. Doyle was "blacklisted" by Hydro Nuclear Services, a division of Westinghouse Electric. Just last month he asked the Supreme Court to overturn enforcement of a waiver he signed in which he agreed not to file a claim against his former employers. He says they provided bad references in retaliation for his blowing the whistle on plant safety back in the late 1980s.

And, of course, most people are familiar with Karen Silkwood, who died under mysterious circumstances in 1974 while reportedly gathering evidence of poor safety standards at Kerr-McGee's plutonium production plant in Crescent, Okla.

"Karen Silkwood and Sherron Watkins were heralded for doing a great service," says Steven Kohn, attorney and board chairman of the National Whistleblower Center (NWC) in Washington, D.C., a nonprofit advocacy organization that supports employee whistle-blowers. "But it's hard to find a job after that, because nobody wants to hire a whistle-blower."

Many firms apparently don't want to retain whistle-blowers, either. More than half of workers who flagged incidents of unlawful conduct in 2002 were fired, according to a NWC study in September. Many others said they faced unfair discipline.

But perceptions are slowly shifting, according to some experts. Employee watchdogs are getting more positive attention than ever in the wake of corporate scandals.

And last summer the federal government passed legislation mandating internal programs that encourage employees to cry foul, and require firms to provide protections against retaliation. All publicly traded companies were immediately required to set up committees to address concerns, and attorneys can be disbarred for helping clients cover up misconduct.

A recent study by Ipsos Reid, for Ernst & Young, cited 43 percent of employees surveyed reported fraudulent activities by co-workers during a recent 12-month period, mostly related to stealing office items.

Reports are on the rise in today's climate, but more are related to petty theft or discrimination, says Mr. Kohn, noting that only a handful of infractions have been reported each year in the 25-year history of environmental laws.

Experts say most employees are unlikely to speak out about more serious acts until corporate culture balances the risks with rewards.

Some Fortune 500 companies, such as State Farm insurance, Southern Company (an electric-and-gas utility firm), and Xcel Energy, actively encourage employees to come forward with information about unlawful actions.

Bentina Chisolm, attorney and manager of workplace ethics at Southern Company's Georgia Power, says posters, newsletters, wallet cards, and coffee cups urge employees to report employee misconduct.

The company offers multiple channels through which employees can anonymously lodge "concerns," including a third-party 800 number.

But Ms. Chisolm says the promotions and options don't seem to be enough. "Many employees are [still] concerned about how blowing the whistle is going to affect their careers," she says. "That is the overriding factor that keeps people from coming forth."

Fear of retaliation from co-workers is another barrier, say experts, including more subtle forms of payback, such as being ostracized. "The worst thing you can be accused of these days is not being a team player," says James Fisher, head of St. Louis University's Emerson Center for Business Ethics.

With so many negative repercussions associated with reporting unethical behavior, experts say it is unlikely that internal whistle-blower programs will expand quickly beyond complaints based on race, age, or sex discrimination, say experts.

Sharie Brown, a partner at Foley & Lardner, a Washington law firm, says companies have to remove the negative stigma attached to whistle-blowers by openly recognizing and rewarding employee watchdogs.

"There should be a special bonus for those who help the company avoid problems or minimize losses, in terms of financial issues," she says.

But some workplace experts worry that firms could become bogged down in a boom of costly, dead-end investigations.

"Corporations, scared by the headlines, are sacrificing good judgment and common sense and treating [everyone] that comes out of the woodwork as a potential 'insider,' " says Pat Gillette, cochair of Heller Ehrman's Labor & Employment National Practice Group based in San Francisco. "The pendulum has swung all the way in the other direction – which is never good."