Speaking up is Golden: The Importance of Integrity for a Safe Reporting Culture in Organizations

1. How Well Is Your Organisation Protected Against Risks?

Does your organisation have fire insurance? It probably does; sometimes it is even mandatory to insure yourself against certain risks. Fortunately, fires do not occur too often in organisations, and there is a willingness to take safety measures to prevent fires or respond quickly to them.

But what does your organisation do to prevent integrity risks such as fraud, theft, data leaks or inappropriate behaviour? Integrity issues occur much more frequently than fires, yet not all organisations actively work on promoting integrity or creating a safe reporting environment to prevent and properly address such risks when they occur. That is why it is very valuable for organisations to invest in integrity and an efficient reporting procedure.

2. The Cost of Integrity Violations

Integrity violations can cause a lot of damage to organisations. The ACFE (Association of Certified Fraud Examiners) publishes an annual Report to the Nations on the average damage organisations suffer due to fraud. If the organisation has an internal reporting system, the financial damage can amount to $100,000. Without a proper reporting system, the average damage can easily double. 43% of fraud cases are discovered through a report or tip-off. Most tips or reports come from employees (52%), 21% from customers, and 11% from suppliers.

It is primarily the employees themselves who are the first to notice when something is wrong within the organisation. They report this via a formal reporting channel, such as a hotline (53%), or to someone within the organisation, most often to their direct supervisor (29%), followed by the director or board members (16%), and thirdly to internal audit (14%). Some whistleblowers report through multiple channels.

These findings from the ACFE show us that it is very important for organisations that employees can report internally. The sooner incidents are noticed and reported, the sooner they can be addressed and the less damage the organisation will suffer.

However, simply having an internal reporting channel and procedure is not enough. More is needed to protect your organisation against integrity violations.

3. Investing in Integrity Pays Off

To support employees to report incidents or raise concerns, your organisation must ensure that there are as few barriers as possible and that employees are encouraged to speak up.

This starts with building a positive integrity culture. Tony Simons, in his Research on Ethical Management: The High Cost of Low Trust (2002), described the positive effects of employees’ trust in the integrity of their managers and, conversely, how damaging it is when that trust is lacking. Ethical leadership leads to more engaged employees, who take fewer sick days, perform better, and speak more positively about their employer. This, in turn, results in higher customer satisfaction and greater profitability. Research by Karin Lasthuizen (Leading to Integrity: Empirical Research into the Effects of Leadership on Ethics and Integrity, 2008) and Leonie Heres (Tonen van de Top, 2016) confirms the significant impact of ethical leadership.

In the private sector, for example, integrity contributes to the continuity of processes, strengthens trust between business sectors, reduces administrative burdens and enhances corporate reputation.

In the public sector, the importance of integrity is often framed in terms of public trust; it contributes to economic growth, legitimacy, social stability, and the quality of public services. In both sectors, an integrity-driven organisational culture boosts employee motivation and engagement.

Employees in organisations with a strong integrity culture experience less stress, anxiety, uncertainty, and emotional exhaustion. Moreover, integrity-driven organisations are more attractive to job seekers. Research by the Erasmus Happiness Economics Research Organisation even showed that a government that prioritises integrity and anti-corruption contributes to the well-being of its citizens and, of course, of its own employees.

It is therefore fitting that building a culture of integrity and integrity management is receiving increasing attention. However, integrity within organisations does not arise automatically. It requires an integrated and coordinated approach.

4. Integrity Management: A Matter of Culture and Structure

Effective integrity management consists of various measures. These contribute to both a culture of integrity and the implementation of appropriate structural safeguards. It is important that these measures reinforce one another and align with the organisation’s culture.

An integrity-driven culture reflects the moral values and norms desired by the organisation (and society). These values and norms are expressed through group patterns, collective behaviour, employee attitudes, and shared beliefs. Examples of cultural measures include: values workshops, onboarding and mentoring programs, dilemma training, internal communication, employee satisfaction surveys, and fostering a culture of giving and receiving feedback.

To support these, the Dutch Whistleblowers Authority offers various practical tools such as the guidelines: Tips and insights for integrity communication, and Integrity in practice - Towards an ethical culture.  

Not only does an organisation’s culture influence employee behaviour, organisational structure also plays a key role. Structural measures include, for example, the introduction of procedures and protocols that define how employees should act in certain situations. Just like cultural measures, structural measures guide people’s behaviour. Structural measures may include:

• laws, codes, and (house) rules;

• performance standards and reward systems;

• procedures and protocols;

• reporting and investigation procedures;

• physical and digital access rights;

• allocation of authority;

• monitoring and enforcement mechanisms.

To strengthen structural measures, the Dutch Whistleblowers Authority also provides practical advice in brochures such as The Reporting Procedure and Internal Investigation.

In practice, there is a constant interaction between structure (measures) and culture (measures). The structure defines what employees may and may not do in certain situations (according to agreed procedures); the culture ensures that employees actually adhere to these expectations.

To help organisations build integrated and coordinated integrity management, the Dutch Whistleblowers Authority developed the Integrity Infrastructure Model (see Figure 2), which consists of seven crucial and interconnected elements.

The Integrity Infrastructure is also used as a guiding framework for the Integrity Compass (IntegriteitsWijzer). This is a free online tool that organisations can use to assess their integrity management and identify the strengths and weaknesses of their approach. After answering 35 questions – covering the seven elements of the Integrity Infrastructure – the organisation receives a customised report with recommendations for further strengthening its integrity management.

5. Successful Reporting

The Whistleblowers Protection Act requires organisations with over 50 employees to have an internal reporting procedure. However, simply having a procedure does not guarantee its effective operation. Several conditions contribute to its success.

Research by Utrecht University, in collaboration with the Dutch Whistleblowers Authority, provides insight into how interpersonal contacts between those involved play a key role in the successful handling of internal reporting processes. Specifically, organisations must ensure:

• Social and psychological safety, so that whistleblowers feel safe enough to come forward;

• A careful and swift procedure, where the involved actors take decisive and visible action;

• A reporting process that aligns with both written and unwritten agreements, and of course complies with legal requirements;

• Expert and objective investigators who are also well-intentioned and empathetic, so that the reporter feels seen, heard, and supported;

• Investment in the knowledge, skills, competencies, and attitudes of the actors involved in the reporting process, such as managers, confidants, investigators, and other integrity actors;

• A personal approach combined with continuous and timely contact with everyone involved, so they see that active steps are taken and the report is taken seriously;

• Openness and transparency to ensure it is clear to everyone what information can and cannot be shared and why;

• Ongoing, up-to-date information about the steps in the process for all involved, so they understand why specific steps are taken and know what the next steps are;

• Systematic evaluation of reports and reporting processes so that lessons can be learned and the reporting process is continuously improved.

6. In a Nutshell

Whistleblowers are crucial for organisations to detect integrity issues and ensure they are addressed promptly. According to ACFE data, employees prefer to report internally. To make this possible, not only is an internal reporting system necessary, but also a positive integrity culture where whistleblowers feel confident that their reports will be handled safely and effectively. At the core lies an integrated and coordinated integrity policy.

There are conditions for successful reporting. On one hand, there is a professional, proper, swift, and visible approach that follows established procedures and agreements. On the other hand, there is great attention to transparency and interpersonal contacts between those involved. This strengthens trust that the organisation will handle the report quickly and sincerely.

The Dutch Whistleblowers Authority is happy to provide organisations with practical support through various tools and information available on its website.