Helping Companies Avoid and Address Wrongdoing: Brought to You by Tenure

An interview with Professor Janet Near, Associate Dean of faculty and Research, Howard L. Hawks Chair in Business Ethics and Leadership, and Professor of Management in the College of Business at UNL

Enron. Big tobacco. FTX. Bernie Madoff. Throughout recent history, there are countless examples of wrongdoing within organizations that has caused harm to society. Even recently, when Google launched its Gemini AI platform, many called foul when it gave what some saw to be overly “woke” results. From outright fraud to avoidable public relations disasters, scandals can take down big companies in a matter of days. In many of these cases, it turns out that insiders within the companies could identify and call attention to the problems before they blew up into full-scale disasters, but often those insiders were ignored or even fired for doing so.

Professor Janet Near, Associate Dean of Faculty and Research, Howard L. Hawks Chair in Business Ethics and Leadership, and Professor of Management in the College of Business at UNL, has spent her career researching this exact phenomenon – how and why employees become whistleblowers and what happens as a result. Her work provides important insight for organizations on how to embrace internal whistleblowing to improve organizational performance and prevent public relations disasters. I recently had an opportunity to chat with Dr. Near about her work and the role that tenure has played in her career. Below is a summary of our conversation, edited for length and focus.

Niehaus: I see from your faculty profile that you spent much of your career at Indiana University and are relatively new to UNL. What brought you to Nebraska?

Near: In 2016 I took early retirement from Indiana University but was not ready to retire. I accepted the Howard L. Hawks Chair in Business Ethics from the College of Business at UNL. I was so honored to have this opportunity, because Howard Hawks has made ethics the foundation of his business operations for many years. He thought it was important to have a professor of business ethics, so he worked with the Dean in the College of Business to create this position.

Niehaus: Obviously ethics is a huge part of what you focus on in your research. Why do you think business ethics, and in particular the phenomenon of whistleblowing, is so important?

Near: As an organization theorist, I am interested in how the organizational structure, and particularly the reward structure, affects behavior of people within that organization. What is interesting to me about organizations is that if you make a change to the reward structure, people change their behavior quickly. If you make the wrong change, you are going to end up with a bunch of people doing dysfunctional stuff.

I think for the most part organizations want to be as effective as possible, but there is never consensus in an organization about how to achieve that. And this is a good thing. Without dissensus, we wouldn’t have innovation. But dissensus also makes life difficult for the people who live in those organizations. So, I think often people don’t want to hear about wrongdoing. They don’t want to hear that they must take action because they’re busy and overworked, and they just want the organization to continue to operate. Often folks hope that everything will be fine and they can brush wrongdoing under the rug, and no one will notice. I understand why managers feel the way they do, but in the long-term ignoring wrongdoing means the organization is going to have problems.

There are many notable examples of this. Recently Boeing has experienced several problems, some of which appear to be design issues or inspection issues, although it may be too early to tell. Most dramatically, a door fell off one of its airplanes while in flight. Most regulating agencies in the U.S. are not well funded, so regulators may not check things unless there are complaints. Those complaints frequently come from whistleblowers, as appeared to be the case at Boeing. Relying on whistleblowers to report wrongdoing means that if they don’t act then the wrongdoing may be missed. If they are under threat and might face retaliation for speaking up, a lot of wrongdoing will not be revealed. Organizations and society won’t know about wrongdoing that could have dangerous outcomes. So that part is scary to me.

Niehaus: What have you learned about whistleblowing that can help organizations be better at what they do?

Near: Ralph Nader coined the term, “whistleblowing,” in 1972, but no one could agree on a definition. If you can’t even define the term, then you cannot do research where everybody’s studying the same phenomenon. So, my co-author, Marcia Miceli, and I came up with a definition that required several components. First, only current or former employees can blow the whistle. It cannot be someone outside the organization; it must be someone internal who knows what’s going on and who understands the organization fully. We could compare whistleblowers to others external to the organization, like journalists, but the process for reporting wrongdoing will be different and is not directly comparable. Second, whistleblowing can be external, but it can also be internal, when people report wrongdoing within the organization. There was a lot of debate on this point initially, but our empirical research showed that internal and external whistleblowing were interrelated, and both needed to be studied. Third, whistleblowing is not just complaining about something at work. It’s reporting something that the employee assumes is wrongdoing, illegal behavior, or morally wrong, with the goal of changing the organization to stop the wrongdoing. It was important to delineate the phenomenon to be studied so that we did not compare oranges to apples, as the saying goes.

Using this definition, we could start to see fascinating results in the research. It turns out that if you interview a random sample of employees from multiple organizations, about half will say that they saw wrongdoing in the past 12 months. But then if you ask, did you tell anybody about it, only half of that group say yes. So why don’t they say anything? There are several reasons. First is that they don’t think anybody is going to change anything. Employees are not going to report the wrongdoing if they believe it is impossible for the organization to change. Second is that they fear retaliation, which is perfectly reasonable. The third reason, which we often overlook, is that they are not sure whether what they observed was wrongdoing or not.

One of the things that impressed me in our surveys is that people are very careful. They don’t report wrongdoing unless they’re quite sure that they can make a difference. It’s not just complaining for the sake of complaining. And when you get down to it, there are very few people who blow the whistle, and of those who do, it turns out that only about 40% suffer retaliation. The news media often focuses on those who suffered retaliation but in fact not everyone does.

The issue of retaliation is important because the laws in most states provide little protection for whistleblowers. In 1978 the federal government put into place a system to protect federal employees who blew the whistle, but still today in private firms you have little protection by and large if you blow the whistle. Even within the federal government, research has shown that supervisors can find all sorts of creative ways to retaliate. They cannot fire people, but they can keep them on the job and give them nothing to do, or put them in an undesirable basement office, or refuse to provide them training so that they can advance in their careers. In our data sets, most whistleblowers did not suffer retaliation. But for those who did, it often ruined their lives. My single piece of advice for anyone thinking about blowing the whistle is to find a very good lawyer first.

A second important finding in my research concerns the question of differences in internal vs. external whistleblowing. It turns out that about 90% of whistleblowers blow the whistle internally first. Usually they tell their direct supervisor, which suggests that they are committed to the organization, and they want to improve things. They are not trying to create problems. Managers often believe that whistleblowers immediately report wrongdoing externally to stir up trouble, but this complaint is not well founded.

What typically happens is that people blow the whistle internally first, but if the supervisor or anyone else in the organization retaliates, that’s when they go external. The irony here is that a manger’s first response often is, “well, I’m going to retaliate so they will quit, they will stop blowing the whistle, and it will signal to other employees that you should never blow the whistle.” In fact, that’s absolutely the wrong thing to do. If a manager retaliates, then the employee is likely to go external. And the last thing any organization wants, public or private, is to have information out there that employees have engaged in wrongdoing. Retaliation against whistleblowers sets in play this turn of escalating events that is guaranteed to create problems for everyone. My single piece of advice to managers is to avoid retaliation against whistleblowers. It is better to try to figure out what’s going on and where that person is coming from so actions can be taken to improve the situation. If there is wrongdoing, fix it. If there is only the appearance of wrongdoing, then explain to employees why what they thought they saw was not wrongdoing. Ultimately whistleblowing can benefit society and it can benefit the organization.

Niehaus: So if whistleblowing is ultimately good for society, are there things we can do to make it easier and safer for people to blow the whistle when they do see wrongdoing happening?

Near: Unfortunately, most employees have little protection from firing and retaliation if they blow the whistle on their employers. There are a lot of improvements that have been moving along in the legal system, which is great. But clearly what we need is innovation in this area, and I think that researchers have a primary responsibility to help with that. Fortunately, many researchers have helped with that, including other researchers at UNL.

At one point my co-author and I had a grant from the Institute of Internal Auditors Research Foundation. Internal auditors are, in fact, people who are hired by their organizations to report financial wrongdoing. Our research showed that internal auditors rarely suffered retaliation because their role was protected. They were hired for this purpose, and they did not report wrongdoing to their immediate supervisor. Instead, they reported wrongdoing to an audit committee, which was composed of outside members of the Board of Directors. So, they were reporting to people who were outsiders, but who were trying to make sure that the organization was going in the right direction.

This structure seemed to work well in the sense that only 6% of the internal auditors who reported wrongdoing also reported retaliation, compared to 40% of whistleblowers generally. It was fascinating to me to think that an organization could be structured in such a way as to provide employees, or at least a certain group of employees, with the opportunity to blow the whistle and to ensure that other people would at least listen to them and try to find out if they were right. If we had organizations that did that for every employee, how many cases of wrongdoing could we avoid?

Niehaus: How has tenure enabled you to do this work?

Near: Tenure has given me a greater sense of freedom in two ways. One was that I had the right to engage in academic freedom. I was working in a business school, but the results of my research could be interpreted to be negative towards business. That was not my intent, and I do not think that was the outcome of my research, but perhaps someone would have been concerned about my topic.

The second thing was that tenure gave me the time to explore this topic fully. As an assistant professor, there’s always the pressure to try to keep publishing and to do it quickly. You have to pick out topics and research methods that will yield results faster. That worked out fine for me, because I was lucky enough to have access to existing data sources, but after tenure I was able to collect my own data, to go out and talk to whistleblowers. The auditor study took two years start-to-finish, which is not unusual for survey research. That’s freedom I wouldn’t have had without employment security. Eventually that led to research results that helped to explain the whistleblowing process, but it wasn’t going to happen in 6 months or a year.

With tenure you have enough time to fully explore all aspects of a research problem and not to feel the pressure to move quickly, which can lead to ethical problems or to research results that are not valid. We can see the pressure on younger faculty, particularly in positions where they don’t have job protection. They must get results quickly, and that can be a disservice to everyone.

Often the most important research, with the greatest impact, is based on a study that was accidental, when researchers stumbled into findings that required them to try something new that they otherwise would never have done. This type of research can improve life for all of us. That’s what research is about: making life better. If we don’t have organizational structures at universities that support that willingness to pursue innovative research and try new things, even if we are not sure they’re going to work, we won’t be able to move civilization forward.