The Power of Openness

September 28, 2022
Technical Staff

In an organizational setting, success depends, among other things, on the internal culture that encourages managers and employees to report actual or suspected wrongdoing. However, in many cases, it is easier said than done. For example, when an accounting staff finds out that the CFO and the CEO are cooking the books to meet the financial expectations of their bank, a primary creditor, why does he not report such misconduct to the audit committee of the board? There may be more than one answer to such a question, but internal culture is paramount. 

Culture of Integrity

Setting the tone at the top of what is acceptable and not acceptable sets the boundaries of expected behavior and conduct. Those charged with governance and executive management are responsible for establishing proper and adequate policies that encourage honesty and reward integrity. For example, when a company establishes a well-written whistleblowing policy, it should encourage all stakeholders to report wrongdoing. However, organizational leadership should be vigilant and have effective communication with management, employees, and other stakeholders.

Organizational Openness

Fear of retaliation, ineffective governance and internal control, and a corrupt environment are among the factors that do not encourage employees, management, and other stakeholders to report wrongdoing. Furthermore, there is the “bystander effect, psychological phenomena describing how people stay on the sidelines as passive bystanders, waiting for others to act rather than do something themselves.” 1

Reward Integrity and Corruption Fighters

Rewarding Corruption Fighters is the 10th Principle of Fighting Corruption, promulgated by The American Anti-Corruption Institute (AACI)2. Management should ensure that employees will not hesitate to report fraud or errors. They should be close to employees and vendors alike. Detecting wrongdoing in its early stages is far preferable to the devastating corruption damage that can occur when it is discovered too late. 

1. Harvard Business Review. “Why Open Secrets Exist in Organizations,” January 14, 2019. https://hbr.org/2019/01/why-open-secrets-exist-in-organizations.

2. Exam Unit, “Principles of Fighting Corruption,” in Certified Anti-Corruption Manager (CACM) Review Textbook, 2022 ed. (United States of America: The Exam Unit of The American Anti-Corruption Institute LLC., January 14, 2022) pp. 41-42.

Image by Gerd Altmann from Pixabay