Whistleblower Psychology: The Experts Weigh In, Part 1


When Paradigm Capitol Management’s former head trader discovered his company’s owner, Candace Weir, owned a broker-dealer that was doing transactions with Paradigm while trading for a hedge-fund client, the employee reported the alleged conflict of interest to the SEC.

Weir didn’t take it lightly to say the least. Paradigm immediately demoted the trader from his position, assigning this new task – investigating the very misconduct he reported. The employee’s entire job function was lessened and he was stripped of all supervisory responsibilities.

It is a unique breed of person - willing to face bridge-burning, potentially career-ending employer retaliation - who stands up and reports their concerns about illegal activity in the workplace.

Courageous, determined, steadfast whistleblowers often find their lives and the lives of their loved ones seriously disrupted after exposing wrongdoing. Though there are powerful anti-retaliation laws to protect them, retaliation is still the most-cited hindrance to coming forward.

So what motivates whistleblowers to stand up against wrongdoing while most would rather scamper for some sand to hide their heads?

It’s all about the money, right? Most folks would say whistleblowers speak out solely to collect the millions of dollars in False Claims Act, SEC and other awards and anti-retaliation remedies the government provides as incentive to report misconduct.

But studies show this just isn’t the case. In fact, it is NOT about the cash rewards.

Ethics & Compliance Study: Money Not Primary for 57%

Monetary incentive is actually the least likely motivator for whistleblowers to report fraud outside of the workplace. According to the 2012 Ethics & Compliance Initiative (ECI) Report, only 43% report company misconduct externally for financial motivations.

Leading American False Claims Act attorney and author of Saints, Sinners & Heroes, Brian Mahany explains, "Many people think money is the primary motivator of whistleblowers. While money is certainly important, it is not the primary motivator. Most whistleblowers are genuinely concerned about the companies they work for and try to fix problems internally before filing a complaint.”

In fact, the 2013 ECI survey found that 92% of whistleblowers reported internally first. “Only after they are ignored or suffer retaliation for speaking up do most whistleblowers bring their concerns outside, filing a False Claims Act complaint or making an IRS/SEC whistleblower submission,” said Mahany.

One in five whistleblowers are subjected to workplace retaliation after reporting misconduct internally and one in three people choose not to report internally for fear of retaliation. Researchers at the University of North Carolina and Bucknell University found that the primary reason for reporting fraud outside of the workplace is fear of retaliation.

The True Whistleblower Profile - Proactive, High-Performing Employees

To try and decipher what these daredevils are made of, a number of studies have looked into the personal profiles of whistleblowers. Population studies [LINK: http://hum.sagepub.com/content/65/8/923.abstract] show that proactive individuals who aspire to influence their environments are most likely to blow the whistle. Whistleblowers are on average actively-engaged, high-performing employees with years of loyalty to their companies.

Dr. Cary Greenwood: 66% Corporate PR Execs/Practitioners Report Knowledge of Misconduct

Whistleblower expert Dr. Cary A. Greenwood, Assistant Professor of Public Relations at Middle Tennessee State University, serves on the Affiliated Faculty Committee for the Government Accountability Project, a whistleblower defense organization in Washington D.C. and has presented her research findings on whistleblowing both nationally and internationally.

A recent study by Dr. Greenwood asked corporate public relations executives and practitioners in the largest publicly traded U.S. corporations about their involvement in developing and/or publicizing internal whistleblowing channels to report financial fraud, their awareness of wrongdoing, their view of their responsibility to report wrongdoing, and the consequences of reporting wrongdoing.

The study found that almost half (44.4%) said they or someone they knew had been aware of wrongdoing. Nearly 66% with knowledge of wrongdoing reported it, while more than 81% said reporting was not part of their job. One-third (33.3%) of those who reported wrongdoing and were identified suffered employer retaliation.