Negative Consequences of Whistleblowing

Companies expect employees to be loyal, which makes whistleblowing a big deal. Whistleblowers are employees of governments, businesses or nonprofits who "blow the whistle" by reporting wrongdoing to people outside the organization, such as media, regulators or police. It's a controversial act, and many employees who do it experience negative effects of whistleblowing.

Why Blow the Whistle?

Many organizations have a formal procedure in place for dealing with illegal acts such as sexual harassment, racial discrimination or fraud. If your supervisor is sexually harassing your coworker, for instance, the usual procedure would involve reporting this to human resources and letting HR investigate and resolve the case.

Established procedures don't always work. Human resources and upper management may receive a complaint and take no action, particularly if the wrongdoing implicates someone who holds a lot of power in the organization. If the company is engaged in widespread fraud, for example billing Medicare for services it doesn't provide, nobody may be willing to take responsibility for fixing it. At this point, going outside the company may be the only solution.

While organizations often dismiss whistleblowers as disgruntled employees out for revenge, most whistle-blowers are trying to right the wrongs they see. Although the government offers financial incentives for whistleblowers to report fraud, personal ethics usually count far more than money in motivating whistleblowers.

Consequences of Whistleblowing

One reason organizations hate whistleblowers is the consequences of whistleblowing. Once police, the government or auditors launch an investigation, the organization loses control of its own affairs. It has to open its books and records to outsiders and may face financial or legal penalties.

Because the consequences of whistleblowing are so disruptive, the bar is set high for when whistleblowing is justified:

  • Other efforts to fix the problem, such as reporting it to HR or upper management, have gone nowhere.
  • The whistleblower's safety is at risk if they stay silent or report it by the usual channels.
  • The whistleblower has good reason for believing the wrongdoing exists. 
  • The whistleblower has evidence to back up their charges. 
  • Exposing the wrongdoing will accomplish some public good. 

Protection for Whistleblowers

To avoid the negative impacts of whistleblowing, federal rules bar workplace retaliation in whistleblower cases. If an employee reports wrongdoing, the organization cannot legally take any "adverse action" against them. That includes firing, laying off, blacklisting, demoting, disciplining, denying benefits, intimidating, threatening or cutting pay.

Negative Effects of Whistleblowing

Despite the ban on retaliating against whistleblowers, blowback happens. A 2014 survey found that less than 10 percent of federal employee whistleblowers were thanked for identifying a problem; a third said they'd been threatened with retaliation or experienced it. Many whistleblowers have learned the hard way about the negative impacts of whistleblowing on their lives and careers.

  • Employers may fire a whistleblower, or pressure them into quitting.
  • Employees who don't quit may be bullied, demoted, isolated or harassed.
  • Some whistleblowers crack, becoming depressed, suffering panic attacks or drinking to cope with the pressure.
  • An employer may push a whistleblower into mental health counseling, then portray them as mentally ill and unreliable.
  • Military members who blow the whistle may be imprisoned and charged with treason or espionage.  
  • Although retaliation is illegal, it's possible to portray retaliation as something else, for example, a negative review for poor performance. 

Making Anonymous Reports

Because of the negative effects of whistleblowing, making anonymous reports is safer for the informant. The flip side is that it might make it easier for people to make frivolous or inaccurate charges, or make claims out of revenge or rivalry. Critics of anonymity say it might end up hurting the public interest instead of helping it.

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About the Author

Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com