Corporate Dissenters

Dissent can occur when an individual decides that he or she will not conform to a popular view, holding an opinion that may be opposed to what the majority thinks. In the workplace, the organizational culture provides the employees with its acceptable values, procedures, practices and behavior to which the employee is expected to conform. If an employee deviates, he or she is considered an organizational, or corporate, dissenter. Unfortunately, when employees step forward and alert the organization to its own wrongdoings, they are labeled as whistleblowers; generally a negative label which causes the employee to be ostracized by the larger organizational group. Recent whistleblower cases leading to corporate fraud exposure have led to improved legislation protecting whistleblowers and encouraging new levels of corporate transparency.

Keywords Cooper, Cynthia; Dissenters; Ethics; Enron; False Claims Act; Lloyd-La Follette Act; Organizational Justice; Sarbanes Oxley Act; Securities and Exchange Commission (SEC); Watkins, Sherron; Whistleblowers; WorldCom

Social Interaction in Groups & Organizations > Corporate Dissenters

Overview

Dissent can occur when an individual decides that he or she will not conform to a popular view, holding an opinion that may be opposed to what the majority thinks. In the workplace, the organizational culture provides the employees with its acceptable values, procedures, practices and behavior to which the employee is expected to conform. If an employee deviates, he or she is considered an organizational, or corporate, dissenter.

According to Kassing (1998), there are three types of dissent:

  • Articulated,
  • Latent, and
  • Displaced.

Articulated dissent is considered to be a positive behavior. An articulated dissenter has the ability to express issues in a constructive manner with the intent of fostering a positive change in the organization. On the other hand, a latent dissenter feels powerless with no influence to orchestrate change. Instead of sharing concerns with top management, the latent dissenter tends to share concerns with coworkers. The two types of organizational dissenters mentioned above tend to share concerns within the organization. However, there is another type of organizational dissenter that expresses concerns externally. The displaced dissenter tends to feel that no one in the organization will listen. Therefore, there is a need to voice concerns to the public. Some of the sources that these individuals approach are the media, the legal system or governing bodies for the corporations.

The Whistleblower

The whistleblower is a type of displaced dissenter who believes that the only way that corrective action will be taken is through external intervention. These individuals tend to be high performers with strong moral values.

Given the increased levels of competitiveness in the world today, many people are tempted to operate outside of the rules and regulations of society in order to get ahead. Although many would argue that traits such as honesty and credibility are valued, temptations have lured some to act irresponsibly. Actions such as cheating, stealing, lying and bribing have always existed in the workplace, as have good moral values and actions. Organizations must put policies in place that will encourage employees to do the right thing and inform the proper authorities when illegal actions and dishonesty take place.

Unfortunately, when employees step forward and alert the organization of wrongdoings, they are sometimes labeled whistleblowers. Instead of being considered heroes for doing the right thing, they are chastised; some never fully recover from the experience. For many of these individuals, there is a loss of trust in fellow employees and the organizations in which they work. Alford (2001) describes the personal trauma a whistleblower feels upon discovering dishonesty or unethical practices in his or her organization:

For some, the earth moves when they discover that people in authority routinely lie and that those who work for them routinely cover up. Once one knows this, or rather once one feels this knowledge in one's bones one lives in a new world. Some people remain aliens in the new world forever. Maybe they like it that way. Maybe they don't have a choice. (Alford, 2001, p. 52)

For whistleblowers, this can be devastating. Everything that they have believed and trusted is turned upside down. In some cases, these employees may have been friends outside of the workplace with the culprits, which places an additional burden on the potential whistleblower. It is unfortunate that society has come to a point where individuals with high moral values and a sense of right and wrong are treated as outsiders. Whistleblowers have been ostracized, reprimanded, forced to transfer, referred to receive psychiatric care, assigned to menial duties, dismissed and blacklisted. Some have been unable to obtain employment at other companies because there is a fear that the same situation will occur. Organizations respond to whistleblowers with hostility and fear.

Whistleblower Legislation

The US government recognized that big business may not always do the right thing. Therefore, it has introduced and implemented some regulations to level the playing field and allow employees to come forth. Examples of such legislation are:

False Claims Act

The False Claims Act was a qui tam provision that was enacted during Abraham Lincoln's presidency. Originally, the legislation protected the government from damages due to faulty war equipment supplied fraudulently during the Civil War. Revisions were made to the Act in 1943 and 1986. In 1986, there was a significant expansion of the rights of whistleblowers and their attorneys. The law allows individuals to file actions against federal contractors claiming fraud against the government. People filing under the Act may receive 15 to 25 percent of any recovered damages.

The False Claims Act provides the following protection:

Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated in the terms and conditions of employment by his or her employment because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section (i.e. a whistleblower action) shall be entitled to all relief necessary to make the employee whole.

Many courts will provide protection when:

  • An employee becomes a participant in a "protected activity" (i.e. when an employee decides to confront an employer about illegal activities such as fraud).
  • The employer becomes aware of the "protected activity".
  • The employee is penalized as a result of coming forth about the "protected activity" (i.e. termination, harassment).

When it has been determined that an employee is a victim of retaliation, he or she may petition for:

  • Reinstatement with the same seniority that he/she would have had if the adverse action did not occur.
  • Two times back pay
  • Interest on the back pay
  • Special damages (i.e. compensation for emotional distress, recovery of litigation costs, and reasonable attorney's fees)
  • Any type of relief that will assist the employee in becoming a whole person again (Sheeder, 2006, p. 39-40).

Sarbanes Oxley Act

The Sarbanes Oxley Act was passed in 2002 with the purpose of encouraging employees to become effective corporate monitors and report misconduct and unethical behavior in corporations. The act has two approaches that encourage employees to become corporate whistleblowers (Moberly, 2006). The first step is a clause that provides protection to whistleblowers from employer retaliation once they have disclosed improper behavior. The second step requires employers to provide employees with guidelines, policies and procedures to report organizational misconduct within the organization.

Lloyd-La Follette Act

The Lloyd-La Follette Act was enacted in 1912 and was designed to protect American civil servants from retaliation. The purpose was to ensure the right of employees when they wanted to provide the House of Congress, a committee or individual congressman with information about fraud. The intent was to provide the intention of conferring job protection rights to federal employees.

Applications

Recent Examples

Two of the most discussed fraud cases in history have been those surrounding the energy giant Enron and the telecommunications company Worldcom. Coincidentally, both of the whistleblowers in these two cases were women who had risen to the rank of vice president in their respective organizations. A study conducted by two professors at St. Mary's College in Indiana found that female business students value honesty and independence more than their male counterparts. Women may be more prone to expose wrongdoing due to their value system (Allen, 2002).

Cynthia Cooper was a vice president at Worldcom and Sherron Watkins was a vice president at Enron. The circumstances surrounding both cases were so shocking that it made the public acknowledge how corrupt some organizations had become. Worldcom would become known as the company that created the largest accounting fraud in history (Ripley, 2002). According to Colvin (2002), "Enron and Worldcom have become America's twin symbols of business malfeasance, but share a different kind of similarity: In each case the public learned the extent of the scandal in large part through the actions of a brave woman who did the right thing by going over her boss' head" (p. 56).

Cynthia Cooper & Worldcom

Worldcom's founder, Bernie Ebbers, went to college in Clinton, Mississippi and he wanted to move his company to the area. Cynthia Cooper had grown up in this area as well and was proud of the organization. Soon she had become the Vice President of Internal Auditing. Unfortunately, in June, 2002, she had to tell the audit committee of Worldcom's board that the organization was unethical in its accounting practices (Ripley, 2002).

Worldcom had started out as a small company in 1983, but became a major telecommunications powerhouse in the 1990s. Most of the executives were in their late thirties and making millions of dollars. However, there was a glut of companies like Worldcom by early 2001. Many believe that this was the time that the organization started to use creative accounting practices. In June 2002, Cooper and her department conducted a routine examination of the company's capital expenditures and uncovered $3.8 billion in fraud and alerted the company's new auditors, KPMG. The U.S. Securities and Exchange Commission (SEC) launched an investigation into these matters on June 26, 2002.

Cooper was not a part of the illegal activities, but many of the people who she had respected were a part of the scandal. Even the organization's external auditor, Arthur Andersen, was alleged to be a part of the cover-up. Many of the activities were geared toward providing fraudulent information to the Securities Exchange Commission (SEC).

Cooper stayed at Worldcom once she became a whistleblower. Although she became physically and emotionally exhausted, she persevered because she did not want the innocent employees of the company to suffer. Even though Cooper can be credited as a major influence for improved corporate governance, no one from the senior management team at Worldcom acknowledged the sacrifice that she had made. When speaking at different conferences, she has offered the following advice to corporations:

  • Protect whistleblowers so that they can continue to provide information to support their allegations.
  • Set an ethical tone at the top. In the Worldcom situation, the deceitful few were members of the senior management team.
  • Hold more committee meetings and consider going into executive sessions.
  • Remain flexible in the course of auditing and maintain an element of surprise (Peterson 2005).

Issues

Organizational Justice

According to Alford (2001), "the whistleblower is a political actor in a nonpolitical world" (p. 97). The whistleblower responds to his/her value system in an organization where the value system has no role. Employees may view situations in terms of right or wrong, whereas the employer may view situations in terms of the bottom line and financial profit. In essence, the purpose of the employee is to make sure that the business makes money. What can an organization do to support employees who want to do the right thing and view the organization as a fair and ethical place to work?

Organizational justice is a concept that explores an employee's perception about whether or not an organization is fair in its decision making processes and the influences of those perceptions on employee behavior. Research has shown that organizational performance is improved as a result of improved ethical decision making (Hatcher, 2002; Swanson, 1999). Many have researched this area in hope of understanding why and how ethical decisions are made. By understanding the thought process behind an employee's decision making, human resource professionals may be able to create an environment that encourages ethical actions in the organization. According to Joseph and Esen (2003), a national business ethics survey showed that "40% of professionals in human resource management and development roles must respond to their organization's ethical situations and in 70% of organizations, these same professionals are viewed as their organization's experts on ethics" (Joseph & Esen, 2003).

As the business community embraces a global economy, there has been a push to speed up processes in order to make more profit. As a result, some employees see taking shortcuts as the only way to stay on top in a competitive environment. In order to accomplish ambitious goals, some may be tempted to participate in unethical behavior in order to meet these goals. Thus, organizational acceptance may be a factor as to why some people make unethical decisions. Research supporting the understanding of the ethical decision-making process may assist human resource professionals on how to create an environment where employees are encouraged to make ethical decisions.

According to Cropanzano, Golman and Folger (2003), the "result of organizational justice research suggests that the effects of injustice within organizations may be much broader than previously thought." Kray and Lind (2002) assert that "victims directly affected by organizational injustice consider and sometimes take retributive actions, and so do neutral observers." As a result of the recent scandals, institutions of higher education have been challenged to teach students the virtues of ethical behavior and organizations have been challenged to create an ethical environment. Those who have devoted their time to researching the importance of organizational justice may be of assistance to this cause. Organizations need to realize that there are people who value their conscience over their job.

Terms & Concepts

Dissenter: A person who holds a different opinion than the group to which he or she belongs and acts against the norms of the group.

Ethics: A branch of philosophy which studies concepts such as right and wrong, good and evil, and responsibility.

False Claims Act: A qui tam provision that was enacted during Abraham Lincoln's tenure as president. Originally, the legislation protected the government from damages due to faulty war equipment supplied fraudulently during the Civil War. Revisions were made to the act in 1943 and 1986. In 1986, there was a significant expansion of the rights of whistleblowers and their attorneys.

Lloyd-La Follette Act: This act was enacted in 1912 and was designed to protect American civil servants from retaliation.

Organizational Justice: An umbrella term used to refer to individuals' perceptions about the fairness of decisions and decision-making processes within organizations and the influences of those perceptions on behavior.

Sarbanes Oxley Act: Legislation passed in 2002 with the purpose of encouraging employees to become effective corporate monitors and report misconduct and unethical behavior in corporations.

Securities and Exchange Commission (SEC): A United States government agency responsible for enforcing the federal securities laws and regulating the securities industry and stock exchange.

Whistleblower: An employee, former employee, or member of an organization, especially a business or government agency, who reports misconduct to people or entities that have the power and presumed willingness to take corrective action. Generally the misconduct is a violation of law, rule, regulation and/or a direct threat to public interest — fraud, health, safety violations, and corruption are just a few examples.

WorldCom: The second-largest long distance phone company in the United States, WorldCom expanded rapidly by acquiring other telecommunications companies, such as MCI Communications.

Bibliography

Alford, C. (2001). Whistleblowers: Broken lives and organizational power. Ithaca and London: Cornell University Press.

Allen, J. (2002, December 30). Women who blow whistles. U.S. News & World Report, 133, 48. Retrieved June 6, 2007, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=8780577&site=ehost-live

Bocchiaro, P., Zimbardo, P. G., & Van Lange, P. M. (2012). To defy or not to defy: An experimental study of the dynamics of disobedience and whistle-blowing. Social Influence, 7, 35–50. Retrieved October 25, 2013, from EBSCO online database Academic Search Complete http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=71678571

Colvin, G. (2002, August 12). Wonder women of whistle blowing. Fortune, 146, 56. Retrieved June 6, 2007, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=7030100&site=ehost-live

Cropanzo, R., Golman, B., & Folger, R. (2003). Deontic justice: The role of moral principles in workplace fairness. Journal of Organizational Behavior, 24, 1019–1024.

Ellsberg, D. (2010). Secrecy and national security whistleblowing. Social Research, 77, 773–804. Retrieved October 25, 2013, from EBSCO online database Academic Search Complete http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=55575664

Hatcher, T. (2002). Ethics and HRD: A new approach to leading responsible organizations. Cambridge, MA: Perseus Publishers.

Iwu, C. (2013). Whistle-blown into nothingness: The Boeing story. Journal of Social & Development Sciences, 4, 182–184. Retrieved October 25, 2013, from EBSCO online database Academic Search Complete http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=88009343

Joseph, J., & Esen, E. (2003). SHRM/Ethics resource center 2003 business ethics survey. Alexandria, VA: SHRM.

Kassing, J. (1998). Development and validation of the organizational dissent scale. Management Communication Quarterly, 12, 183–229.

Kray, L., & Lind, A. (2002). The injustices of others: Social reports and the integration of others' experiences in organizational justice judgements. Organizational Behavior and Human Decision Processes, 89, 906–924.

Miceli, M., Near, J., Rehg, M., & Van Scotter, J. (2012). Predicting employee reactions to perceived organizational wrongdoing: Demoralization, justice, proactive personality, and whistle-blowing. Human Relations, 65, 923–954. Retrieved October 25, 2013, from EBSCO online database Academic Search Complete http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=78031190

Moberly, R. (2006). Sarbanes-Oxley's structural model to encourage corporate whistleblowers. Brigham Young University Law Review, 2006, 1107–1175. Retrieved June 6, 2007, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=23715204&site=ehost-live

Peterson, A. (2005). Inside the WorldCom fraud. Credit Union Magazine, 71, 15–20. Retrieved June 6, 2007, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=17911983&site=ehost-live

Ripley, A. (2002, December 30). The night detective. Time Canada, 160/161(27/1), 36. Retrieved June 6, 2007, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=8787230&site=ehost-live

Sheeder, F. (2006). Whistleblowers are not born that way — We create them through multiple system failures. Journal of Health Care Compliance, 8, 39–73. Retrieved June 6, 2007, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=22337250&site=ehost-live

Swan, R. (1999). Foundations of performance improvement and implications for practice. In R. Torraco (Ed.), Performance Improvement Theory and Practice (pp. 1–25). San Francisco: Berrett-Koehler.

Suggested Reading

Barrier, M., & Cooper, C. (2003). One right path. Internal Auditor, 60, 52–57. Retrieved June 6, 2007, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=11603045&site=ehost-live

Bjørkelo, B., Einarsen, S., Nielsen, M., & Matthiesen, S. (2011). Silence is golden? Characteristics and experiences of self-reported whistleblowers. European Journal of Work & Organizational Psychology, 20, 206–238. Retrieved October 25, 2013, from EBSCO online database Academic Search Complete http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=59702694

Gleeson, W., & Minier, J. (2003, January). Why companies need to adopt whistleblower policies now. Banking & Financial Services Policy Report, 22, 1–6. Retrieved June 6, 2007, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=9037470&site=ehost-live

Soviet dissident goes to Middlebury. (1979). Chronicle of Higher Education, 18 , 8.

Essay by Marie Gould

Marie Gould is an Associate Professor and the Faculty Chair of the Business Administration Department at Peirce College in Philadelphia, Pennsylvania. She teaches in the areas of management, entrepreneurship, and international business. Although Ms. Gould has spent her career in both academia and corporate, she enjoys helping people learn new things — whether it's by teaching, developing or mentoring.