Negative Consequences of Whistleblowing

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Famous whistleblowers such as Sherron Watkins of Enron have been hailed as brave souls who alerted the public to corruption and sought to protect colleagues from an unexpected downfall of a company. However, the corporate environment often values loyalty so highly that people who speak up about such problems suffer a number of personal, professional and financial turmoil. These consequences must be expected and prepared for when deciding to blow the whistle.

Job Loss

  • In U.S. states with at-will employment laws, employees can be fired for any reason that isn't an illegal one. This means that a whistleblowing employee may be terminated for nearly any other reason. If laws do not exist in that location to specifically protect whistleblowers, an employee may not have strong legal recourse against the termination. Additionally, an employee retained after event may experience difficulty in future promotions or could face demotion.

Alienation

  • After the whistle has been blown, employees may continue their careers with the same organization but face awkward social surroundings and stilted relations with their superiors. Even when the dust has settled, whistleblowers may be given less responsibility or access to company information and colleagues may feel disinclined to cooperate with them or share any negative news.

Litigation

  • Government employees and workers in certain industries and locations are protected from job loss, slander lawsuits and other litigation problems. However, in the aftermath of reporting corruption or inappropriate activities occurring in the corporate environment, an employee may be exposed to lawsuits related to confidentiality agreements or other aspects of employee contracts. If the company fires the employee, a legal battle may also ensue to regain employment.

Damage to Employer

  • Whistleblowing often causes financial turmoil and public relations problems for the employer. As in the Enron scandal when employees' stock options became endangered, whistleblowing may ultimately prove beneficial for the individual and her colleagues. However, potential drawbacks like profit loss and lowered stock values can negatively impact the whistleblower and other employees financially and professionally. Weighing the moral issues and long-term consequences of speaking up are often at odds with what seems best for the company at the time.

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