Whistleblowing and the NZA case
Managing change and Human Resources
©2014
Academic Paper
59 Pages
Summary
Whisteblowers are necessary to introduce change into a company when wrongdoings are identified. They are the first employees within a company that witness and show wrongdoings that arise in the everyday dealings of a company. However, they are often ignored by their colleagues, supervisors and the company.
Within this research the issues that arrise from neglecting the information provided by whistleblowers and ignoring the wrongdoing are illustrated using the case of “de Nederlandse Zorgautoreit”, henceforth NZA. The key variables related to whisteblowing are shown from the perspective of a potential whistleblower as well as from a company’s perspective. Finally it is concluded what went wrong in the NZA case and recommendations are provided.
Within this research the issues that arrise from neglecting the information provided by whistleblowers and ignoring the wrongdoing are illustrated using the case of “de Nederlandse Zorgautoreit”, henceforth NZA. The key variables related to whisteblowing are shown from the perspective of a potential whistleblower as well as from a company’s perspective. Finally it is concluded what went wrong in the NZA case and recommendations are provided.
Excerpt
Table Of Contents
9
1. Introduction
This phrase describes the whisteblowing situation quite accurately. Whisteblowers are
necessary to introduce change into a company when wrongdoings are identified. They
are the first employees within a company, who witness and show wrongdoings that
arise in the everyday dealings of a company. However, they are often ignored by their
colleagues, supervisors and the company.
Within this research the issues that arise from neglecting the information provided by
whistleblowers and ignoring the wrongdoing is illustrated using the case of "de Neder-
landse Zorgautoreit", henceforth NZA. It will be shown, which the key variables related
to whisteblowing are, from the perspective of a potential whistleblower as well as from
a company's perspective. Finally, it is concluded what went wrong in the NZA case and
recommendations are provided.
1.1. Research Question
Whisteblowing has a high impact on society as a whole. It is therefore relevant to
investigate why a person decides to blow the whistle and what role the company plays
in the process. We can learn from the mistakes made in the past to prevent them in the
present. Within this research I will therefore analyze a whisteblowing case concerning
"de Nederlandse Zorg autoriteit". This paper will analyze the case by using existing
academic models. This allows us to draw conclusions about what went wrong within the
NZA case. These models show the decision making process of the whistleblower and
what role the company plays in it.
From this point forward the organizational willingness to change is introduced. This
depends on several variables that will be explained as well. These variables will determine
whether a company will actually change its behavior and terminate the wrongdoing.
This paper has therefore the following research question:
What went wrong in the NZA case according to the current dominant academic models
and what could NZA have done to prevent it?
In order to provide a coherent answer and analysis sub-questions were defined and
elaborated on in the following:
-
Which factors influenced the whistleblower's decision to blow the whistle?
-
What was the role of the organization in this decision-making process?
-
Was there an organizational willingness to change and terminate the wrongdoing?
-
What are the cost/benefits of terminating the wrongdoing and what are the current
costs of NZA?
-
What could have prevented the current outcome?
10
Once these questions have been answered possible recommendations will be given what
NZA could have done to prevent this situation. Although a single case study has a low
generalizability it is still academically relevant to determine the pivotal variables in this
case study. In addition, companies that take this research into account might be capable
to understand the context of this type of situations and prevent the latter.
1.2. Research Design
The intention of this research is to see what went wrong in the NZA case. Furthermore
analyzing this recent case, ended with a suicide could lead to deriving important rec-
ommendations about how to motivate employees to share information about the
wrongdoings they witnessed and how to ensure that this information is not going to be
ignored by the organization.
For that purpose the current dominant models will be applied to the case. Thereby I
want to assess both the whistleblower's decision-making process and the organizational
reaction on it. The problem with models is that they have restrictions. In addition, the
analysis of the case could identify additional variables that have been omitted in previ-
ous research as well as assess areas for future research.
The latter is known as the omitted variables problem. When using models, certain
variables can either be over-or-underestimated due to the missing factor (Gerring,
2004). In the current case study the strength of the variables are not known. Therefore,
it is only possible to check whether certain variables are missing.
In addition, the choice to conduct a case study already gives limitations. Since I use
existing models it is a crucial case study. This is a case study that investigates a phenom-
enon against the background of a received theory (Gerring, 2012). The use of a crucial
case study leads to both internal and external validity threats. There are a lot of threats.
The most important ones will be described below.
The first threat is ambiguous temporal precedence. This is the situations in which there
is no certainty about the order of occurrence of the variables. Therefore, no conclusion
can be drawn about the possible "cause" and "effect". We have temporal variation. The
problem with the current case study is that we do not exactly know what happened
when. Therefore, temporal precedence could be a serious threat. Yet, the main purpose
of this research is to know whether certain variables could have prevented the situation
in this case. Therefore, this research does not look at whether one variable preceeds the
other. However, we have to take into account that the precedence of one variable could
ultimately lead to the occurrence of another. This situation does lead to a validity threat
and is a limitation in the research.
Secondly, this research might suffer from selection bias. The problem with a crucial case
study is that the level of generalizability is rather low. Indeed, the research done in the
area of whisteblowing shows very generic models, while the cases itself are very specif-
ic. It could be that the specific situations in the NZA case study could lead to certain
11
variables playing a more important role and others playing a less important role. The
first problem is that the models do not measure the strength of the variables. The second
problem is that NZA might be very case-specific leading to a very low generalizability.
History is another internal validity problem. We do have temporal and maybe even
some spatial variation. Therefore, certain "acts of nature" might have influenced the case
study that eventually led to the current outcome. Since this research is based on models,
the variables might therefore be biased. In addition, this research might not take into
account variables that have (pivotal) influence.
Maturation should also be taken into account. This case study involves persons who
mature during the period of case study. Since we have temporal and spatial variation the
subjects might change during the course of the current case study.
Other validity problems such as testing effects, statistical regression, attrition and non
compliance do not play an important role within this current case study.
1.3. Case Selection
As already mentioned, the main focus will be on the NZA case. Next to that several other
cases will be used to illustrate a certain parameter or to provide a motivation to a
certain recommendation. The reason why this research uses the NZA case is because it is
fairly new and not much (possibly even not at all) research has yet been done. It is
therefore a very interesting case study that might provide answers to many unanswered
or yet to be answered questions and provide critical recommendations in regard to
dealing with wrongdoings. The data about the NZA case is acquired by using newspa-
pers, news reports and blogs. Especially the Dutch paper "NRC Handelsblad" provides
extensive information since it has access to all of the information Arthur Gotlieb also
gave to NZA.
However since this information is due to now not yet made publicly available, we cannot
exclude the possibility that some information is still left unconsidered, possibly leading
to not entirely objective conclusions and biased model analysis. I tried to gather as much
information as possible in order to minimize this possibility.
1.4. Data Analysis
Once the case information has been summarized, I will use three models to assess the
decision making process whether or not to blow the whistle and the processing of the
information provided by the whistleblower, followed by change in the organization and
terminating the wrongdoing within the NSA case. From that point forward I will draw
conclusions and give possible recommendations about both the case study and the
models.
12
2. The Case
A typical example of a whistleblowing that is not followed by changes in the organiza-
tion but only associated with "terrible experience" of the whistleblower is NZA case
discussed in the following. In order to assess the consequences of ignoring the reported
wrongdoings and make a statement about what went wrong in the this case, a brief
description of the case is provided below.
This case shows a peculiar situation within a company claiming to be a learning organi-
zation. A learning organization is a company or institution that promotes the develop-
ment of new knowledge or insights that have the potential to influence possible future
behavior and can change existing norms and values within a company (Senge and
Suzuki, 1994).
The peculiarity lies in the fact that there was a whistleblower that promoted change
within the company but nothing really happened. How is it possible that an organization
such as NZA which claims to be a learning organization did not listen to the complaints
from its own employee? To answer this question we need detailed information about the
case itself that is then going to be mapped against the currently dominant whisteblow-
ing decision-making and whistleblowing processing models.
However, it is better to take many small steps in the right direction than to make a great
leap forward to only stumble backward. I, therefore, start by explaining the case.
This case involves a senior manager within the organization of NZA named Arthur
Gotlieb. The NZA is an organization that has a monopoly position as legislator in the
healthcare market. The main activities of this institution involve the determination of
the amount of healthcare to be provided by health care institutions, the price and the
quality (Dohmen and Wester, 2014).
For a period of thirteen years long Gotlieb was one of the people responsible for the
recognition of treatments involving expensive medicines. In this period, Gotlieb recog-
nized a lot of flaws within the system of NZA. The result was a file of 600 pages, support-
ed by 3 gigabyte of proof such as internal correspondence, documents, pictures and
audio files. There were five main issues.
The first problem was the so called "clean desk" rule in which employees were only
allowed to leave their jobs and go home after people literally cleaned their desks. The
pictures Gotlieb made showed something else. Desk offices, paper bins and printers
contained a lot of private information. Access to this information was therefore easy and
because there were (and are) a lot of temporary employees active in the company itself
the right information could easily end up in the wrong hands.
A second major flaw was that employees that left the NZA started working for compa-
nies that they first had to supervise. Since NZA is capable of fining companies that do not
obey the rules of the former, an enlaced situation was created. This led to new manage-
13
ment members that knew whether they were being supervised and whether NZA was
planning on fining them.
A third problem was that it was possible to check the agenda of every person within the
company. This included possible resumes and other private information of persons. The
letter and resume of director Paul Frencken who applied in June 2009 could be read by
everyone. Temporary employees had access as well.
Fourthly, every employee had access to the so called "V-drive". This drive was created
for employees to share information. This information on the V-drive was supposed to be
there only temporary. However, employees did not delete the information which led to
300 gigabytes of information that remained stored on the drive. This included patient
files, audio files of hearings and more private information. Even people who only
worked at NZA during the holidays could access this information.
The last complaint of Arthur Gotlieb was about another part of the network, the so called
W-drive. This drive contained information such as high quality pictures of director
signatures, which could easily be counterfeited. Gotlieb complained that this part of the
network was not protected. Temporary employees and people having a holiday job
could access this information.
Arthur Gotlieb warned his senior managers quite frequently about all these major flaws.
The management did not do anything with the information Gotlieb gave them. Indeed,
they even ignored him for a period amounting to four years. During that period, Gotlieb
got bullied by the same managers who did not listen and even tried to get rid of him. A
good example is that they gave him a heavy work load which could be compared with a
2.0 Full-time equivalent (better known as FTE). Gotlieb complained four times about
this job pressure. The management responded by giving him even more work. In
addition, Gotlieb got a lot of negative feedback on his job performance and people never
responded to his emails.
At the 10th of January 2014 Gotlieb delivered the file of 600 pages to the NZA. On the
22nd of January he committed suicide. He died at the age of fifty. Gotlieb is described as
a person who loved his work. Before the whole situation started the feedback on his job
performance was positive. In addition, people describe him as having a good sense of
humor.
The Dutch government has started an investigation led by minister Schippers who is
responsible for healthcare. Conclusions have yet to be drawn, but the first result of the
external whisteblowing has emerged. The board of directors has withdrawn themselves
from their position.
In the next section three dominant models according to the literature, regarding the
whistle-blowing process are described. The first model from Keil et al. (2010) focuses on
the decision-making process, which precedes the actual whistle-blowing act of a person.
In case the potential whistleblower decides to blow the whistle by communicating the
wrongdoing internally, the second model should be applied to assess the processing of
the information and whether it led to a change in the organization and termination of
14
the wrongdoing. It thereby indentifies the factors that make whistle-blowing `effective'
(Near and Miceli, 1995). After introducing the models, the academic relevance and
empirical evidence regarding the value of the models will be discussed. Based on this
relevance, both empirical and academic, a consideration will be made about if and how
these models are useful to apply to the NZA case.
15
3. Whistleblowing
In this section some of the elementary aspects of whistleblowing will be elaborated. The
following will be discussed:
- Whistleblower definition
- When is someone a whistleblower
- Internal and external whistleblowing
3.1. What and when about whistleblowing
Whistleblowing has the following definition in the US Whistleblower Protection Act
1989: a present or former employee discloses information which former employee
discloses information "which the employee reasonably believes evidences a violation of
any law, rule, or regulation, or gross mismanagement, a gross waste of funds, an abuse of
authority, or a substantial and specific danger to public health or safety." (Lennane,
2012, p.1)
The term whistleblowing is becoming commonplace. It is a term that is gladly used by
journalists, is often prominent in headlines and is used by them in a variety of contexts
in which alleged misconduct is exposed. It is important to keep the term whistleblowing
close to what it essentially is, namely informing, and keep it free from prejudice (corrupt
individual turned informer, sneaks, spies, etc). There is a risk that whistleblowing will
become interchangeable with, and not recognized as a special case of, informing. There
are three major goals a whistleblower can have, these are:
· Informing; the release of information is done deliberately and with the aim of
achieving a disclosure.
· Accusation; identifies perceived wrongdoing, typically a bad news message about
misconduct, incompetence, fraud, etc. alleged to have been ignored and/or cov-
ered up. In any case an accusation is being made towards some person or organi-
zation.
· Dissent (disagreement); when faced with wrongdoing, a person can choose to
disagree with the observed misconduct. During this there are three options which
are mentioned in the paragraph below.
Hirschman (1970) has identified three major response categories a whistleblower can
have when it comes to organizational misconduct. These are labeled exit, loyalty and
voice. Exit is to distance yourself from a problem, voice is to express your concern or
disagreement. He presented exit as the standard response to dissatisfaction with
economic entities, or leaving your position by seeking a transfer or by resignation. Voice,
he claimed, is the usual way to deal with dysfunctional social and political organizations.
In both cases the means of expression are mechanisms to relieve the individual's
discontent and to give signals that will allow the organization to improve the situation.
16
Below is a schematic overview of the different actions to take when a person stays
(voice) or go's (exit).
Table 1: Dissent aspect and the exit dimension (Jubb, 1999)
Lennane (2012) identifies a whistleblower as a principled organizational dissenter. The
whistleblower acts on principle when something is observed that conflicts between
immediate authority (employer) and higher authority (norms, values, justice, in public
interest). The reaction that follows is organizational, as it arises from the organization
being challenged on its authoritive power. Finally the whistleblower dissents from the
culture, internal principles and believes of an organization.
Jubb (1999) gives an overview of previous research into the topic of whistleblowing.
Below are a number of definitions formulated by previous researchers:
"Whistleblowing is the act, by an employee or officer of any institution, profit or
non-profit, private or public, of informing the public about a belief that either (s)he
has been ordered to perform, or (s)he has obtained knowledge that the institution is
engaged in, activities which (a) cause unnecessary harm to third parties, (b) are in
violation of human rights, or (c) run counter to the defined purpose of the institu-
tion" (Bowie and Duska, 1990).
whistleblowing by internal auditors is "The unauthorized disclosure in the public in-
terest by internal auditors of audit results, findings, opinions, or information ac-
quired in the course of performing their duties and relating to questionable practic-
es" (Chambers, 1995, pp. 192-193).
17
"The whistleblower is a concerned citizen, totally, or predominantly motivated by
notions of public interest, who initiates of her or his own free will, an open disclo-
sure about significant wrongdoing directly perceived in a particular occupational
role, to a person or agency capable of investigating the complaint and facilitating
the correction of wrongdoing" (De Maria, 1994, p. 3).
"Whistleblowing, defined as disclosing questionable practice involving the organi-
zation or its members, may be either internal or external. Internal whistleblowing
involves informing relevant organization members about wrongdoing. External
whistleblowing involves going outside the organization . . . to voice concerns over an
organizational wrongdoing" (Chiasson et al., 1995, p. 24).
". . . we defined whistle-blowing to mean `the disclosure by organisation members
(former or current) of illegal, immoral or illegitimate practices under the control of
their employers, to persons or organisations that may be able to effect action' "
(Miceli and Near, 1992, p. 15).
Collecting a number of definitions and presenting them in a schematic fashion gives the
following table:
Table 2: Overview of whistleblowing aspects
Bowie
&
Duska
(1990)
Chambers
(1995)
De Maria
(1994)
Miceli &
Near
(1992)
Chiasson et
al.
(1995)
Action
-
Reporting
-
Intended
-
Unauthorized
-
Voluntary
X
X
X
X
X
X
X
X
X
By
-
Employee
-
Org. member
X
X
X
X
X
Motive
-
Moral motive
-
In public interest
X
X
X
What
-
Illegality
-
Immoral acts
-
Qualifiers
· occurs in org.
· in org. control
· involves org. mem-
ber
X
X
X
X
X
X
To
-
Internal authorities
-
External authorities
-
General public
-
Entity able
to effect a remedy
X
X
X
X
X
X
18
3.2. Internal and external whistleblowing
A distinction can be made between two types of whistleblower, namely internal and
external. An internal whistleblower informs misconduct to persons within the target
organization. This can be done in accordance with routine procedures to a designated
superior or within prescribed arrangements for non-routine situations, such as notifying
an ethics officer. The disclosure can also go outside of set procedures (unauthorized)
and be made to someone higher up the chain of command or an influential colleague,
being someone outside the normal chain of command, for instance an approach to a
director or to senior personnel in some other division or section.
An external whistleblower reports observed misconduct to an outside agency, such as
the media, protective agencies, lawyers or politicians. It is often the case that whistle-
blowers only go externally after their complaint has been ignored internally. Such was
the case in a survey studied by Lennane (2012) in which 91% of subjects did not receive
a proper response from inside the organization and resorted to an outside agency. A
survey done by Soeken and Soeken (1987) showed a similar outcome (for 80.5% the
initial internal complaint was considered unsuccessful). The below table gives an
overview of to whom the observed misconduct was first reported.
Table 3: First contacted in the case of observed misconduct. (Soeken and Soeken, 1987)
19
4. Theoretical part
4.1. A model to assess the factors, influencing the whistleblowing
intentions by Keil et al.
It is important for a company to motivate its employees to use internal ways instead of
making wrongdoings public, as stated in section 3.2. Therefore it should be aware and
make use of the intervening mechanisms through which whistleblowing intentions are
formed. These factors can be explained using the middle-range theory of whistleblowing
by Keil et al. This model has been developed, tested and accordingly adjusted and as
such is the dominant model explaining whistleblowing intentions.
The central explanatory variable of this model is the perceived "benefit-to-cost differen-
tial", henceforth BCD. (Keil et al., 2010) It is defined as the net difference between the
perceived costs and expected benefits of whistleblowing from the perspective of a
potential whistleblower. It is claimed that a witness of a wrongdoing would weigh the
cost and benefits, associated with the whistleblowing and make a decision based on
their difference. Therefore this decision making process will result in whistleblowing
only in case the expected benefits outweigh the costs associated with whistleblowing.
The key question is then which factors influence the BCD. For the selection of factors the
social information processing framework of whistleblowing
developed by Gundlach et
al. is used. (Keil et al., 2010) This framework will be explained in the following.
Using the social information processing framework of Gundlach et al (2003) to
identify factors influencing the decision-making process whether or not to blow
the whistle
By integrating power, justice and pro-social theories, Gundlach et al., (2003) tried to set up a
social information processing framework. This framework tends to capture all the factors
that are influencing the decision-making process of an individual whether or not to blow the
whistle when identifying organizational wrongdoing. Gundlach et al., (2003) divide their
model in interpersonal and intrapersonal factors. Interpersonal factors form the main part
of the model and will be explained first. Intrapersonal factors could influence the interper-
sonal factors as will be explained later. The model itself is not shown in this section because
the focus lies on the model of Keil et al., (2010) but for a better understanding of this part
the model can be viewed in the summary in appendix A.
When an individual recognizes organizational wrongdoing, their emotions and their
decisions whether they should blow the whistle are influenced by the cost and benefit
analysis they make regarding the act of whistle-blowing. Besides of weighing the
psychological and economic costs and benefits, potential whistleblowers also add
attributions and responsibility judgments to their decision-making process. If a potential
whistleblower attributes the wrongdoing to internal, stable and controllable causes,
they will probably hold the wrongdoer(s) responsible and therefore they are more likely
to decide to blow the whistle (Gundlach et al., 2003).
20
Social influence of the wrongdoer could also influence the decision-making process of a
potential whistleblower. This social influence can be specified as the use of impression
management tactics to manipulate the decision-making. These impression management
tactics form the intrapersonal factors in the model. Both, defensive impression manage-
ment and offensive impression management appear in the model. Defensive impression
management means that the excuses and justifications made by the wrongdoer influence
the (interpersonal) attributions by defining them as `uncontrollable' and `unstable'. As
earlier stated, perceived controllable and stable causes should lead to whistleblowing
and therefore this defensive impression tactic lowers this incentive. The second tactic is
the offensive impression management. When a wrongdoer uses retaliation and threats,
the potential-whistleblower will increase judgments of the responsibility of the wrong-
doer and therefore encourages the actual whistleblowing. However, if this tactic leads to
a high amount of fear against the wrongdoer the potential whistleblower could decide to
not do it.
Besides of the intrapersonal and interpersonal factors there are two interfering factors
added in the model: the power of both the wrongdoer and the potential whistle-blower
and the credibility of the presentation of the impression management tactics. For
example if the perceived power of the wrongdoer is high, blowing the whistle causes
fear and therefore the potential whistleblower could decide not to blow the whistle.
Also, when the presentation of an impression management tactic is perceived as non-
credible it is more likely that the whistle is blown.
The seven factors influencing the BCD according to Keil et al.
From the framework of Gundlach et al (2003), seven factors are claimed to be the key
factors influencing the BCD and therefore the whistleblowing intentions. The focus on
these seven factors is chosen based on the dominant theory and literature and is neces-
sary in order to practicality. (Keil et al., 2010)
The seven factors that companies need to consider when employing a whistleblowing
program are shortly explained in the following.
Personal reporting responsibility is referred to as the degree of formally prescribed
responsibility to report a whistleblower is associated with. It is claimed that a pre-
scribed reporting responsibility enhances the likelihood of observing and reporting a
wrongdoing. (Miceli and Near, 1984) Several studies develop models, according to
which personal reporting responsibility has a direct influence on the whistleblowing
intentions. (Smith et al., 2001; Keil et al., 2004). However here it is claimed that the BCD
plays a mediating role in the relationship between personal reporting responsibility and
the whistleblowing intentions.
The second factor that is believed to influence the whistleblowing intentions is trust in
the supervisor. The extent to which the integrity of the immediate supervisor is trusted
is observed to influence the upward communication likelihood of wrongdoings. Higher
trust in the supervisor is associated with higher tendency to inform the latter in case a
wrongdoing is observed. (Gaines, 1980) Higher support from and trust in supervisors is
Details
- Pages
- Type of Edition
- Erstausgabe
- Year
- 2014
- ISBN (PDF)
- 9783954899937
- ISBN (Softcover)
- 9783954894932
- File size
- 6.1 MB
- Language
- English
- Institution / College
- University of Twente – MB (Business Administration)
- Publication date
- 2015 (October)
- Grade
- 1,7
- Keywords
- managing change whistleblowing whistleblower Human Resources Nederlandse Zorg autoriteit
