Articles - Ethics

The whistle-blower is typically a dedicated and committed corporate employee who follows a strong code of ethics and loyalty to an organization. Certainly there are some cases of self-interest, in which a disgruntled employee attempts to defeat another through acts of outrage and a myriad of unprofessional lies, but the majority of these informants simply want to assist in a legal judicial structure.

 Unfortunately, the consequences of reporting an illegal corporate activity can be substantial or even deadly. In a study reported by MacNamara (1991) on whistle-blowing, approximately 50 percent of the selected sample suffered retaliation after reporting corporate wrongdoing such as job loss, blacklisting, transfer, harassment, divorce, and even death threats. 

Organizations must establish a structure to prevent retaliation of these individuals if they are concerned with the well-being of the company itself. This article will cover the levels of organizational structure that an organization should engage upon to protect their employees and implement a program to prevent fraudulent activities.         

Organizational framework is the basis of primal life.  Our personal lives, relationships, work environments, government structures, and worldly economic procedures are all based on some type of structure.  Although each respective situation entails a different cultural basis and identity, the key factor is they all have an independent framework; whether these structures work at an optimal level, is key to understanding organizational culture and change. 

The framework of any organization can be likened to building a house on sand.  Initially the house will stand, but in time the house will deteriorate due to the unstable foundation.  A house build on concrete will endure all forms of environmental changes, and will last until uncontrollable circumstances prevail.  As with a house and the proper foundation for its longevity, an organization needs a solid base to operate for long-term success. 

Our goal as social scientists in organizational change and culture is to monitor the environments within the organization, to prevent the storm from destroying the original culture built upon.  A framework for the identification of fraudulent activity is essential in building a strong organization that will endure any storm.    

Schein (1992) discusses the key factors in describing the levels of an organization’s culture, and examines the artifacts, espoused values and basic underlying assumptions made, which are necessary in identifying the internal operations of an organization.  If we were to use a pyramid, as Abraham Maslow does in his hierarchy of needs, the artifacts would be the basic level, situated at the bottom of the pyramid. 

The artifacts need to be discovered before the organization can progress to a higher level of understanding, which in this scenario would be the basic assumptions residing at the top of the hierarchy.  In exposing the true artifacts of an organization, the company compiles an understanding of the physical environment that is on display, for all to see in an overly simplistic manner. 

For example, an outsider driving by a large Bible Church could easily identify the artifacts of the church as being successful, with a large following due to its size and prominence.  The outsider could also assume the attendees are Christian, from the written statement on the sign describing that it is indeed a Bible church.   

The espoused values reflect the original ideas of the founder, and his thoughts in the present (Schein, 1992).  The founder will present his thoughts and views on the moral obligations and direction of the church.  Obviously this list could be quite extensive, but some generalized thoughts could be the founder believes  

1) lecturing from the Bible about the word of God will generate a large calling

2) by attracting this large calling, funds will be generated through donations to create a larger facility; provide resources to others who are in need; spread the word of God to unknown territories that are not Christian based; and provide a centralized location for individuals who are troubled

With these espoused values in mind, a cognitive transformation will eventually occur throughout the congregation, if the founder can indeed convince the individuals and his staff all this transformations will occur for the good of mankind.  If his assumptions are correct, this becomes a shared assumption with the founder’s followers. 

Social validation is established by the founder’s ability to prove the validity of his thoughts, by creating minimal anxiety, to enable a shared belief to emerge.  For example, if the founder of the church was conducting sermons in pursuit of donations while having illicit sexual relations on the side, the anxiety level and comfort zone of his followers would be negative.

Basic assumptions will prevail on how the organization creates change and the idea and values within the entity that could eventually be taken for granted.  Defense mechanisms by the basic shared values of the followers could eventually occur, which in essence could slow the growth of the organization (Schein, 1992). 

For example, if the followers in the church create a shared assumption that if they attend church on Sunday and donate to the congregation, a benefit will transpire in the name of Christianity.  This may leave room for distortion in the follower’s concepts of the organizational culture of the church. 

 Perhaps some will create a basic assumption they need not take any further steps to spread Christianity, or that those who do not attend church and donate are not conducting themselves in the proper manner. 

In summary, the underlying assumptions of the clergy and staff are paramount to the successful operations of the organizational culture.

 In order for change to be successful, people need to desire change, and be actively involved in the process. The artifacts, values and assumptions of an organization need to be properly identified.  To build a proper framework within an organization against corporate malfeasance and promote whistle-blowing on acts of injustice, corporate executives and the founder need to identify the following questions about the organization:

1) "What critical results are we expecting to achieve on a regular basis to reduce fraudulent activity within our organization?"

2) "What results are we actually achieving on a regular basis to reduce fraudulent activity within our organization?

3) "If there are differences between the actual results and the expected results, what are the causes of these differences?"  

  Once these areas have been identified, the entire organization should be informed of the company’s proactive results to stop white collar crime within the company. It also helps to inform employees of the False Claims Amendment Act of 1986, which outlines a monetary reward in the form of 15-30 percent of the recovered funds through successful prosecution to the whistle-blower or informant.

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BIOGRAPHY

Dr. Melissa Luke is a practitioner in the financial and securities markets, specializing in maintaining positive economic conditions within domestic and international organizations for maximum profitability.

Dr. Luke has directly worked with top agency authorities such as the Securities and Exchange Commission (SEC), the National Association of Securities Dealers (NASD), and the Public Company Accounting Oversight Board (PCAOB) to increase knowledge base for university students and business owners nationwide.

She assists leaders in maintaining corporate vitality and economic growth within an organizations strategic structure and shareholder realm.

Melissa was a professional guest speaker, conducting seminars nationwide and in Canada on market makers, electronic control networks, arbitrage, Level II systems, technical approaches, and crisis prevention methods for corporate securities and welfare, and the Sarbanes-Oxley Act of 2002.

She has published securities educational methods for global distribution, and has worked with several foreign governments on securities issues.

Dr. Luke beta tested the primary software systems used for many of the major brokerage houses and online trading entities prior to the inception and implementation to the general public. She also trains all levels of organizations and corporations on the identification process of corporate malfeasance and fraudulent activity, to protect the corporate executives and public shareholders.

She educates 21st Century organizations, investigates wrongdoing, conducts extensive research on the intricacies of the Sarbanes-Oxley Act, and recruits knowledgeable professionals on the requirements of compliance of corporate fraud utilizing her prior experience working for the United States Treasury.

Currently, Dr. Luke analyzes corporate legal entities, methods of operation, systems, internal controls, employee management, ownership, and corporate structure to maximize profitability and provide recommendations to improve ease of operation, productivity, and profitability of small to medium sized business in the United States.

She also teaches undergraduates at Boise State University as an adjunct professor in management and doctoral students at North Central University in finance.