Why Companies Like Wells Fargo Ignore Their Whistleblowers – At Their Peril

Elizabeth C. Tippett, University of Oregon, San Antonio Express-News: World
Sun, 10/23/2016 - 9:50pm

First the misconduct is discovered, and then we learn about all of the whistleblowers who tried to stop the fraud much earlier. The Sarbanes-Oxley Act, passed in 2002 after the Enron and Worlcom scandals, was supposed to protect whistleblowers who uncovered accounting frauds, but judges typically rejected their retaliation claims. While these laws may protect employees who expose wrongdoing from retaliation and encourage more to do the same, nothing requires employers to take their disclosures seriously. [...] as we saw with the latest scandal involving Wells Fargo, several former employees say they tried to get the company’s attention in 2005 and 2006, to no avail. In other words, we expect the true whistleblower to be Ryan Gosling’s suave character in “The Big Short,” while ignoring the angry insights from Steve Carrell, on account of his bad haircut and terrible social skills. There is a principle in social psychology known as the “bystander effect,” which essentially means that people defer to others on how to interpret ambiguous situations and dread the idea of overreacting to a situation and later being embarrassed. In a famous experiment, researchers observed how people reacted to a room filling with smoke, contrasting the behavior of those who were alone to those accompanied by others who were instructed in advance to appear indifferent to the smoke. [...] the important nugget of information might be buried within a lot of irrelevant information. One study found that people literally saw what they wanted to see in a drawing, perceiving an ambiguous drawing as a “B” or the number “13” depending upon which interpretation led to a more favorable result for themselves in the experiment. [...] great investigators keep an eye out for patterns, noticing when seemingly isolated incidents may indicate a larger problem. Managers and corporate officers responding to complaints need to shed

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