6-9. The Problem with a Company's Safety Culture Where the Whistleblower System Failed to Function

An internal reporting system is an essential mechanism for the early detection and correction of risks within a company. However, there are many cases where these systems have become a mere formality and failed to prevent serious misconduct or industrial accidents. The failure of these systems often stems from deep-seated issues within a company's safety culture and organizational climate. This article examines the factors that cause an internal reporting system to fail and suggests improvements for fostering a strong safety culture.

1. Typical Reasons for a Dysfunctional Internal Reporting System

One of the main reasons an internal reporting system is not used correctly is the fear of retaliation or detrimental treatment for the whistleblower. Even if a system is in place, employees won't speak up if they believe it will hurt their performance reviews or career advancement. Another factor is a lack of independence for the reporting channels. When reporting is limited to a supervisor or the HR department, conflicts of interest can arise, increasing the risk that issues will be suppressed. Furthermore, a slow or opaque response can erode trust. If employees feel that their report won't lead to any improvement, they will choose to remain silent.

2. Organizational Culture Deficiencies in Safety

Organizations where internal reporting is ineffective often suffer from a lack of psychological safety. In workplaces where employees feel that speaking their minds or reporting failures and risks will negatively impact their evaluations or relationships, potential dangers are hidden. Additionally, if management values "productivity and profit over safety," employees are more likely to ignore issues than report them. In such an environment, even a formal internal reporting system will be ineffective.

3. The Impact of a Dysfunctional Internal Reporting System

When a serious accident or misconduct comes to light because the internal reporting system failed, the consequences are severe. Industrial accidents can lead to casualties, legal liabilities, and public criticism for the company. Financial fraud or environmental law violations can cause stock prices to plummet and a loss of trust from business partners, severely harming business continuity. In fact, there have been reports of large-scale accidents and compliance violations occurring after internal reports had been filed years earlier but were ignored.

4. Improvements for an Effective Internal Reporting System

To make an internal reporting system truly effective, the following measures are useful:

• Ensure Anonymity: Use external hotlines or third-party organizations to make it difficult to identify the whistleblower.

• Thorough Whistleblower Protection: Clearly state that retaliation is prohibited and enforce strict penalties for violators.

• Provide a Prompt and Transparent Response: Build trust by sharing the investigation process and results of reports to the extent possible.

• Ensure Management Involvement: Top management should clearly demonstrate the importance of internal reporting and prioritize a culture of safety.

• Provide Education and Awareness: Thoroughly inform employees about the purpose and use of the system and help them understand that their reports can lead to organizational improvements.

5. Summary

The failure of an internal reporting system is not just about its flaws; it is about the corporate culture itself. To build a truly effective system, it is essential to increase psychological safety and foster a safety culture where reporting is seen as an act of improving the organization. Companies must use their internal reporting system not just as a way to avoid business risks but as a foundation for sustainable growth and earning trust.