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The unwillingness of employees to report misconduct, even anonymously to corporate ethics offices or external hotlines, poses a continuing risk to companies, as I observed in my posting in January, "Dangerous Silence"

Some time afterwards, I had lunch with Norm Augustine, the retired chairman and CEO of Lockheed Martin, and we discussed that topic. He brought up a salient point, and I asked him to post it on our blog.

Speaking at a recent National Association of Corporate Directors (NACD) chapter meeting, I was stunned to hear CEOs and directors alike question why they should care about data quality—after all, isn’t that just the CIO's problem?
To my even greater surprise, among the least concerned in attendance were those who, like myself, were lawyers by training. Executives, Directors and ethics or compliance officers all need to recall the computer science teaching mantra “Garbage In, Garbage Out” or GIGO coined in the early days of computing to remind students that computers, unlike humans will unquestioningly process the most nonsensical input data and produce equally nonsensical output.

Prevent Misconduct? First, understand the causes: Why do companies spend so much time and money teaching their employees about laws, regulations and company policies? Is it because executives believe that serious misconduct is the result of ignorance of the rules? Or, is it because they want evidence with which to absolve themselves when employee misconduct occurs—it’s not their fault, they told employees the rules. Why do employees break the rules, anyway?

Employees won’t tell you about the misconduct they observe, because they don’t believe corrective action will happen, they don't trust the company to keep their report confidential, and they fear retaliation from management and other employees. Most companies respond to this by outsourcing the hotline service, in the hopes that employees, knowing that their identity is protected, will tell all. Unfortunately, this is the wrong answer to the wrong question.....