Human Resource Management: Whistle Blowing Analysis and Recommendation - Case Study Example

 Table of Contents 1. Summary 1 2. Analysis of the whistle blowing event and controversies 2 3. Evaluation in the context of Human Resource Policies 4 4. Recommendations 7 4.1Have an ethics policy 7 4.2 Train the employees and employers 7 4.3 Training and reinforcement 8 4.4 Anonymous researches 8 4.5 Establish a formal procedure to handle whistle blowing 9 5. Conclusion 10 6. References 11 1. Summary Pfizer’s whistle blowing episode is an eye opener for employees, the government and people in general. If it weren’t for the courage of Kopchinski, the deception of Pfizer would not have been known to public. The whistleblower received a hefty cash settlement amount at the expense of his career and several years of financial suffering. Pfizer itself was not penalized or closed down but it had to face the media and pay the settlement amount. The whistleblower lost his job and while he was working at Pfizer he faced the negative work environment and resistance from the management. However, he now has the future of his children secure but he was lucky as everyone does is not remunerated for whistle blowing. In the B&W case Wigand suffered tremendously and was even threatened to be murdered for whistle blowing even though the law forbids retaliation. NIH fired Fishbein and later rehired him for whistle blowing. However, the firm was within lawful parameters as Fishbein was not protected by whistle blowing laws. Duke Energy retaliated with Stone by posting him in another state. Stone faced difficulties at the workplace and was not supported by anyone there. The managers of the respective firms play a crucial role in resolving the whistle blowing issue. It may even be a misunderstanding which could lead to whistle blowing and later, negatively portrayed by media. The managers could handle whistleblowers respectfully and may be things would not blow out of proportion. The managers also have the power to correct such acts within the firm and instill ethical values so that acts that trigger whistle blowing may not occur. This report studies the Pfizer whistle blowing case along with three other cases and analyses why such acts happen and how the law protects the whistle players. It assesses the roles played by the HR in these cases and makes valuable suggests for what they should do. Lastly the recommendations suggests improvements within the HR department like establishing ethical values and systems, educating the employees, training of management, anonymous checks and establishing formal procedures to handle whistle blowing as given. The report has a conclusion towards the end that summarizes all the findings in relation to the cases. 2. Analysis of the whistle blowing event and controversies. According to Lowe, (2009), Pfizer faced a lawsuit by their own sales representative for selling Bextra. It takes courage and ethics on the part of the employee to complain about his own firm. His loyalties are questioned for the firm. Since the government reward system was strong, Kopchinski was encouraged to file the lawsuit even though he lost his job at Pfizer. Near, (1996, pp. 507-526) points out that this questions the ethical standards at Pfizer-the profit making and image is greater for them than human lives. This means that the HRM as not practiced ethics in the firm and is not incorporated at all levels. Lowe, (2009) adds that not only the individuals but the employees are also unethical. Kopchinski even faced resistance from co-employees and his being ethical was unfavorable. Neurontin another medicine at Pfizer also faced whistle blowing which shows the firm has a culture of corruption. As per Runkel (2005) the reason why the whistle blowing act occurred was that the firm doesn’t have ethical standards of its own and is profit centered even at the expense of human lives. They fired Kopchinski when he filed for Bextra proving this, and without compensating him with no concern for his family-retaliating and thus breaking the law. Dr Jeffrey Wigand exposed the truth behind Brown & Williamson Tobacco Company (B&W) when he revealed that the firm knew that tobacco was lethal and nicotine was addictive and yet they hid this from the consumers (Tobacco Free kids, 2009). They marketed their product in a way that dint seem harmful. This case is similar to Pfizer as both the firms fired the employee even though it is illegal and he had to settle for a low paying job. Financial remuneration encouraged the employee in both cases to make the complaint. The main reason was that the firm was not following ethical standards and practices and the HR supported this. According to Runkel (2005), upon facing lawsuits, instead of correcting themselves, the firms attacked the employee by firing him and even threatening to even kill him even though retaliation is outlawed. This discourages others from whistle blowing (Tobacco Free kids, 2009). According to Kaiser, (2005), in 2005, National Institute of Health fired Fishbein on the basis that he was performing poorly. The truth was that he had raised concerns that NIH had sexual harassment and other such behavior amongst management. There was also data manipulation. Since he was hired as a special employee whistle blowing laws dint protect him. However, investigations proved that he was right and NIH rehired him. As Lowe, (2009) argues, Pfizer dint rehire its whistle blower and the firm’s practices were unethical. As Kaiser, (2005) further elaborates, at NIH all employees knew about such conduct but none took a step moreover, they all supported Fishbein when he was rehired unlike Pfizer. At NIH the HR was supportive and accepted that the firm was at fault. It initially retaliated but later corrected itself and remained within legal bounds as technically Fishbein was not protected by whistle blowing laws (Kaiser, 2005). However, at Pfizer the firm broke the law when it retaliated. According to Ridder, (2002), Working at Duke Energy group, Barron Stone accused the firm in 2001 that it manipulates its accounting. He told his seniors about it but was paid no heed. Then, staying anonymous, he complained to the higher executive only to find out that his identity was revealed and he was transferred to Siberia. At least Duke was not as harsh at retaliating as Pfizer. They were ethical enough to not fire him. However, according to Near, (1996, pp. 507-526) It also shows that the whole executive team was on board with this and practiced unethically. In all the cases, the employees’ feedback is not given attention and importance. This churns the need for whistle blowing. The employees are also not taken seriously and nor is the law. Pfizer and B&W are multinationals and know that they can have their way around through settlement. As Ridder, (2002) suggests, the smaller firms are more law conscious and even though the whistle blowers do them harm, they hesitate to take steps against the legal system of whistle blowing. 3. Evaluation in the context of Human Resource Policies The HR in all the four firms knows that the firm is into unethical practice yet they are not reacting against it and instead of protecting the whistleblower, they are protecting the firm. As Near, (1996, pp. 507-526) points out, even though technically all these firms have protection for the whistleblowers, but none practice it and have all involved themselves into retaliation. The HR is playing a negative role in the firm and is discouraging the firm to practice ethical actions. The firms have not taken whistle blowing positively. According to Miceli, (2002, pp. 455-479), the HR is to be blamed because the employees are not given enough attention and their opinions and suggestions are not given importance. The coworkers are also unethical and the HR does not care about it as long as they are increasing their sales. HR managers ideally should have strict ethical standards and the HR should make sure that everyone is following them. Pfizer’s HR reacted by terminating the whistleblower and surpassing the law. Instead, as Miceli, (2002, pp. 455-479) argues, when the employee had registered the complained the HR should have tried to resolve the problem come up with an amiable solution between the firm and the employee. Investigations and researches should have been conducted by the HR on why the employee had reacted this way. The rights of Kopchinski should have been protected and he should not have been fired. The fact that he was fired shows the firm was guilty of the accusation. Moreover, Lewis, (2002) adds that this act of the HR made the other workers grow hostile towards him and discouraged others to speak against such unethical acts. Even though the firm claimed to protect the whistleblower the HR went against the law and fired him which shows that the HR policies are faltered and tilted towards the interest of the firm rather than the employees. The HRM should have been supportive of the employee and it should have made sure that his concerns are voiced and resolved in the initial stages before it became a lawsuit. It should have protected his rights and retained his employment. Moreover, as near, (1996, pp. 507-526) agrees, the HR should have allowed him to continue working there and made sure that the work environment was congenial for him. This would have proved that the firm has its ethics intact to an extent even though it was guilty of wrongdoing. In the case of Brown & Williamson Tobacco Company again the HR should have retained him even after the complaint (Tobacco Free kids, 2009). The HR policies should have been strong and protect the rights of the employee as he individually was ethical and the firm had no complaints regarding his work. National Institute of Health had a better HR policy than the other two. This is because the HRM stayed within the legal parameters. As Kaiser, (2005) explains, since Fishbein was an external employee, he was not protected and the HR stayed within the law. The HR was still unethical as it made a false allegation on him saying he performed poorly. However, the HR also reinstated him once he was covered by the law. The firm had bad work environment but the employees dint have the courage to complain to the HR which shows that the HR was also involved in it and it dint protect the rights of its employees. In this case they were forced to rehire because of the law however, instead of firing him, the HR should have stepped forward and taken steps against the management who was at fault. This is because such behavior was making the work environment bad and was harming the firm itself more than anything. Miceli, (2002, pp. 455-479) argues that the employees were uncomfortable and with such an environment they would not be performing their best. Lastly, as Ridder, (2002) explains, Duke Energy group also has weak HR policies which could not work against the strong executive lobby. Even though the firm was manipulating its accounts none of the executives from lower to top management helped the whistleblower. There was no way he could voice his concerns and stay anonymous. Near, (1996, pp. 507-526) further adds that his identity was also revealed which showed that the HR policies were weak. The HR should have made sure his concerns reached the right people instead of transferring him to another region. This would have saved the firm from legal action and media. 4 Recommendations There are basically two ways the firm can protect itself from whistle blowing or minimize its repercussions. Lewis, (2002) explains that first is to avoid illegal activities in the firm itself which cause the whistle blowing act. The second is to treat the whistle blower properly. Several measures can be taken by the above mentioned firms to handle whistle blowing. 4.1Have an ethics policy. The HR should have rules and established systems to incorporate ethical practice in every part of the firm and will make the organization stick to the law and legal acts. There should also be a proper complaint system unlike the Energy case and the firm should be able to punish the higher management if need be for their illegal acts. Moreover, whistleblowers should not be fired as it is forbidden by the law. As Runkel (2005) explains, some states protect the whistleblowers under “wrongful discharge in violation of public policy” thus the HR should look into that before it thinks of retaliation. 4.2 Train the employees and employers Once the HRM has set the ethical policy, it should make sure that the employees and employers are well informed about it. In the case of Pfizer, NIH and B&W, the HR had no ethical policies and the management knew that any illegal action will not be accounted for and they will not be penalized for it. The HR should train the employees and employers and inform them of the dire consequences if there are unethical actions going on within the firm that harm either the public interest or the internal work environment. According to Lewis, (2002), once the training has been completed the R should monitor the conduct of the workers and the overall work environment making sure that the ethical policies are being followed. 4.3 Training and reinforcement The HR should also make sure that the management is reinforcing the ethical policy in the work system. For this the management should be regularly trained by the employers making sure that all ethical standards are being followed. They should also be told to recognize whistleblowers and should be trained how to tackle such employees staying within the ethical bounds. In the case of Pfizer, the employee was entitled to remuneration for whistle blowing by the government so firing him dint make sense as he would be financially compensated anyways. Thus firms should know whether in their case the employees are entitled to remuneration or not which also encourage the employees to complain. Lewis and Malcolm (2001, pp. 57-69 ) point out that if there is financial remuneration, the firm should handle the whistleblower much more carefully as he and other employees will have motivation to do so. 4.4 Anonymous researches The HR should also conduct anonymous researches to make sure that the ethical policies are being followed. With these researches the HR will ensure that the employee’s identity is retained and at the same time, he can have a friendly work environment. This will make sure that he doesn’t turn into a whistleblower unlike the case of Duke Energy where the employee after making innumerable complaints at all managerial levels finally resorted to whistle blowing (Ridder, 2002). 4.5 Establish a formal procedure to handle whistle blowing. Pfizer, Duke, NIH and B&W should all have a proper step by step way of handling the whistleblowers. This is essential because what these firms dint realize is that in an attempt to retaliate, they mistreated the whistleblower. They also made him go seek external help which in turn marred the firm’s image as the media covered the allegations giving a negative image to all these firms. Instead had the complained been handled more effectively at the firm level only, they might have avoided this act. According to Near, (1996, pp. 507-526), the HR should have a proper documentation procedure, which acknowledges the complaint made. Next the HR should look into the complaint and find proof of the activity and whether it is actually an illegal act. The next step is the appropriate documentation of the compliant made and its investigations. Next the compliant should be voiced to the concerned individuals and a proper plan should be drafted to resolve the issue. At the same time the identity of the whistleblower should be respected and his riots should be retained. At the same time, the law should not be broken by retaliating with him. 5 Conclusion Whistle blowing is an act that requires the employee to place his job and career at stake. He is forced to react by taking legal action like Pfizer, NIH, B&W and Duke when the management doesn’t give importance to his complaints. As Near, (1996, pp. 507-526) adds, a whistleblower is created by the firm itself due to its indifferent attitude towards the individual. All these cases discussed dint realize that mistreating and ignoring the whistleblower will in turn harm them as the media will portray them negatively and their illegal activities will be disclosed like Duke, NIH and B&W which jeopardize the firm’s image (Tobacco Free kids, 2009). Firms should have a proper system to handle whistle blowing and it is the HR’s responsibility. It should have a well established system of ethical policies. Moreover, Lewis and Malcolm (2001, pp. 57-69) adds that the HR should make sure its employees understand these policies and are implementing them. The HR should also have a system which enables employees to file complaints without being threatened. The firms should also not harass the whistleblowers like B&W where the whistleblower was threatened to be killed. However, firms are not very concerned about whist blowing as they know they can get away. As Runkel (2005) explains, there are no stringent laws protecting the whistleblowers. The only law is that the firm cannot retaliate but as seen in all the four cases, the firms retaliated and no grave action was taken against that apart from NIH. The irony is that even when these firms are involved in illegal action that in turn harm the public interest especially in the case of Pfizer, the government dint close down the firm and settled for remuneration for the whistleblower. According to Lowe, (2009), the government couldn’t do that because the patients would have to be without the drugs that Pfizer manufactures which would be against public interest. This is a weak argument nevertheless encourages firms to continue with their illegal activities as the HR continues to play a negative role instead of protecting employee rights. 6. References Kaiser, H.J. (2005). A Troubled Organization"; Whistleblower Fishbein Fired. Accessed on 30th Oct 2009. Retrieved from: http://www.thebody.com/content/art8915.html Lewis, D.B. and Malcolm, S. G. (2001). Whistle blowing and human resource management. Whistle blowing at work. Athlone Press, London, pp. 57-69. Lewis, P. (2002). Business Ethics: A European Review. Blackwell Publishers Ltd. Lowe, D. (2009). Pfizer Whistle-Blowing: The How and Why. Accessed on 31st Oct 2009. Retrieved from: http://seekingalpha.com/article/160167-pfizer-whistle-blowing-the-how-and-why Miceli, M.P. (2002). What Makes Whistle-Blowers Effective? Three Field Studies. Human Relations, Vol. 55 (4), 455-479. Near, J.P. (1996). Whistle-Blowing: Myth and Reality. Journal of Management, 22,( 3), 507-526. Ridder, K. (2002).Duke Power Whistleblower Says Career Hurt by Reporting Profit Understatement. Tribune Business News. Accessed on 1st Nov. 2009. Retrieved from http://www.accessmylibrary.com/coms2/summary_0286-7463073_ITM Runkel, R. (2005). Law Memo. Accessed on 31st Oct 2009. Retrieved from http://www.lawmemo.com/101/2005/12/whistleblowing.html Tobacco Free kids. (2009). the Insider. Accessed on 31st Oct 2009. Retrieved from http://www.tobaccofreekids.org/reports/insider/ Read More