Raising the alarm about misconduct or corruption can be considered risky for individuals. Businesses that would like to swiftly detect such behaviour will need to ensure that they have the right governance structure that promises ease of access and confidentiality, while instilling confidence in employees that reporting their concerns on suspected integrity breaches is safe, and in the best interests of the company. For some of the larger companies with complex structures and multiple reporting lines, human resources (HR) and assurance functions (e.g. risk management functions, compliance functions, internal audits, integrity units) play crucial roles in building and strengthening the internal control systems related to corporate integrity.

Recent trends in Southeast Asia reflect that corporate integrity disclosures among the largest listed companies in Southeast Asia have continued to improve. According to a 2022 study conducted by the National University of Singapore’s Centre for Governance and Sustainability with two other organisations, Malaysia-listed companies have performed well on integrity disclosures, and have the second-highest average score among companies from four other Southeast Asian countries, namely Singapore, Thailand, Indonesia and the Philippines, at 81 per cent.

The study, which looked at public corporate integrity disclosures from the 50 largest companies by market capitalisation across stock exchanges of the Southeast Asian countries, found that Malaysia-listed companies showed marked improvement, by 11 percentage points, on disclosures which is indicative of an “internal commitment to anti-corruption”. These could include the application of anti-corruption codes of conduct and the provision of relevant training to both employees and directors, said the study.

Inculcating a culture of business integrity, however, also requires initiative and support from the company leadership, and other pertinent departments such as the Integrity & Governance Unit (IGU) and Internal Audit function, so that existing anti-corruption or corporate integrity policies are continuously strengthened, and gaps addressed.

Effective Whistleblowing

A key component in strengthening organisational integrity is through establishing an effective whistleblowing programme. This programme is a key pillar of a company’s corporate governance framework. Independent (board-level) oversight over the programme is also crucial for its success.

To be specific, setting up a whistleblowing mechanism will include having in place confidential channels that allow employees of a company to report suspected wrongdoings. If issues of corruption, fraud and bribery are left undetected, it can lead to devastating reputational and financial losses to the companies.

A key barrier that hinders whistleblowing, however, is the fear of reprisal or detrimental actions taken against the whistleblower. In Malaysia, the Whistleblower Protection Act 2010 was enforced in December 2010 to encourage and facilitate the disclosure of improper conduct, both in the public and private sector, though there have also been calls for reform to strengthen the protections. High profile cases widely reported in the media where whistle-blowers suffered repercussions e.g. lost their jobs when they lodged a report might add to the environment of fear and apprehension.

In an effective whistleblowing programme, among the key elements that are essential are trust and confidentiality. Where they have a role in receiving or dealing with disclosures, complaints, and reports, human resource professionals or the organisation’s designated whistleblowing administrative function will need to ensure that procedures and protocols are followed, take all reasonable steps to maintain confidentiality where it is requested, treat all disclosures consistently and fairly and be able to convince the whistleblower or complainant that the company will take the necessary actions to investigate the report professionally. Regular internal audits and reviews of integrity programmes in a company will also help to instil confidence among employees.

Institutionalising a Culture That Encourages Reporting and Disclosures

The effectiveness of corporate integrity disclosures can only be strengthened when the whistleblowing or disclosure mechanisms operate within an open-door culture. In such organisations, problems are likely to be aired earlier and can be addressed long before they develop into a crisis.

The corporate integrity function and HR teams can step up to set this tone, to ensure that the correct mindset in handling misdeeds is embedded in the company. A clear understanding of good corporate behaviour makes wrongdoing easier to spot. When concerns are discussed openly, this also reduces the negative connotations of whistleblowing. Blowing the whistle then becomes only the last port of call, operating as a back-up if other measures have been tried and failed.

These recommended practices complement and reinforce each other to create a multi-tiered approach that may strengthen a culture of integrity at the workplace:

1. Evaluate the company’s ethical culture: TWhile corporate culture can be difficult to measure and monitor, the HR and/or the corporate integrity team can create a robust survey programme that can quickly assess the company’s integrity and ethical culture. The surveys can be used to measure perceptions of the ethical commitments of senior management, how comfortable employees are with speaking up on misconduct, how motivated employees are, their satisfaction levels and other pertinent information. Apart from surveys, the team can also evaluate integrity culture through indirect mechanisms such as decision-making scenarios and behavioural games. Companies can use feedback from these evaluations to spot trends and devise strategies to enhance or safeguard organisational integrity.
2. Create a company code of conduct and communicate it right: HR personnel can lead or play a more involved role in establishing a code of conduct, which is a document that outlines rules and appropriate behaviour that employees are expected to follow at the workplace. A comprehensive, easy-to-understand code of conduct that matches the company’s and employees’ values can improve workplace integrity in many ways such as helping to promote upright behaviour throughout the whole company and encouraging responsibility, accountability, and fairness. Dedicated sessions to communicate key sections of the code or staff training should be provided.
3. Maintain confidentiality and protecting sensitive information: Ensuring that confidential information is secured and protected is vital to building employee trust, confidence, and loyalty. Misuse of confidential information can lead to unethical and illegal activities such as integrity breaches, discrimination, and fraud. The Corporate Integrity or HR departments can take steps to identify which documents and processes must be kept confidential, safeguard employee information, store sensitive data securely and restrict access to it.
4. Train and educate: HR can ensure that staff are adequately trained on corporate integrity or anti-fraud, bribery, and corruption standards, monitor their effectiveness and provide refresher courses and tailored training where necessary. Although training can address the “what” of business integrity, companies should also educate staff so that everyone understands the “why” of business integrity too. HR should seek to embed a culture of integrity that goes beyond compliance and avoidance of litigation, whereby staff embrace integrity as the “right thing” to do.
5. Clear and periodic communication: Practicing clear communication helps employees understand company expectations and to know what to do, which helps to foster a culture of integrity. Maintaining consistent messaging helps reduce the chances of misunderstandings, removes communication barriers and ensures all employees are on the same page when it comes to rules and regulations, thus making practicing integrity easier. Communications should be easily accessible by employees and can be in the form of digital and printed documents, posters, or messages in the company intranet and website.
6. Encourage a culture of speaking up: Most employees are reluctant to report on integrity breaches or violations due to fear of retaliation or they believe that doing so is not worthwhile as no effective action will be taken. The corporate integrity and HR teams can play a role here to make employees feel safe and confident in reporting misconduct by setting up systems that protect employees against repercussions and taking prompt action to address reports of unethical behaviour. They can also set up multiple reporting channels for employees, so that they choose a channel that they are most comfortable with.