Kyle Lagow blew the whistle on his former employer and was awarded $14.5 million for doing so.
And that is not a bad thing.
That's because Lagow's admission brought to light not only an unsavory and unethical practice by his former employer, but it may also change the opinion people have about whistle-blowers.
Lagow, a former home appraiser for Countrywide Financial Corp., questioned his employer when he saw them overvaluing homes purchased with government-backed mortgages. This in turn increased the value of loans that the company sold on the secondary mortgage market. This led to a $25 billion settlement between federal and state regulators and the mortgage industry. It also resulted in Lagow's dismissal from Countrywide.
Even though Lagow simply reported a wrong when he saw it, most people do not see whistle-blowers in this way. Instead, most people think of whistle-blowers as being rogue and disgruntled employees. New research, however, is poking some holes in that belief.
According to research by the Ethics Resource Council, 65 percent of workers who witnessed misconduct reported it. More than half the workers who did report misconduct said they did so to a trusted source within the organization, while just over one-quarter brought issues to a senior manager.
"We tend to think that whistle-blowers go outside the company because they do not trust their employer," Patricia Harned, president of ERC, said. "But in most cases, employees actually turn to their management first. Many see whistle-blower as a derogatory term for a disloyal employee, but we’ve found that the whistle-blower is often forced to go outside, either by fear, inaction, or both."
Overall, most employees report misconduct because they want to fix the problem or help the organization. According to the report, monetary rewards were the least likely motivating factor for people to report a problem. The most common reason for reporting was the size of the problem or crime.
The report also found that employees were much more likely to report problems if they knew that reporting the issue would bring about a change. For this reason the ERC recommends companies be clear with employees about how to define misconduct and, most important, how workers can report it.
"The best strategy for management is to respond quickly and effectively when employees report misconduct," Harned said.
This research, a part of a study by the Ethics Resource Center, was funded by Dell and URS Corp. The information was based on more than 4,600 responses.
Reach BusinessNewsDaily staff writer David Mielach at Dmielach@techmedianetwork.com. Follow him on Twitter @D_M89.