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Sunday, July 8, 2012

EDITORIAL

Thumbs up for whistle-blowing

The Supreme Court, for the first time, ruled in favor of a corporate whistle-blower late last month. Mr. Masaharu Hamada, an employee at Olympus Corp., had filed suit after being demoted, forced to take rudimentary tests, ignored by colleagues and given cold treatment after raising complaints about business practices. After a five-year legal battle, Mr. Hamada's experience at Olympus was ruled unfair retaliatory treatment.

The victory is more than Mr. Hamada's alone; it offers an opening for companies to change how they handle employees and how they accept criticism.

During those five years, Mr. Hamada had to remain an employee of Olympus, since Japanese law only allows current employees to pursue such legal action. Before filing suit, Mr. Hamada first went to his bosses and then to the company's corporate compliance division to raise questions about complaints from a supplier that Olympus was luring away the supplier's employees.

Rather than listening to the issues raised, upper management at the company considered him disloyal. His insistence on resolving the issue got him pegged as nonconformist and noncompliant. In deeply conservative Japanese companies, such behavior has typically been met with the kind of harsh treatment meted to Mr. Hamada. Companies may not find it so easy to engage in such rigid and unfair treatment in the future.

Of course, Mr. Hamada is not the only whistle-blower to question the hidden workings of Olympus, which has been beset by scandals over the last two years. Even former British CEO Michael Woodford, the company president for half a year, was fired after he blew the whistle on accounting irregularities.

The practice of sequestering and excluding employees who go against management policies is widespread in Japanese companies, not just at Olympus.

Mr. Hamada's victory, much more than Mr. Woodford's settlement, can be considered an opening — a legal opening — for change. Japanese companies can no longer be easily shielded by public indifference or by the silence of insiders. The bad treatment accorded to whistle-blowers in the past is not a small misunderstanding; it reflects a larger mind-set that needs reform.

Businesses need to respect input and feedback from employees and create a working environment that encourages the expression of different opinions. When ethical objections arise from an individual worker's conscience, he or she should not be met with ostracism and punishment, but with openness and flexibility.

Whistle-blowing is an important way of opening businesses up to more sustainable business practices. The very metaphor of "whistle-blowing" acknowledges that business is a game best played according to the rules.

Removing unethical practices and accepting employee input are, quite simply, very good for business.



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