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Organizational Ombudsmen Can Be Key for Companies to Adapt to New Whistleblower Rules

October 4, 2011

Understanding how they can improve their internal compliance and reporting mechanisms in light of new whistleblower provisions created by the Dodd-Frank Act is of significant importance to corporations. Nationally prominent thought leaders, including Shipman & Goodwin attorney Charles L. Howard, weighed in on how best to accomplish this at a RAND Corporation symposium.

A key theme discussed among these leading company executives and directors, chief ethics and compliance officers, and other stakeholders (from the government, law, industry, academic and nonprofit sectors), was the issue that it is in the best interests of corporations -- and consistent with the goals of regulators -- to encourage internal reporting and to protect employees who do come forward.

Unfortunately, to date many companies have experienced difficulties in encouraging employees to report on misconduct and fraud through internal channels. Among the reasons cited for employee reluctance are fears over confidentiality and retaliation, and the perceived failure of management to act when employees do report internally.

“Creating an organizational ombudsman program is one way corporations can address employee concerns over confidentiality and fear of retribution,” says Howard, a litigation partner with a national practice and reputation in representing organizational ombudsman offices at major corporations, universities and other institutions throughout the United States.

“While not a reporting channel themselves, organizational ombudsmen complement formal reporting channels by providing information and guidance to employees who may be reluctant to come forward through a formal channel,” says Howard. “They also can assist employees who want to surface an issue but who do not want to be the whistleblower, even with the potential for reward offered by Dodd-Frank.”

According to Howard, there is a great need for the type of confidential and off-the-record guidance offered by an organizational ombudsman because at the time an employee is considering whether to make a report, the employee may not even be sure that he or she is correct. “Moreover, the employee certainly has no assurance that a report will later qualify for the bounties provided by Dodd-Frank,” says Howard.

As noted in a report recently released by the RAND Corporation, the symposium identified other steps that companies can take to encourage internal reporting, such as empowering the role of chief ethics and compliance officers and working to build a culture of integrity. “Building a culture of integrity must have more to it than merely a check-the-box approach,” Howard cautions. “It must start with recognizing that if a company wants employees to report misconduct internally, it must find multiple ways to assist them to make this possible and to protect those who do come forward.” The report cites that “trust in the system is a key factor in contributing to employees’ willingness to come forward and report internally.”

Howard is the author of The Organizational Ombudsman: Origins, Roles, and Operations--A Legal Guide (published by the American Bar Association in 2010). He is also a former member of the Ad Hoc Advisory Group appointed by the United States Sentencing Commission, which from 2002-2004 studied and recommended revisions to the United States Sentencing Guidelines for organizations. He can be reached at or (860) 251-5616.

The RAND Corporation’s report “For Whom the Whistle Blows: Advancing Corporate Integrity and Compliance Efforts in the Era of Dodd-Frank,” which summarizes the symposium and includes the papers presented, is available online at

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