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Conflicting Perceptions on Internal Whistleblowing Activity
from Correlation Between Brand Reputation Damage & Hotline Reports - By Kyle Welch at Navex Global -
The Cockroach Theory
“There’s never just one cockroach in the kitchen” — Warren Buffett
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• Internal WB reports are the tip of the iceberg of potential undiscovered problems
• Firms with more reports have more problems
• The quality of the firm and leadership is reflected in the number of reports that show up in the system
The Cutting Wood Theory
“When you cut wood, you get sawdust”
• Internal WB reports reflect the discovery of unknown problems common to every firm
• Firms with more reports know more about unobservable problems than firms with fewer reports
• The number of reports is unrelated to the overall quality of the firm
• Firms that proactively solicit reporting are able to get ahead of problems before they become worse
