With new allegations about government misspending coming out almost weekly since the damning report by Canada's Auditor-General on the federal Liberal government's sponsorship plan, whistle- blowing has become a big issue in the public sector.

But whistle-blowers can also appear in the private sector, in any size of company. What they have to say can be damaging beyond calculation to the company in question and its reputation. That is why experts recommend managers work with potential whistle-blowers to address their concerns before they feel the need to blow the whistle.

Concern about the damage whistle-blowers can cause is growing among all sizes of businesses, says Gerard Seijts, an assistant professor of organizational behaviour at the Richard Ivey School of Business at the University of Western Ontario in London. He recently held a discussion for his master's of business administration students on the importance of working with employees to resolve serious concerns before they feel they have no other option but to go public.

"[Whistle-blowers] are the catalysts of change," Mr. Seijts says. So, it is far better to work with them privately than against them in the public arena. "It's a leadership issue, and [recognition] that individual behaviour matters," he says. "Managers need to value employees speaking their mind."

He says many managers often do not properly investigate concerns raised by employees, which leaves them feeling undervalued. Employees should be rewarded for speaking out, he says, especially if it brings to light potential problems with the company's business. "The courage to speak up and be heard has a huge impact on corporate institutions."

Lack of proper investigation can contribute to problems arising in a company's day-to-day business. "The gradual acceptance of small deviations to the norm is problematic," he says. When those small deviations begin to snowball, concerned employees are more likely to go public and become whistle-blowers.

Many managers have a skewed idea of what type of employee becomes a whistle-blower and why, says Joanna Gualtieri, of the Federal Accountability Initiative for Reform. A whistle-blower herself, she says studies in the United States show disgruntled workers with an axe to grind do not typically become whistle-blowers.

Rather, whistle-blowers are hard-working, conscientious workers who feel they have no other choice but to speak out if their concerns are not resolved by going through the normal chain of command.

"Because they believe in the company, they dissent," she says. "They aren't the disgruntled employees that employers say they are, but the best and the brightest."

Ms. Gualtieri, an Ottawa lawyer with a background in real estate, was hired by the Department of Foreign Affairs as a real estate analyst to look after a portfolio of embassies and diplomatic properties around the world. After discovering what she describes as lavish spending on a range of properties, some of which were rarely used, she spent six years trying to deal with the problem internally before going public with her concerns about wasteful spending.

"I felt a responsibility," she says. "I had not even heard the term whistle-blower before. I was simply doing my job to procure real estate cost-effectively with respect to cost for the Canadian taxpayer."

Ms. Gualtieri says managers must learn to recognize that whistle- blowers are essentially trying to aid their organization. But if no one in management takes their concerns seriously, they speak out as a last resort. "It's not about destroying an organization, but ensuring its integrity," she says.

She says there is little Canadian research about whistle- blowing, but one study in the United States found whistle-blowers do not fit a particular profile. They are individuals who see wrongdoing and, instead of staying quiet, say something. No one wants to be a whistle-blower, she says, as the results of blowing the whistle are crushing and often include job loss and emotional turmoil.

"As a manager, how do you tell the difference between a whistle- blower and a Chicken Little? You have to look at the allegations seriously. It sounds so simple, but you have to treat people with dignity and respect," she says.

Mr. Seijts says across-the-board protection for whistle-blowers would help. He says it is alarming Canada has so little in terms of whistle-blower protection. In the United States, there is protection for all private-sector employees of publicly traded companies through the Sarbanes-Oxley Act of 2002. Canada has no comparable protection.

Late this past March, Denis Coderre, president of the Queen's Privy Council and minister responsible for the Public Service Human Resources Management Agency, tabled a whistle-blower protection bill. As proposed, it protects federal employees, excluding members of the armed forces, RCMP or the Canadian Security Intelligence Service.

"In Canada, there is no incentive to speak up, no Sarbanes- Oxley, so you'd almost be a fool to spill the beans," Mr. Seijts says. "Why does the U.S. have these incentives and we, as a longtime human rights advocate, do not?"

In the meantime, he says, managers must embrace the principles of whistle-blower protection and foster a workplace environment in which employees feel they can safely question the company's workings without putting their jobs in jeopardy.