In the wake of the videotaped shooting of Laquan McDonald, the U.S. Department of Justice recently announced an investigation of the Chicago Police Department. In addition to the shooting itself, Justice will investigate more broadly, including whether additional officers failed to report – or actively covered up – wrongdoing by Officer Jason Van Dyke.

As a business leader, you run a company, not a police department. Your employees don’t carry guns on the job. What does this have to do with you?

Everything.

Suppose one of your employees hears that financial performance is weak, and decides to help his bonus pool by sending hazardous waste off with an unlicensed carrier for dangerous, but cheap, disposal. Do you want to hear about this from another employee after the first illegal shipment, or from the Environmental Protection Agency after the hundredth? If an employee gets business by paying a bribe, keeps production moving by ignoring lockout-tagout rules, or starts talking pricing with your competitors, will you find out before a prosecutor or plaintiff’s lawyer does?

It’s sometimes said that police department cultures encourage officers to protect one of their own who does something wrong, rather than the organization or the public.

Does your business’s culture encourage the same?

It’s a truism that the cover-up is worse than the crime, and this is certainly true in business compliance. You depend on employees to keep a bad situation from spiraling out of control, but building a culture in which employees come forward is a major challenge for business leaders. Assess the risks your business faces by considering these points:

1. Do your business leaders include compliance when they talk about business goals?

As I’ve written before, leaders must have an open dialogue and be comfortable explaining why doing the right thing is a sound business decision.

2. Are your discussions of compliance all threats and no incentives?

Employees should see your encouragement of “right” behaviors as a common effort, not an attempt by leadership to line up scapegoats.

3. Do you have an effective policy and practice of no retaliation?

If employees feel that they will be punished for asking questions or for reporting something that’s wrong, they are less likely to come to you. Cynicism will build, and whistleblowing will look attractive – and virtuous.

4. Do you provide several ways for employees to ask questions or report wrongdoing?

Some companies require employees to report all problems up through the chain of command; but, this creates a huge risk of intimidation and retaliation. Instead, give employees several options, including a way to report anonymously, to increase the odds that the employee will feel comfortable communicating with the company.

5. Are the people who might hear reports active listeners who know what to do?

Some employees might report wrongdoing very directly, but most will begin indirectly with a question or a hint to test the company’s reaction. It’s critical that management, HR, in-house lawyers and compliance personnel know how to recognize when an employee is trying to communicate a concern, ask the right questions, and start acting on the intelligence – preferably without making the employee feel that he or she has started a huge firestorm.

Many criminal prosecutions and expensive class-action lawsuits began with small problems. These proceedings go very badly for companies that ignored, or worse, stifled, employee concerns. You can manage the risk of small problems becoming enormous liabilities by improving your compliance culture and reporting process.