When it comes to effective internal whistleblower hotlines, silence is never a sign of success. It is usually a sign that the compliance program, and its internal reporting systems, are not resonating with employees and is therefore, not effective. In these cases, we have to ask ourselves why? Do our employees understand the existence and purpose of the internal hotline? Do they know how it works? And if so, do they feel like they are part of that purpose and are willing to contribute to it? Or are there factors in play that impact their willingness to speak up?
According to our 2019 Ethics & Compliance Hotline Benchmark Report, organizations are annually receiving approximately 1.4 reports per 100 employees. While this is a median benchmark, it should not define your best-practice objective; it should define your baseline. As evidence-based research continues to demonstrate the value and importance of internal reporting, we are learning that higher volumes of internal reporting consistently correlate with better business returns. So, though seemingly counterintuitive, the more reports the better.
If your organization is not aligning with this baseline, you may be suffering from one of these four common pitfalls.
1. Organizational leadership and/or the board believes too many reports are “bad”
This is a common myth that was recently debunked by a George Washington University study (key findings here). This study proved that companies with higher levels of reporting activity enjoyed higher return on assets and lower litigation settlement costs. So, while an individual report may indicate an issue, the reporting process itself allows organizations to identify and resolve problems more quickly. This translates into fewer external complaints to regulators and fewer lawsuits. The George Washington University research is also showing that organizations with more reports have fewer adverse media stories.
2. Employees aren’t aware of, or do not understand, your hotline
Lack of employee awareness or understanding of how the reporting system works will reduce the number of reports. The fact of the matter is that most employees don’t think about your hotline until they need to use it. Regular reminders of the system’s availability increase the likelihood that employees will consider this option when other resources are not responsive or trusted. If your organization has had a negative perception of internal hotline reports, there is a good chance you have not promoted the hotline to its full potential. Or maybe you’ve just had the same poster up in the breakroom for years and employees ignore it because it has become wallpaper rather than informative.
The truth is, employees would much prefer to report their concerns internally rather than going through external channels.
The more aware and comfortable employees are with your hotline, the easier that next internal step will be. And part of providing comfort includes easily accessible information on how the process works. To determine their level of trust, employees will evaluate your explanation of who answers the phone or receives the report, how that report is processed, how anonymity and confidentiality will be protected, your stance on non-retaliation, and what you will be able to tell them after an investigation.
Promoting a speak-up culture through Awareness Materials and information on your internal website is vital to having an effective and successful hotline and case management strategy.
3. Compliance officers (and therefore leaders) do not have visibility into all available reports
While the hotline (and in addition web portals) are key channels for internal reporting systems, becoming too reliant on them exclusively can leave a large portion of reports untracked, unaddressed and unresolved. Our 2019 Ethics & Compliance Hotline Benchmark Report indicates that 25% of whistleblower reports come through the hotline, while more than a third come through channels like open door, email, fax and manager submissions. If you don’t have a process to document these direct reports, you are leaving a lot of business-critical information on the table. This also opens the door for would-be internal reporters to take their complaints outside the organization.
Enabling your compliance team, and members of other departments who receive direct reports, with the right processes, including manual case entry, will allow you to capture all in-person reports in addition to incoming hotline or web reports.
4. Employees aren’t willing to speak up
Last, but certainly not least, your employees aren’t willing to speak up. Research consistently shows that the top reason why employees don’t speak up is the belief that no action will be taken. Addressing this concern requires the organization to find a way to publicize that reports have been received and action has been taken. This can be done through annual reports to employees about hotline activities and general outcomes as well as publishing sanitized cases. Fear of retaliation is also very real and continues to be one of the leading reasons employees don’t report known or suspected wrongdoings. This is something that must be discussed with employees and reinforced with accountability and tone from the top.
Organizations need to regularly communicate an honest desire to hear from employees, a willingness to listen, and visible actions that demonstrate to employees that the process is a business priority. This will help provide the level of encouragement employees need to feel inclined and safe enough to speak up.
Just because you’re not seeing incoming reports, doesn’t mean your organization is free of misconduct.
Misconduct happens in every organization and leaders who think that “it can’t happen here” are adding significant risk to their organizations. If you’re ready to make improvements, take it back to the basics and re-build the foundation of your reporting awareness, communication, and case management strategy.
By Carrie Penman
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