Whistleblower Hotlines: A Valuable Tool

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An effective ethics reporting tool, implemented as part of an ethics and compliance program, can not only help an organization detect and resolve potential misconduct issues, but it can also help support a culture of integrity and responsibility within the workplace.

Misconduct in the workplace can be devastating. The Association of Certified Fraud Examiners’ “2016 Report to the Nations” estimates that, on average, organizations lose 5 percent of revenue per year due to fraud and other misconduct.

Many organizations have implemented active and deliberate misconduct-detection processes. “Active” means that a person, or an internal control method, has been put in place and is instrumental in looking for fraud and other misconduct. Compare that to “passive” detection, in which the organization learns of unethical activity only after the fact or by accident.

How does an ethics reporting tool, such as a whistleblower hotline, fit in? It could be labeled a “passive” tool because fraud or other misconduct is often reported after it has happened. However, an ethics reporting tool can help to shed light earlier on misconduct that might otherwise continue for any length of time and cause more damage.

Knowing about misconduct sooner enables an organization to put a stop to it earlier. According to the report, the median duration of fraud prior to detection is about 18 months. For smaller organizations, early detection could mean the difference between surviving or going out of business.

A whistleblower hotline doesn’t just help bring fraud to the forefront. Other types of misconduct commonly reported using these systems are harassment, discrimination, workplace health and safety violations, alcohol/drug abuse, violence in the workplace, and conflicts of interest — to name a few.

Once an ethics program has been implemented, it needs to engage every employee, from the top down. It can’t just exist as window dressing.

Senior management needs to be committed to the ethics program and sincere about sharing their commitment with employees. Employees learn acceptable workplace behavior by taking cues from leadership. If management doesn’t believe in the ethics program and model leading with integrity themselves, employees are not likely to use the reporting tool to report any unethical conduct.

Employees may also be skeptical about coming forward to report perceived misconduct. Many people are concerned that even if they do make a report, no corrective action will be taken. But the biggest fear for employees is retaliation by co-workers and management. Ethics program best practices, as well as regulatory standards, call for ethics hotlines to ensure confidentiality for employees who report concerns and offer the option for anonymity.

External third-party ethics hotlines, which often include a case management database, can help. Third-party programs provide the ability for management and the reporter to communicate with each other about the allegation securely, within the system, enabling management to gather more information while protecting the whistleblower’s identity. This ensures a more thorough investigation of the alleged misconduct, getting to the bottom of any serious issues sooner, before they escalate.

Customizable third-party whistleblowing systems allow companies to create a program that is best suited to meet the needs of their organization, regardless of industry. They log and date stamp every report and allow management of each case to closure. 

The ability to include a company’s national or global locations as part of the reporting process enables all incidents to be funneled into the one system in an organized manner. 

Every industry has its own unique risk concerns and customizable third-party systems help management spot and track issues and trends, no matter the location, the department or the issue.

If they are not comfortable talking with their supervisor, a whistleblower wants to know where they can go to report ethical concerns and remain anonymous. An anonymous hotline removes many of the obstacles to reporting inappropriate behavior and gives employees, suppliers and vendors the ability to raise genuine concerns about illegal or unethical behavior. 

Ethics hotlines also reduce the risk of individuals going outside the organization with their concerns, potentially damaging an organization’s reputation and causing further financial harm.

Every employee wants to know that his or her voice matters in the organization. That’s why encouraging a speak-up culture is important. Employees want to know they are part of the success of the company. Encouraging them to speak up about wrongdoing and showing them that their concerns do matter and are taken seriously creates more motivated employees who truly want to participate in the company’s future.

Many companies believe they are too small to warrant an ethics reporting system. There’s a belief that there’s too much complexity and work involved. But putting in extra upfront effort to set up a customizable program that is right for the company is well worth it when the result is more open communication, happier employees, reduced risk, and future growth and success.

When an organization implements a confidential and anonymous third-party ethics hotline, it lets employees and stakeholders know that it is serious about adherence to its code of conduct, it takes all reports of misconduct seriously, and it does not tolerate retaliation towards anybody reporting perceived misconduct.

If company leaders truly want to promote a speak-up culture, and give employees a safe place to come forward to report ethics and compliance concerns, then one of the best ways is to provide employees security and comfort of anonymity and confidentiality via a whistleblower hotline.

Amanda Nieweler is marketing manager at Whistleblower Security Inc. (www.WhistleblowerSecurity.com)

Topics: Ethics, Ethics Corner, Defense Contracting