Do You Know What an Effective Ethics Hotline Looks Like?
What Does the Success of an Ethics Hotline Look Like?
Hotlines, for the purpose of reporting wrongdoing, have been around for many years. But it’s only following an increase in a few well known corporate scandals that the use of hotlines have been increasingly adopted and corporations have developed a better understanding of their benefit as an early warning sign for potential wrongdoing.
The effectiveness of hotlines as a detective and preventative control across a range of wrongdoing, in any size of organization, anywhere on the planet, is being acknowledged by more and more organizations. It is more crucial than ever that companies have effective whistleblower hotlines as part of their corporate compliance programs so that employees (and other company stakeholders, like vendors) are motivated to report suspected unethical or unlawful conduct internally and not first turn to regulators.
Third party hotlines are only one of a number of channels available to whistleblowers, but they are considered by many to be one of the most effective channels:
Email: having the option to send a secure email to a unique address is another option. A third party provider will translate (if needed) and transcribe verbatim, the report into the reporting system so that it can be followed up on appropriately. The use of a unique email keeps the reporter anonymous – he/she can report from any location on any device.
Web: third party providers offer a secure, confidential, and encrypted “Case Reporting System” that allows the whistleblower to report on unethical activities within their organization in a systematic and structured questionnaire mechanism. Each user should have access through their own unique user name and password.
Mail: should a reporter prefer to stuff and seal an envelope, attach a stamp, and mail their report explaining their concern, that option should be available no matter how archaic it may seem. Although rarely, if ever, used, it’s just another option open to an employee who does not have access to a phone line or internet connection.
Fax: what’s that? Yeah, ha ha! That giant machine standing alone in the corner of the office, more than likely used to store packs of printer paper. In our history, we’ve only received a very small handful of reports come in via fax. But the important thing to stress is that the option is kept open for employees to do so. Who are we to judge what their preference for reporting is. What’s important is that they are reporting because they feel they need to and they can because they feel safe doing so. Fax is available, we make it secure, and it will be accessible by an organization wishing to measure their program’s success.
Questions That May Arise Around the Use of Hotlines If They Haven’t Already Been Put to Use:
Are they an effective way to detect wrongdoing in various forms – fraud, conflict of interest, harassment, securities related incidents, non-compliance with laws?
Sure they are. All it takes is an employee becoming aware of another member of the organization participating in any type of wrongdoing, then taking action and using a hotline to report on the wrongdoing. At that point is where the rubber hits the road, as they say. Will that report be investigated?
Are hotlines equally effective across all organization types and sizes?
It doesn’t matter the type of your organization, or its size. What matters is that there are people involved, and some of those people may decide to participate in wrongdoing. There will equally be people who are willing to report on wrongdoing if they are given the tools and safety assurances. The scope of misconduct in bigger organizations will be comparatively larger than that in a smaller company, therefore more resources may be required to investigate and fix that wrong. However, public companies are mandated to have a whistleblower hotline in place, so they should also have appropriate resources to implement and run it.
Are hotlines effective in reducing misconduct – would they act as a deterrent for individuals who might otherwise have acted incorrectly?
If made available, and guaranteed anonymity, then in theory they should be an effective measure in reducing misconduct. That’s not to say that someone may try to conduct their negative actions in as secretive a manner as possible in an effort to not get caught. If one could predict the future actions of hired employees, wouldn’t businesses be rejoicing? The question is, will any reports of wrongdoing be taken seriously, investigated thoroughly, followed by new policies and procedures put in place to prevent them from happening again?
How is the effectiveness of a hotline measured and what factors lead to their success?
As much as you don’t want to think it, it’s inevitable – misconduct will happen. But after initial reporting through to investigation, remediation, and discipline, was any insight gleaned into the everyday workings of your organization. How did that misconduct happen in the first place and could something have been done to prevent it? Are you able to take what was learned and apply these result into changes to policy and other improvements in internal control? If the answer is yes, then the above question has been answered.
There is little point in implementing a hotline if it is not going to be used. On the other hand, overuse can bog down a hotline leaving reviewers investigating frivolous reports. Management’s aim in implementing a hotline is to detect and deter wrongdoing – detect wrongdoing early enough to stop it before it gets out of hand, and deter future potential wrongdoers from embarking on unethical behaviour. In order to achieve this, the hotline must be effective, meaning individuals need to be encouraged to use it to report on wrongs they see while remaining anonymous, and at the same time not using it to report on the latest pack of pink sticky notes that went missing from the supply closet (HR can probably handle that one). Subsequent investigations must be handled completely and fairly.
From a whistleblower point of view, the most important aspect is confidence in the policies and procedures around the hotline, and confidence that confidentiality and anonymity will be respected. Hotlines need to be trustworthy – fraud and malpractice can continue to occur despite the presence of a hotline if the reporter feels their anonymity, and care in their reporting, is jeopardized. Many feel their confidentiality won’t be maintained and fear retaliation. This is one reason why a third party hotline is a better option.
The success of a hotline depends on more than just putting the hotline in place. To create an open and non-retaliatory workplace, a hotline depends on focusing on the wrongdoing, not the person who brought the wrongdoing to light. It also depends on getting to the root of an issue raised, rather than treating the symptoms. Don’t just punish the wrongdoers, but fix why they were able to commit that wrong in the first place.