What qualifies an ethics hotline as beneficial? Are hotlines even necessary in modern business or does their existence breed a culture of suspicion and retaliation?
In fact, when executed properly, an ethics hotline can foster numerous benefits for an organization. Notably, profitability increases due to controlled costs such as insurance, workers’ compensation, and governmental fines; theft is detected more quickly, if not deterred altogether; reputations are protected when small problems are caught before becoming big; management spends less time on headaches and more time on constructive efforts; and employee satisfaction increases due to the emphasis on safety and integrity. And these are only a few of the benefits.
Further, benefits of hotlines are stalwartly recognized in published statements across legal, human resources, accounting, and ethics organizations. Harvard Law School states it “is more crucial than ever that companies have effective whistleblower hotlines as part of their corporate compliance programs …”; “…it is generally recommended that all organizations implement some type of whistleblower system for reporting wrongdoing” posits SHRM; the American Institute of Certified Public Accountants writes that “tip lines are one of the most effective tools organizations possess for detecting and preventing fraud”; and according to the Association of Certified Fraud Examiners, “managers and owners of small businesses should focus their anti-fraud efforts on the most cost-effective control mechanisms, such as hotlines…”
Ideally, ethics hotlines will protect both employees and companies and permit a platform to voice a concern. However, not all ethics hotlines are created equal. Case in point is recent activity at Wells Fargo.
According to a September 21st CNN Money article titled, “I called the Wells Fargo ethics hotline and was fired”, several Wells Fargo employees who reported unethical practices to the bank’s human resources and the ethics hotline were fired. These unethical practices included staffers being ordered to open bogus credit and banking accounts and selling unwanted or unnecessary products to customers.
Matt Egan, who wrote the CNN Money article, confirmed with a former Wells Fargo human resource manager who said “The Bank had a method in place to retaliate against tipsters … It could be as simple as monitoring the employee to find a fault, like showing up a few minutes late on several occasions.”
Language from a Wells Fargo document titled “Our Code of Ethics & Business Conduct, Living our Vision & Values” encouraged employees to examine situations based merit, ethics, legalities and compliance considerations. Apparently, employees were told that contacting the company Ethics Line led to an interview specialist who provided a summary to Wells Fargo. The summary was then to be reviewed by the Auditing & Examination Committee of the Board for further action.
It is unclear whether the Ethics Line calls by concerned employees were in fact reported to the Wells Fargo Audit and Examination Committee or another committee and what actions were taken. The apparent multiple firings of employees who voiced concerns, which further appear retaliatory, has a long reaching effect on the corporate culture; Wells Fargo will have to regain confidence in their ethics hotline moving forward. An employee hotline that is not trustworthy gives the opposite outcome to which any hotline should aspire.