Choosing to implement a hotline is an excellent step for promoting the wellbeing of your organization. Hotlines allow employees and other relevant individuals to anonymously report cases of unethical and noncompliant practices such as fraud, harassment, and discrimination. Some hotlines even allow employees to submit suggestions for improvements or to receive guidance on concerns related to ethics and organizational policies. A hotline has numerous benefits when it is carefully integrated with other measures to promote an open and ethical workplace, but it cannot benefit organizations by merely existing with the hope that someone will use it! In this guide, we will explore key factors that will help or hinder the success of your organization’s hotline. We will discuss how to establish trust and buy-in from the top down, as well as practical considerations pertaining to choosing a hotline that works for your organization’s needs, addressing regional legal and cultural concerns, and evaluating your hotline’s success.
Establishing Trust and Buy-In
Just because an organization has an ethics and compliance hotline available to employees doesn’t mean that anyone actually feels comfortable using it. Everyone may be well aware of the hotline from company memos and posters hanging in public places, but the real determinant of its use starts with the tone from the top. Imagine working at one of many branches of a large company where you regularly witness your superiors crossing into ethical grey areas (or worse) to promote company interests. Now imagine attending a meeting where the same superiors pass out a mandatory flyer on the hotline that the company recently adopted along with access codes. Would you really believe that your company wants you to report your concerns to promote an ethical workplace? As the Fraud Magazine article, “Top 10 Factors Leading to Hotline Distrust,” puts it, “The focus on ‘winning at all costs’ locally results in a culture of noncompliance at all levels.” If there is a sense of disbelief that those at the top actually want to promote an ethical workplace, employees at all levels are likely to stay silent. They are likely to fear retaliation for whistleblowing or may simply believe that their concerns would be dismissed.
With the above stated, how can those at the top of an organization establish trust and promote the use of a hotline? The Practical Law resource “Setting Up and Operating a Company Hotline Checklist,” explains that in order for a hotline to be successful, it must have “the strong, explicit, and visible support of the company’s governing body (such as the board of directors or board of managers) and senior management.” Direct statements from a company’s leaders show employees that leadership is serious about having employees utilize the hotline to share concerns. Although these statements may reduce the fear of retaliation, employees should also be made aware of legislation that protects whistleblowers. Examples include the Dodd-Frank Act that protects whistleblowing to the SEC and Section 806 of the Sarbanes-Oxley Act, which protects internal whistleblowing. Additionally, it is important that employers make their hotline as understood and easy to use as possible. As a part of workplace ethics and conduct training, employees should be trained on the intended use of the hotline, examples of misconduct that should be reported, and the multiple reporting methods available.
Finally, employees must understand how their reports will be handled in order to gain maximum trust. The Fraud Magazine article mentioned above explains that employees often distrust hotlines if they don’t understand the system. They may worry that their report will not remain anonymous, that the report will be received by an untrustworthy individual, or that investigations will lead to inconsistent outcomes depending on those involved. Transparency regarding the general processing and investigation of reports leads to increased trust in the system.
Now that establishing trust and buy-in at all levels has been discussed, we turn to practical considerations for implementing your organization’s hotline. First, it is necessary to consider the intended purpose of the hotline. Who will have access? What types of concerns will individuals be able to report? Will it exclusively be a whistleblower hotline, or should it also have a suggestion box component? What will happen once a report is filed? Is it important for the system to also include case management and trending capabilities? Considering these points will help you to ensure a smooth implementation.
Along the same lines, it is important to consider what region or regions will be served by the hotline. The Practical Law resource “Setting Up and Operating a Company Hotline Checklist,” describes some local and national laws that govern hotline use in certain regions. For example, certain European countries prohibit anonymous reporting. Other countries may limit the types of concerns that can be reported using a hotline. Anti-retaliation laws also vary from country to country. In short, always consult an attorney with expertise on local legislation before expanding your hotline to serve individuals in new regions. Beyond legal concerns, cultural differences that may alter the perception or use of hotlines. In some countries or cultures, whistleblowing may carry negative connotations, being associated with disloyalty and “ratting out” others. One recommended solution is to modify hotline features so that employees in different regions feel comfortable using it. For example, instead of calling the system a whistleblower hotline, it can be called a helpline and include a two-way communication system for employees to seek advice about their work-related concerns.
In addition to defining the intended purpose and scope of service, it may be necessary to gain internal buy-in on the benefits of a third-party provider over an internally maintained hotline. Both the aforementioned Practical Law resource and “Elements of an Effective Whistleblower Hotline,” found on the Harvard Law School Forum on Corporate Governance argue that utilizing a hotline managed by a third-party provider instills more trust in the system. Externally managed hotlines are seen as unbiased, and many whistleblowers feel more comfortable talking to a third party as opposed to an employee of their organization. Additionally, third-party providers can provide benefits such as 24-7 availability, translation services and customization for multinational companies, multiple reporting methods, and robust case management and trending software.
After your organization has implemented a hotline, it is important to routinely assess its effectiveness. “Elements of an Effective Whistleblower Hotline” states that “To the extent hotlines are currently in place, companies need to evaluate them to ensure that the hotlines are operating as intended and are effective in preventing and identifying unethical or potentially unlawful activity, including corporate fraud, securities violations, and employment discrimination or harassment.” It may also be important to compare data on hotline use across different departments or company branches. As a word of caution, numbers, alone, do not tell the full story of your hotline’s success. The article correctly points out that a very low report volume can mean that your organization is outstandingly ethical, that employees are uninformed about the hotline, or that employees are unwilling to use the hotline out of fear of retaliation. Conversely, a high report volume can indicate that the hotline is well advertised and implemented or that there is a very serious and far reaching concern that needs immediate attention. In short, qualitative, and quantitative data must be used in combination to accurately evaluate your hotline’s success.
To close, merely having a hotline available for employees does not guarantee success. The implementation, promotion and management of your hotline must be well planned to meet the specific needs of your organization. A successful hotline is implemented after careful consideration of those organizational needs along with the encouragement of employee buy-in thorough training and open communication.