Building a Strong Compliance Culture: Empowering Ethics and Accountability

Build a Strong Compliance Program

Today's fast-paced and regulated business world requires a strong culture of compliance. This is crucial for organizations to maintain ethical standards and mitigate risks. This pillar page will explore the power of whistleblowers, the role of ethics hotlines, and strategies for developing a culture of compliance.

By embracing transparency and empowering individuals to speak-up, companies can enhance their operational efficiency, improve ethics, and foster a stronger organizational culture.

Recognizing the Value of Whistleblowers

Whistleblowers have often been thought of as 'trouble makers'. Those who stir up trouble and cause inconveniences for companies and their employees. Yet, we have shifted our perceptions of whistleblowers considerably, to the point where companies now recognize the value that whistleblowers bring to their workplace and internal culture. Empowering individuals to speak-up can lead to a stronger organizational culture, improved ethics, and enhanced operational efficiency.

Why are whistleblowers important for organizational accountability?

  • Early warning system - Employees with firsthand knowledge of unethical behaviour put their faith in the company wanting them to come forward to report misconduct. This allows organizations to address issues at an early stage, preventing potential escalations.
  • They protect stakeholders - When whistleblowers speak-up, they help protect the interests of various stakeholders, including employees, customers, shareholders, and the public. By exposing wrongdoing early, measures can be taken to ensure no harm comes to the company by way of financial, reputations, or regulatory violations.
  • Fostering a culture of accountability - Promoting speak-up sends a powerful message to the entire organization that ethical behavior, transparency, and accountability are core values. By supporting those who speak-up, other employees are encouraged to act with integrity and report concerns without fear of retaliation.
  • Strengthen compliance measures - Whistleblowers often provide crucial information regarding violations of laws, regulations, or internal policies. These disclosures help organizations identify areas of non-compliance and other concerns, and they can take prompt corrective action. Proactive whistleblowing minimizes legal and financial risks and enhances the organization's reputation.

Prioritize Implementing a Whistleblower Culture

There are plenty of warning signs that should be taken seriously that if left unaddressed, can effectively poison your work environment. Ensuring that every attempt has been made to address these warning signs early can ensure the workplace remains healthy. Continuing to build a strong whistleblower culture can help address any red flags before they get out of hand.

Employees are generally aware of activity happening inside the organization. Providing them with a mechanism to safely voice any concerns can help bring misconduct to light sooner. What can early warning signs look like?

Concealment is the first indicator of an ethical lapse. If the perpetrator thinks they can avoid detection, the next step toward misconduct seems that much easier to take. A person's decision to operate in secret and exclude those who might speak-up about wrongdoing can be the first indication of a red flag.

Silence is not golden. In fact it may be an indication of misconduct. Anytime there is a silent treatment regarding any matter, or should a matter not get a straight forward answer for the subject, it might be a red flag.

Unrealistic expectations can be the fuel to fraudulent activity. This is especially true when the requirement to meet unrealistic goals is accompanied by overt or covert threats such as job loss, or demotion. Many organizations caught up in insider fraud have generally put unrealistic pressures on employees to achieve specific unattainable goals.

Avoid Retaliation When Employees Do Speak-Up

For some employees, the result of speaking up has resulted in retaliation from their employer and co-workers. This reality highlights the critical need for leaders to implement strategies to manage retaliation allegations while minimizing risk to the organization. There are a number of aspects an organization must consider when managing employee complaints to avoid retaliation.

Protected activity is a legal term used to describe activities in which employees may engage without fear of retaliation by their supervisors or company when reporting workplace violations. These laws exist to protect employees from employer retaliation for reporting violations or discriminatory practices, and to encourage employees to report such behavior. Employers who retaliate against employees for engaging in protected activity may face legal action and penalties.

What should a leader do when they receive a complaint?

  • Figure out the scope of what the complaint is
  • Take as many notes as possible about the complaint
  • Have the employee sign off that what has been written down is accurate

Next comes the investigation. The investigation should be conducted by an impartial and independent person to eliminate any conflict of interest, such as a third-party firm, or an independent party. The chosen investigator should have no personal or professional ties to the whistleblower, or any other individuals involved in the complaint, nor should they have a vested interest in the outcome of the investigation.

Then, interview the accused.

  • Reassure the complainant / witness / accused the investigation will be kept as confidential as possible
  • Reassure all parties involved that they are protected from retaliation

The complainant should be informed that their identity will be kept confidential, and they will not be subject to any adverse consequences for speaking up. Witnesses should be reassured that their identities will be kept confidential, and they will not be subject to any retaliation for cooperating in the investigation. The accused party should be informed of the allegations against them, but they too should be reassured that the investigation will be fair, impartial, and confidential, and that they will also be protected from any retaliation.

Implementing Effective Ethics Hotlines

It's important for organizations to maintain ethical standards and practices. For some businesses, it can be difficult to identify and address potential ethical issues. Ethics hotlines can alleviate the burden of not being aware of unethical misconduct. They allow employees to report any concerns they are witness to in a safe and anonymous environment. Employers have a duty to create a culture where employees feel safe to raise concerns and the organization can take appropriate action to address ethical issues early.

The ethics hotline process includes setting up a dedicated hotline or other reporting mechanism accessible to all employees, with the assurance that their identities will be kept confidential. Reports can include, but are not limited to:

  • Accounting or financial irregularities
  • Fraud or theft
  • Discrimination or harassment
  • Workplace safety concerns
  • Violations of company policies or procedures

The hotline should be easily accessible to all employees and offer a variety of reporting options, including phone, email, and online reporting. Adequate training and resources should be provided to the individuals responsible for receiving and investigating reports. It is also important to regularly review and evaluate the effectiveness of the hotline to ensure that it is meeting its intended purpose.

What Exactly is a Whistleblower Hotline?

We are rapidly moving away from previous connotations of the word whistleblower, which included 'snitch', 'rat', 'tattle tale'. Those variations described what some previously thought of as a person who wants to get someone else in trouble by volunteering information about that person of a sensitive or illegal nature. Today, many businesses are eagerly implementing whistleblower hotlines because they know including them in their internal structure are a best practice for creating a culture of integrity.

Everyday we encourage business to open their communication channels to allow employees to confidently provide vital information pertaining to any misconduct like fraud, illegal practices, safety or harassment issue.

Whistleblower hotlines are designed to provide a process for employees to report any wrongdoing or workplace risk that they’ve witnessed. This can include theft, sexual harassment, discrimination, or misrepresentation of facts and data. A whistleblower program benefits an organization by creating an effective way to assess and manage risks, and allows leadership to effectively and thoroughly prevent damaging the reputation of the company, and the safety of employees.

When an employee or someone in an authority-based position commits fraud, it can be challenging to detect. Typically, fraud will continue for approximately 12 months before it's ever noticed and / or reported. Encouraging the use of a whistleblower hotline to help ensure misconduct is shared with leadership, the sooner the situation can be fixed.

Harassment, bullying and inappropriate behaviour should never be accepted in an organization. This type of behaviour can lead to a toxic workplace culture leading to lack of morale, low productivity, and a high turnover rate. Employees who feel assured that they can safely and anonymously share knowledge of a toxic workplace environment with leadership will help facilitate a quicker response to preventing the behaviour from continuing.

How to Develop a Culture of Compliance

A compliant culture is critical to fostering an organization’s success. Companies prioritizing compliance programs are better equipped to manage risk, protect their brand and reputation, and maintain trust with clients and relevant stakeholders. Creating a compliant culture takes time and strategy.

A compliant culture promotes a set of values, behaviours, and attitudes that guide company stakeholders on how to adhere to policies, procedures, and regulations. In this corporate culture, everyone at all levels, including external stakeholders, must understand the importance of jurisdiction laws, industry regulations, internal policies, and general ethical values.

How do you measure a compliance program's effectiveness? Many factors contribute to its success, so the best way to gather data is to zero in on the most relevant metrics to your organization. For example, some companies use the following techniques:

  • Tracking of compliance training completion
  • Reviewing the number and magnitude of compliance incidents and violations
  • Conducting interviews with supervisors
  • Running focus groups or surveys to gather feedback on employee perception of the corporate culture
  • Using independent auditors to assess the organization’s compliance policies

Can a compliance program fail? Yes it can. Some failures center around poor planning, strategy, dedication, and execution of policies. A little dedication to ensuring it's success goes a long way. 

Management and other organizational leaders set the tone, which trickles down to employees. Their clear, enthusiastic commitment to compliance is essential. These leaders should communicate the importance of regular compliance and hold themselves and those around them accountable. Leading by example is one of the best ways to perpetuate this culture.

Policies and procedures should be straightforward, concise, and easily accessible in a code of conduct, which you should communicate consistently. Keep the content  as easy to read as possible so all employees understand the message. Save the legal jargon for documents the general employee population doesn't need to have access to.

Invest in training and make it engaging, interactive, and tailored to the organization and interdepartmental needs to help employees understand the importance of compliance. This education should be ongoing, repeated periodically, and updated to align with new laws, regulations, and industry best practices.

Continually assess areas to change and grow. Compliance programs should not be static. They must be regularly reviewed and updated to remain practical and relevant.

Strategies for Developing a Culture of Compliance

Encouraging a speak-up culture is more than just telling employees to voice their concerns. You must implement a framework that clearly defines who can come forward, what and when to report, where and how to take this action, and why transparency is essential. This framework should keep whistleblowers at the forefront and continually prove that there’s a place for their voice. A good place to start is with a whistleblower policy.

Whistleblower policies aim to encourage employees and others to voice concerns. They provide essential information to employees such as guaranteeing their anonymity and validating the reporting of all types of misconduct. They provide documented protection to individuals from retaliation and other threatening encounters.

When policies are rolled out with purpose, the ideal outcome is complete transparency and adequate investigations and solutions at all levels of an organization. Preventing corruption, fraud, harassment, and other types of misconduct is essential for the operation of any business. Ensuring the integrity and longevity of your company starts with creating the space for whistleblowers to speak-up so these issues can be dealt with effectively and promptly before they compromise the entire organization.

Creating a Strong Whistleblower Policy

Consider the following questions as you develop your whistleblower policy:

  • What’s the purpose for your whistleblower program? Outline your goals to help clearly communicate standards. For example, your goals as an organization may be to encourage ethics reporting, protect anonymity, and ensure every report is investigated.
  • How will you show your commitment as an organization? Remember, you should always lead by example and demonstrate your commitment to transparency and zero tolerance for misconduct, or retaliation.
  • Who is included in your policy, and what types of conduct are available for reporting? Think about who and what is included in your document to avoid confusion.
  • How will you facilitate reporting? If you use whistleblower reporting hotlines, there should be structures in place to make speaking up easy, accessible, and anonymous for everyone.
  • How will you ensure adequate corrective action when whistleblowers speak-up? People report misconduct with the hopes of an investigation and believable rectification.
  • How can you ensure your policy establishes compliance with laws and regulations? Remember that there are legal protections for whistleblowers. Ensure your policy follows all relevant laws by reviewing it with an attorney.

Once you’ve considered these angles, you’ll have a better idea of what this process will entail and what you need to include when you write your policies.

Detecting Misconduct Using Employee Tips

Whistleblower hotlines help organizations find and deter all types of misconduct. Many employees have firsthand knowledge or have at least observed workplace misconduct and they are more inclined to report it if they were guaranteed anonymity and were confident they would not suffer retaliation.

Fraud and other misconducts do not choose one type of business over another. Where there are people, there could be unethical behaviour following right behind. Whistleblower reporting software is used to connect employees and management in a way that offers the safety net to anonymous reporting. They also provide a central repository, or case management tool, for relevant parties to have a holistic view of the internal corporate culture of the organization and any trends or hotspots that need to be dealt with.

It's important to encourage employees to report suspected wrongdoing before it can get out of hand. Creating a trusting and transparent internal corporate culture starts with whistleblower policies.

Create Your Believable Speak-Up Culture

Just because you believe you have a speak-up culture it, doesn't mean you actually have one. Some tips to consider when you develop a believable speak-up:

  • Efforts and resources

Much effort is put into creating something that has a chance to be successful. Don’t limit your view of a speak-up culture to just ethics and compliance. A speak-up culture is created from all corners of the organization. Companies of the past had a top-down driven belief. Organizations today know that they have to put in the time and resources to make it happen. They also know they have to be patient while the culture goes through growing pains and trust starts to build.

  • Metrics to assess effectiveness and tools to support it

How effective are the tool(s) you have in place that offer a speak-up culture? Case management systems can track how many substantiated investigations resulted from employees speaking up. The tool you use should be thorough enough to provide you with the who, what, why, when, and where of each reported concern. Who knew? When was the report raised? What was the response to the report? Who did not report the incident who may have known about it (and why didn't they)? What lessons were learned?

  • Make employees feel comfortable raising concerns

Employees may fear speaking up about wrongdoing because they feel like their fears may be dismissed as unimportant. If a climate is created where employees feel safe speaking up about small day to day issues, then employees will be more likely to speak up about more serious issues. One of the biggest obstacles you may face is earning the trust of your employees. The biggest factor driving an employee’s decision to not speak up is fear of someone finding out who they are, and fear of retaliation if they do speak up

  • Ensure external stakeholders can report wrongdoing

You have the ability to learn about misconduct not just from employees, but from other stakeholders as well. The best ideas often come from those who are on the front lines, those who may see things that leadership does not.

  • Employee recognition

Employees like to be recognized and rewarded. Recognition is an essential part of the employee experience, and it serves to improve employees’ satisfaction and engagement levels. Recognition or reward doesn’t need to be monetary or excessive. It can be a simple thank you that everyone can see.

Organizations with a poor a speak-up culture risk having employees taking their concerns, and the organization’s dirty laundry, to social media or the press.

Mitigating Risks and Challenges

Organizations grapple daily with a all kinds of risks and challenges. With the distraction of technological disruptions, unforeseen crises, economic downturn and financial uncertainties. Businesses today need to understand what fraud and other misconduct looks like during during these risks and challenges. Employees who may be feeling squeezed or pressured into maintain or exceeding performance during challenging times, may feel justified in committing misconduct.

Fraud Triangle is Enhanced

Stressors and mental health in the workplace can go hand in hand with rising workplace fraud. One trigger of rising mental health is financial stressors. For employees, financial stress is a bigger worry than work, health, and family, especially in today's economy. Stresses like this can affect a company’s bottom line because there will be a decline in productivity, which will trigger action from upper management to push for more productivity. And this could be a catalyst for employees to get the job done in less than ethical ways.

We can see how this can play into the fraud triangle - motivation, opportunity, and rationalization. This endless cycle will kill a workplace culture. For businesses, putting additional controls in place to help mitigate risks like stealing cash, altering spreadsheets, or bribing co-workers or clients, can help in the fraud fight.

There are steps that can be taken to detect misconduct sooner, and create a more trustworthy workplace environment.

    • Whistleblower hotline: a whistleblower hotline is an effective way to identify fraud by allowing employees to anonymously report any type of misconduct without fear of retaliation
    • Separation of duties: a smart business practice is to never have a single person handling all aspects of bookkeeping and business accounts. Separate financial and accounting duties among a few individuals
    • Tone from middle and top: management needs to lead with honesty and integrity. Employees can detect who really has character and integrity and leads with honour, and who doesn't
    • Red flags: look out for bullying and intimidation, living beyond means, or never taking vacation days. This could indicate an escalating misbehaviour

Who is Responsible for Compliance?

Everyone is responsible for compliance in their workplaces. But leading this charge is someone on the front-lines of a compliance framework, like a compliance officer - with numerous duties to fulfill. To begin with, it’s their job to implement, administer, and promote a whistleblower policy and framework. Compliance officers need to be aware of any existing or new risks to the company and keep directors and management abreast of these risks. That way, these entities know how the organization is performing ethically.

Compliance officers are also in charge of the onboarding process of new employees when it comes to training them on compliance procedures. They should ensure that all employees have the code of conduct, can easily access it, and that they’ve acknowledged it in writing.

In addition, these officers are responsible for following up on suspicious activity in the workplace. They’ll receive all reports of non-compliance from workers. In cases of non-compliance, the compliance officer is in charge of recommending proper disciplinary action. Compliance officers are also responsible for adopting new technologies to the compliance program as required and training employees to use them. Examples of these include reporting software and hotlines.

Address Every Allegation

Don't forget to address every allegation that employees share. Don't ignore anything no matter how trivial you may think it is - every person perceives information in their own way. By responding to complaints, you're showing an interest in what whistleblowers are feeling or experiencing that made them come forward in the first place. Not all allegations may need outside help; serious issues like stealing and harassment should be relatively quick and straightforward to resolve. Communicating with the whistleblower and keeping them informed of the process goes a long way, regardless of who is destined to handle their concerns.

Building Strong Workplace Cultures

A strong workplace culture hinges on companies having the right tools in place to foster a thriving environment. Access to the right tools like whistleblower hotines and case management systems not only cultivates a sense of belonging and appreciation, but also fuels individual growth and a collective sense of purpose. When an organization commits to empowering its workforce through the use of these tools, the foudation is layed for a strong, cohesive, and innovative workplace culture:

  • Reduce Employee Stress - when good employees know something bad is happening, it can be stressful not knowing what to do about it. A whistleblower hotline can remove the decision-making stress by providing employees with a concrete, clear, and easy course of action to speak-up with purpose. A hotline also provides employees with a way to be honest, even about difficult-to-discuss issues.
  • Cultivate a Culture of Honesty - during a time of economic downturn, companies may find themselves dealing with issues such as declining employee morale, a decrease in revenue, and trying to prevent the loss of key personnel. Creating a culture that values workplace open communication and honesty is crucial to a safe workplace culture.
  • Insight Into the Workplace - no matter how good their relationships might be, employees still may not feel comfortable coming face to face with management about certain things. This leads to misconduct potentially being missed and evolving even more. By bridging the gap between employees and management, whistleblower hotlines provide safe and secure intake of sensitive matters.
  • Increases Employee Connectedness - During more stressful times, employees may feel disconnected or checked-out. When a company puts a whistleblower hotline in place, and affectively promotes its use, the workplace will start so see positive change reflected in the act of speaking up.


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photo Amanda Nieweler
About the Author
Amanda writes for WhistleBlower Security about ethics, compliance, workplace culture, and whistleblower hotlines. Amanda brings her nearly two decades of risk and compliance experience to the WBS blog where she is dedicated to helping people and companies promote speak-up cultures.

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