How to Implement a Whistleblower Hotline at Your Company
Why should a company implement a whistleblower hotline?
Hotlines are one way to represent management’s commitment to employees that they encourage a speak-up culture. Hotlines are also a way to limit liability for directors and managers when things do go wrong.
A whistleblower hotline is a key ingredient to an effective corporate compliance and ethics program. Business leaders don’t usually know about wrongdoing right away because it is typically hidden or conducted in secret. For example, fraud is often hidden inside accounting and other paperwork. Padding time sheets, inventory theft, billing and payroll schemes, or confiscating receivables are easily hidden inside the books and can remain hidden for quite some time before they are revealed.
Most of the time, management only learns of misconduct because an employee chose to anonymously report it. Other times it’s by pure accident that misconduct is stumbled upon.
What are the benefits of implementing a whistleblower hotline?
- Public companies remain compliant with Sarbanes-Oxley and Multilateral Instrument 52-110
- For private companies it's just good practice
- Companies can detect misconduct sooner
- They provide transparency and oversight of wrongdoing
How to Implement a Whistleblower Hotline at Your Company
The first question to ask is if you want to put this program together yourself, or engage in the services of a third-party.
Internally operated or third-party operated?
The biggest factors are budget, resources, implementation plan, training, report review, response, and analytics. What types of reporting do you need? How do you measure success? A few things to consider here are:
- Cost effectiveness – it might seem like a simple option to set up a voicemail system on an ad-hoc basis, however, internal systems lack budget needed to staff, and maintain the system. External systems are more cost effective because they include all costs needed to maintain and service the system
- Availability – a hotline available 24/7/365 means employees can file their report anytime from anywhere. Many employees speak-up about wrongdoing after work hours because they are afraid of being outed at work
- Regional / National / Global Coverage – organizations with a global footprint can leverage a 24/7/365 hotline to provide employees with access to the hotline when they feel they need it
- Interpretation Services – many employees prefer to blow the whistle in their native tongue. An external provider has the availability to provide interpretation services at the moment of intake
Tone from the top
Tone from the top is the visible and believable willingness of leadership to promote not just an ethical culture company-wide, but a culture that is inclusive, fair, honest, and fee from retaliation. Tone from the top refers to the ethical atmosphere that is created by leadership.
If the climate at the top of an organization is nonchalant and if directors and senior management skirt around important issues and don’t obey and enforce the rules they have initiated themselves, then it’s unlikely that the rest of company is going to take any ethics or compliance initiatives seriously themselves. A compliance program begins with leadership setting the proper tone for the rest of the organization to follow. A strong compliance program should be enforced in good faith and clearly articulated to every single employee.
Multiple reporting methods
Make your hotline easily accessible. Having a program in place that is accessible via multiple reporting channels offers all stakeholders many different options for reporting possible wrongdoing. Multiple access points ensure any reporter can use the program in an easy-to-use format through an engagement point of their preference. This will increase program buy-in and usage.
Employees should be allowed to submit whistleblower tips via mail, phone, and webform. Depending on a number of factors such as employee location, education, age and level of employment, they may differ on their preferred method of reporting compliance concerns.
Anonymity to whistleblowers
More misconduct is detected by anonymous employee tips than by many other means. If running an internally managed whistleblower system, it's important to note that what an organization thinks is ‘anonymous’ may not actually be seen the same way in the eyes of employees.
In-house systems don’t always offer the same level of anonymity and confidence as a third-party system and this uncertainty of safety can be a detriment as an employee may not wish to report an incident if they don’t feel they can remain anonymous.
Benefits of anonymous whistleblowing
- Encourages a speak up culture
- Demonstrates trust with the organization
- Prevents violations and legal battles
- Reinforces an ethical culture
It’s crucial for employers to emphasize zero tolerance for retaliation towards whistleblowers when publicizing the whistleblower hotline. Fear of retaliation among whistleblowers is very real and this fear may have an adverse affect on the quality of the reporting process.
Trusting an employer’s whistleblower program, without fear of retaliation, is essential to motivate employees to report suspected unethical misconduct internally, and not take their concerns outside the company.
How to eliminate retaliation
- Investigate all claims - depending on the situation, an internal investigation or one conducted by outside counsel may be appropriate
- Explain rules and expectations to employees - ensure that employees understand discrimination policies and let them know that retaliation is illegal and will not be tolerated
- Treat employees consistently - before making employment decisions that may negatively affect the whistleblowing employee, ensure that you are acting consistently with past practice or that you can justify treating the employee differently
- Assess whether additional retaliation might occur - for instance, if the complaining employee is still employed, steps should be taken to minimize possible further retaliatory action
Educate all stakeholders
Educating all stakeholders on when and how to use the whistleblower hotline is key in it remaining a valid and integral component to the compliance program. Education should focus on teaching what types of unethical activities are appropriate for reporting, and those that are not.
When it comes to educating all stakeholders, this includes suppliers, vendors and other third parties the company has regular business with. Regularly educate everyone on the who, what, when, where, why and how of reporting ethical breaches. Make training relatable to all stakeholders. If you have a global footprint, you will have a diverse group of employees with differing cultures, language barriers, and education. Make sure you take the time to provide education accessible and available to everyone
Evaluate, test, audit
It’s important to evaluate, test, and audit the whistleblower hotline. This includes how hotline calls are received and managed, how the information is being transposed into the case management system, and how responses are initiated. Is the whistleblower hotline working as intended by management or the board?
- Hotline usage rates - there’s no right or wrong number of calls into a whistleblower hotline, but usage rates can provide clues as to the effectiveness of the hotline. For example, if a large company is receiving a small amount of calls relative to the number of employees, the question could be asked “do employees know when and how to speak up”. Or do employees feel safe speaking up?
- Response time - failure to act quickly on reports can erode trust and confidence in management's commitment to creating a better workplace. It can also send the message that employees and their concerns aren’t important enough. Metrics should focus on time to respond to initial reports, as well as how much time has lapsed from the initial report to update checks, or other action taken, including closing a case
The importance of ethics is continually spotlighted everyday. And as much as an organization doesn’t want to find itself publicly exposed to an ethical breach, without the proper tools and process in place, this could eventually become a reality.
Internal employee hotlines facilitate the detection of unethical or unlawful conduct, as tips are the most common detection method for suspected wrongdoing in companies with hotlines.
More detailed information can be found in this eBook.