Communication breakdown: How employee ethics starts at the top

Hotlines promote an ethical culture by giving employees a way to report wrongdoing anonymously, but management needs to ‘walk the talk’…

So, you’re weathering the Covid-19 challenge (as well as can be expected), customers seem satisfied and employees seem to be on track. Heck, it’s even been quite a while since your last report of ethical misconduct.

No news is good news, right? 

Wrong. When it comes to conduct and ethics, a calm surface can often conceal mischief and unrest beneath. 

An absence of complaints does not demonstrate an absence of problems

Quite the opposite. 

“Whistleblowers – and large numbers of them – are crucial to keeping firms healthy and that functioning internal hotlines are of paramount importance to business goals including profitability,” says Stephen Stubben, associate professor at the University of Utah.

“The more employees use internal whistleblowing hotlines, the less lawsuits companies face, and the less money firms pay out in settlements.”

Stubben says that firms actively using their internal reporting systems face fewer material lawsuits and have lower settlement amounts than firms ignoring similar information.

“While all firms are likely to have some frequency of issues, firms, where these are reported early, are more likely to address them before they become larger problems resulting in costly litigation.”

Simply put, a healthy ethical reporting culture is an active one. 

A good rule of thumb: You should be receiving at least four reports per 100 employees, per annum. Any less, and there may be unacknowledged problems brewing. 

And there’s plenty of supporting evidence for the wider effects too. A 2020 paper from George Washington University found a clear association between the presence of an internal hotline reporting system and overall improved business performance.

According to the report, increased usage of internal reporting hotlines is positively correlated with:

  • Greater profitability
  • Greater workforce productivity
  • Fewer lawsuits brought against the company
  • Lower settlement costs if a lawsuit does occur
  • Fewer external whistleblower reports to outside authorities

Ethics as a comms function

Ethical reporting services and company culture are intrinsically linked with research showing that company-wide ethics training makes employers 56% more likely to receive tips-offs about unethical behaviour in the business. 

But training isn’t enough. Executives also need to be willing to communicate – actively and often – this commitment to an ethical reporting culture. 

That means ensuring that comms teams are acutely aware of the company’s commitment to the highest ethical standards, what ethical reporting programs are actually in place within the company and how they work, and what expectations are for employees and administration around internal communication of ethical issues. (Comms activities should include assurances of support when submitting complaints, what steps are taken to protect whistleblowers from retaliation, and frank discussions around the consequences for not following reporting protocols.) 

What’s the secret to creating more ethical workplaces and companies? Simply put, everyone in the business needs to “walk the talk”. 

Report It Now helps businesses prioritise conversations about speaking up, providing the tools, resources and training required to operate an open, honest, and transparent business. To find out more, contact Report It Now for a free, confidential consultation. 

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