The case for implementing an independent hotline facility at your business. 

In an uncertain world, a whistleblowing hotline is a key tool for reducing risk and building trust. 

Not only do whistleblowing hotlines provide a useful conduit for feedback and the reporting of bad behaviour, but research shows that the mere presence of a whistleblowing hotline is often enough to discourage unethical and illegal activity in a company. 

In the chaotic economy of 2020, that’s especially important. After all, unethical behaviour costs New Zealand companies millions of dollars each year, but organisations with an independent hotline facility cut fraud losses in half. 

But even that’s only half the story. 

It’s the new global standard

Around the world, sweeping new ethical regulations are being rolled out as governmental agencies take steps to stamp out corruption and dishonesty across public and private sectors. Whistleblowing hotline systems are a part of those new rules. 

Big changes to New Zealand’s Protected Disclosures Act have been announced, with the Government introducing several legislative amendments that will address the key deficiencies in New Zealand’s legal framework. 

These changes include provisions allowing employees to report serious wrongdoing direct to external authorities, strengthening of protections for discloses, and new requirements for public sector organisations to provide support for disclosers. 

That’s in line with recent rule changes in Australia. Last year the Australian Federal Government enacted the Corporations Act 2001 and Taxation Administration Act 1953, expanding protections for whistleblowers who report misconduct and requiring all public and large proprietary companies to have a whistleblower policy in place and available to employees. 

Failure to comply carries penalties.  

Those Oceanic developments bring the two countries into line with worldwide standards, in particular, the sweeping new rules enacted by the EU in October of last year. 

The EU’s extensive new regulatory framework guarantees high-level protections for those who speak out about wrongdoing and puts the obligation to create “effective reporting channels” squarely on the shoulders of business owners. The rules include strict safeguards to protect whistleblowers from retaliation – as well as those assisting whistle-blowers, such as colleagues and relatives. 

It’s expected

A whistleblower hotline is crucial for maintaining an honest open company culture that demonstrably supports transparency and ethical behaviour. That’s not always an easy task to accomplish, but it’s absolutely necessary to maintain a reputation for honesty and fairness in a company.

“Sector associations, trade groups and professional bodies must actively support their members to tackle conduct risk,” says ethics expert Jane Arnott. “Providing a centralized speak up channel and providing guidance on how and when to use it is one thing that all too frequently falls by the wayside.”

“Conduct risk impacts everyone,” says Arnott. “It sets up later performance failure of products, projects and delivery failure of services.” 

“Early reporting of unacceptable or illegal behavior is best enabled by providing multiple channels for doing so.”

“Further, coordinating a safe external means to report bad behavior is proven, time and time again, to increase the type and number of calls.”

It’s good for the bottom line

But it’s not just international expectations – or the threat of punishment – that should motivate businesses to better handle whistleblower complaints. Research clearly shows that whistleblower hotlines have a significant positive effect on the bottom line of companies who embrace them. 

According to one reckoning*, median losses from fraud are nearly doubled at organisations without hotlines. Similarly, organizations with hotlines detect fraud by tip far more often than those without: almost half of internal fraud cases are detected by tip when a hotline is present, with small organizations especially likely to detect occupational fraud via a whistleblower hotline. 

Similarly, research shows that telephone hotlines and email are especially important conduits for receiving tip-offs: A third of all tips come via those two channels, with another 32% of tip-offs coming from online/web-based forms. 

To learn more about Report It Now and the customised service platform we can provide for your business, contact us for a free, confidential assessment. 

*Source: The Association of Certified Fraud Examiner’s 2020 Report to the Nations