Another day, another scandal involving a company caught in an ethical lapse.
Judging by the news coverage, it can seem as if these are the new facts of doing business: those with power will abuse it; those with the opportunity to commit fraud will do so. And there’s nothing that can be done about it.
That’s not true of course. There is plenty that can be done, from better staff training, to more demonstrative ethical behaviour from leaders, to external whistleblowing facilities.
External whistleblowing hotlines are among the easiest and most cost-effective ways to combat behaviour in the workplace.
But just why are independent hotlines so valuable to business?
1. They work
The mere existence of an external reporting system can make fraudsters think twice before committing crimes. According to the Association of Certified Fraud Examiners, 38% of employers found out about fraud through an ethics hotline. Even more dramatically, 71% of hotline reports were the first notification these employers received that there was an issue. Simply put, external, third party whistleblower hotlines work.
2. They cut costs
Research shows that the presence of a secure, anonymous third party whistleblowing hotline facility cuts fraud losses by around half*. Similarly, messy employment issues, scandals and the fighting of protracted court battles is time consuming, expensive and a waste of resources. Furthermore, external hotlines can help companies avoid the most significant cost of all: a third of all business failures are due to employee fraud or theft, says one study.
3. They help with compliance
Compliance monitoring can be a highly complex prospect – especially when operating across borders. Operating 24 hours a day, seven days a week, 365 days of the year, a secure external whistleblower hotline (run by an independent, third-party provider) is a key weapon in the fight to reduce unethical and illegal behaviour among employees. Additionally, a secure hotline ensures that whistleblower anonymity is ‘baked in’ to a business’s larger ethical framework.
4. The help minimise risk
Without a place for employees to report ethical violations, fraudulent activity tends to grow over time. Responding to ethical lapses only when they grow so large they reveal themselves however (or are publicly exposed) – reveals a reactive, inconsistent approach to business ethics that leaves too much room for things to go wrong. Responsible manager know unethical behaviour needs to be surfaced and dealt with on an ongoing basis.
5. They reinforce an ethical company culture
A hotline is not a silver bullet for combating fraud, harassment and other undesirable behaviour, rather it’s a crucial part of a business’s larger ethical operation. As ethics expert and Report It Now contributor Jane Arnott writes, “more than ever before, it is essential that ‘rocking the boat’ is encouraged if not celebrated as a test of a robust company culture and effective speak up.”
“Investigating the behavior or actions of all employees – including the CEO – when concerns are raised is a measure of a well-run company. Only by rocking a boat do you find out if it is seaworthy.”
An external whistleblowing hotline should form an integral part of your company’s commitment to making speaking up as accessible and friction-free as possible.
*Source: Association of Certified Fraud Examiners 2014 International Study