How an ethics hotline reduced my sleepless nights

Reflecting on over 25 years as an in-house human resource practitioner and workplace ethics adviser, some of the wisest initiatives that I saw implemented were, in retrospect, ones I approached with the greatest initial reluctance. If there is one thing that I most vehemently shied away from but which subsequently helped me sleep at night, it was the introduction of an independently-managed 'whistle-blowing’ system.

As a young organisation development manager, I had the notion that introducing a whistle-blowing facility that allowed anonymous reporting would signal defeat in the struggle to create what is popularly referred to in the US today as ‘a speak-up culture’. Instead, I was the one that conceded defeat in the face of anti-fraud best practice recommendations by internal auditors who were a bit ahead of their time in the late 1990s.

Looking back on 20 years of managing the receipt and response of open and direct disclosures and 10 years of handling anonymous reports usually received via a third-party managed whistle-blowing system, my revised view is that it is negligent of organisations not to offer employees the option of reporting to a third-party and maintaining anonymity.

In the receipt of open and direct reports (which are very useful and which you wish to encourage) I have seen the anxiety that coming forward can arouse in people regardless of how free of actual retaliation a business culture is. It is not realistic to imagine that at all times any given employee will have the confidence to raise a concern in person. 

When an organisation is considering implementing an anonymous ethics hotline, concern is often expressed about the potential for the system to be abused through false reporting for vexatious purposes. In my experience this is surprisingly seldom the case, and such reports don’t easily stand up to the skill of a trained hotline interviewer or investigator. They can of course cause harm, and minimising this will be the subject of a future article.

What is more common is that circumstances are misinterpreted and incorrect conclusions drawn, resulting in reports that are easily cleared through a fact-finding exercise. It can be frustrating if the report was anonymous and you have no way of clarifying the misunderstanding with the caller.

Your professional hotline service provider will try to secure agreement with an anonymous caller to share their contact details with the hotline in confidence. In these instances you can send feedback from your investigation to the hotline call centre, and even ask follow-up questions for clarity, which are in turn conveyed to the caller without their identity being disclosed to you.  

Often a report is prompted by a strong emotion, such as a feeling of injustice and outrage. This does not always mean that the caller is themselves a complete innocent with totally pure intentions: it may simply mean that some line has been crossed that prompts the report. For example, the caller may have been willing to turn a blind eye until the offending party raised the stakes in a way that was seen as excessive greed. I soon learned that I should not dismiss reports on the grounds of sour grapes, as these can provide invaluable information of wrong-doing that you would certainly rather know about than not.

What I took most comfort from was the experience that employees in small teams and in remote locations had access to a hotline for reporting violations that take place out of sight of a responsive line manager, ethics officer or HR team member.

The reason for sharing some of these observations is that the subject of whistle-blowing is attracting significant global attention and if you have yet to recognise the need for an independent service provider, now is the time for you to take stock.

International trends you need to be aware of

An increasing number of countries are:

• Passing legislation to encourage and protect whistle-blowers
• Incentivising the reporting of irregularities to regulatory bodies 
• Placing whistle-blowing high up on their national anti-corruption agendas
• Expecting businesses to put effective measures in place to promote a culture of ethics and integrity
• Holding businesses accountable for ensuring that there are ethical practices throughout their supply-chain
• Requiring businesses to have reporting mechanisms in place that are effectively communicated to all stakeholders (employees, suppliers and even employees of suppliers, as examples)
• Expecting evidence that reports have been thoroughly investigated and that the outcomes of investigations are made available to regulators when, for example, a business claims that it was a ‘rogue employee’ who engaged in an act of bribery which has now come to the attention of authorities.

In response, it is to be expected that businesses are:

• Putting whistle-blowing systems in place where these do not yet exist: they want to be the first to get reports of unethical practices in their organisation rather than finding out about them via the media or a regulator
• Strengthening their ethics policies and training with a strong focus on reporting mechanisms
• Improving communication of reporting mechanisms to employees
• Actively fostering a reporting culture
• Training managers on non-retaliation obligations
• Extending communication of reporting mechanisms into their supply chains
• Ensuring that all reports are adequately investigated and that the process followed and outcome reached is documented
• Putting remedial measures in place where reports that are found to have substance in order to deter the likelihood of repetition at any time in the future.

The significance of these actions can also be understood from the perspectives of two other key stakeholder groups: customers and shareholders. The speed with which adverse publicity can spread via mainstream and social media and the speed with which share prices can plummet is putting the subject of reputation risk at the top of corporate enterprise risk management rankings. 

People-related risk is one of the most complex for any enterprise and the need to mitigate the risks associated with unethical employee conduct requires that you champion the creation of an ethical work culture including the implementation and effective management of reporting mechanisms.

Selecting, positioning and optimising your ethics hotline

In addition to the best-practices in implementation that your legal advisors and service providers will recommend, here are suggestions that may add further value to the way that your business selects, positions and makes optimum use of your hotline.

1. Ensure that your whistle-blowing service provider itself has up-to-date third-party certification. In South Africa, Ethics Hotline Service Provider Certification is awarded by The Ethics Institute (www.tei.org.za).
2. If your business operations or any part of your supply-chain extends beyond your country's borders, select a provider that is experienced in setting up reporting channels in other countries.
3. Select a provider that offers a range of reporting platforms including a toll free number, fax, email, online reporting, SMS and a WhatsApp facility.
4. Communicate that the hotline is not only for fraud and financial misconduct, but for all ethical and legal violations. Employees are increasingly using hotlines as a vehicle for reporting values violations and employers are increasingly encouraging reporting of all misconduct with legal and reputational implications such as sexual harassment, harmful environmental practices and non-adherence to minimum employment standards. There is a suggestion that ethics hotlines should be described as ‘integrity hotlines’, a label that may be particularly effective at capturing the consciences of your potential reporters.  
5. Clarify that the hotline can be used for both open and anonymous reporting. The benefit of having a skilled independent interviewer taking a report from a caller who is willing to identify themselves is significant and can yield the most actionable reports you will receive.
6. When an open report is made directly without the use of the hotline, consider lodging the report with the hotline anyway. This means that you can have a single record of all reports in a given period and that your investigation process will be carried out to the auditable standards that you apply to hotline reports. When lodging such a report in the hotline system remember that reporter anonymity must be maintained if requested by them, even though you may know the reporter’s identity.
7. As an employer, do not incentivise employee whistle-blowing as this can have the effect of deterring rather than promoting the level and quality of reporting while negatively impacting on the organisational culture and climate. For more on this topic read the previous post Do not pay the whistle-blower (even if he gets you to the other side). Your country's regulators may offer financial rewards for information that would not otherwise come to light if a person's future livelihood was to be compromised, but the same practice is not recommended for employers.

It’s our duty to exert a positive influence on the level of ethical conduct in our organisations. Embrace the valuable role that well-managed ethics hotlines can play in mitigating people-related risk and in the process earn yourself a better night’s sleep.

Notes: Always obtain professional legal advice to ensure that you are handling disclosures in a manner consistent with your country's legal requirements. South African readers need to be aware of important recent updates to the country's Protected Disclosures Act. Look out for a coming update and link to an article that sets these out clearly.

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About the author: Penny Milner-Smyth is the Director of Ethicalways, a South African-based provider of advisory and training services supporting organisations seeking to instill and maintain a culture of integrity. She holds an MA Research Psychology, is a member of The Ethics Institute and Business Ethics Network (BEN) Africa, and is the principal author of the Certificate in Anti Corruption accredited by the International Compliance Association. Contact: [email protected].

A version of this article first appeared in the HR Voice August 2017 publication of the SA Board for People Practices and has been modified by the author for a wider audience.