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NAVEX Global touts itself as the worldwide leader in integrated risk and compliance management software and services that help organizations manage risk, address regulatory compliance requirements and foster an ethical workplace culture. One of the annual surveys it conducts on its client base spread across the globe seeks to define benchmark metrics on whistle blowing programs. The survey results are published in a report titled ‘Risk & Compliance Hotline Benchmark Report’ and the 2020 edition is out. The report is perhaps the most elaborate on matters related to the efficacy of ethics programs including but not limited to ethics hotlines. I highly recommend that you review the entire report from here. Below are the quick key findings from the report with my emphasis added:

>> An overall median of 1.4 reports per 100 employees in year and an average of 3 reports per 100 employees per year is the observed reporting frequency. Consequently, you can assess the utilization of your hotline against these metrics. The metrics consider reporting from all reporting channels – including web forms, hotline, open door or walk-in, mobile, email, mail and more. To effectively monitor these statistics with full consideration of all plausible reporting channels, the survey recommends the adoption of a unified incident management system where reportable concerns collated by the Human Resources function or the Security function are recorded to comprehensively capture trends for analysis and decision making.

>> Human resource issues involving internal parties and often relating to employee relations or misconduct (for instance, discrimination, harassment, retaliation, compensation) are the most reported concerns from all the available reporting channels combined, concluding this as important indicators of potential cultural issues.

>> The reporting of allegations remained at the high level (85% of all reports coming through from all available channels) with too few inquiries (15% of the reports). This is indicative of organizations that are discouraging the use of the hotline system as an intake method for questions or employees who are finding the answers outside of methods captured by their incident management system. Either possibility points to a potential gap in the hotline system that should be rectified.

>> Majority, 59% of all the reports received, were anonymous indicative of a reduced level of trust between the reporter and the ethics program in their organization.

>> Hotline training and communication should always highlight the capabilities provided for anonymous reporters to follow-up on their reports while maintaining their anonymity. A reporter follow-up rate of 36% was recorded. Follow-ups, especially when changes are made, are empowering organizations to investigate, substantiate and mitigate reported risk. Organizations should continue to communicate the importance of anonymous report follow-up.

>> The overall median substantiation rate (the rate at which reports that when investigated prove to be correct as reported) fluctuates between 36 percent and 44 percent indicative of the greater need to boost hotline communication and investigative efforts. The survey found a median substantiation rate of 38% for anonymous reports and of 50% for named reports.

>> While there are cases that require lengthy investigations – especially ones with legal ramifications – an average case closure time across all reports of 100 or more days far exceeds the best practice recommendation of 30 days.

>> Internal report taking methods such open-door conversations, letters to leadership, emails and walk-ins to the compliance office continue to hold the largest share of the reports at 44% of all reports received with 10% of these reports being submitted into the incident management system anonymously. Reports received via internal intake methods continue to be substantiated at a median rate significantly higher than reports received via hotline and web intake methods – both overall and when the report is made anonymously.

>> Substantiation of allegations of retaliation remains lower than the overall median substantiation rate for all cases. Because retaliation remains a top concern for regulatory agencies and employees, it needs to be a top concern for ethics programs as well. Training, awareness, mitigation and demonstrated actions are needed to address this concern.

>> The Substantiation Rates of harassment reports is consistent with our overall Substantiation Rate. However, the Substantiation Rate of discrimination reports was much lower, closer to the Substantiation Rate of retaliation reports.

From this survey report, it is evident that the set up and operation of an effective ethics program including but not limited to an ethics hotline is an intricate exercise that perhaps few organizations can perfect given the resources and expertise required. Organizations, regardless of industry, size or geographical location should assess the efficacy of their ethics programs against this report’s findings and recommendations.

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