What is an Ethics Hotline? Should My Business Have One?
What is an Ethics Hotline?
An ethics hotline (also called a "whistleblower hotline") is a mechanism for employees of an organization and other stakeholders to report inappropriate behavior such as fraud, waste, abuse, misconduct or violations of organization policies or any laws or regulations.
Ethics hotlines usually take the form of an anonymous online form that one would complete and submit, or a telephone line that one must call and leave a message with an operator. Intended to be anonymous, these messages are always transcribed by the operator and the transcriptions are submitted to the organization, not the original voice message. These hotlines are available 24 hours, 7 days a week.
Third-party providers are the most common scenarios for ethics hotlines, in order to preserve the anonymity of its users and to build trust with the users of the hotline. In the past, ethics hotlines have been seen as a tool for suppressing allegations rather than dealing with them.
But don't let that scare you. Ethics hotlines are wonderful things! Both for the company and the employee. Here are a few reasons your company should have an ethics hotline.
Reasons to Have an Ethics Hotline
A study by The Association of Certified Fraud Examiners found organizations with an ethics hotline experienced frauds that were 50% less costly and detected fraud 50% more quickly. Ethics hotlines allow you to monitor your business from the perspective of your employees and other interested parties without them fearing repercussion. Oftentimes, common objections to the hotline are things like, "At my location, I'm trying to build a family culture of trust and of open, mature communication." Well, sure this is all well and good but why should an ethics hotline stop you from trying to build a family culture of trust? Ethics hotlines 'pros' outweigh their 'cons.' By far. Here are a few:
Hotlines are a proven resource. The have allowed companies to detect and address countless issues and concerns. Hotlines are thus a strategically essential component for upholding a company's ethical fabric.
Having a publicized ethics hotline acts as a deterrent to potential perpetrators.
Research shows in-house hotlines do not fully protect your company. A third party whistleblower hotline service makes your employees feel safer and more confident to make a report since they are less likely to be identified, and thus less likely to receive some form of retaliation.
Hotlines save companies a LOT of money. Here is just one example of how. A terminated employee calls the Hotline alleging that his termination was unfair. After an independent, fair investigation there is a finding that the termination was not inappropriate. It is thus upheld. Personnel telephone the former employee back, explaining that there was an independent review of the termination and “I am sorry to tell you that the termination stands. We wish you the very best of luck in the future.” Anyone who has made a number of these calls will attest that the vast majority of the time the reaction of the caller is not to protest but is to express gratitude for the inquiry and for the callback. They are grateful because someone heard them... and oftentimes being heard is what they really wanted. Such persons are extremely unlikely to retain counsel and sue the company for wrongful termination. Take away the Hotline, though, and a certain percentage of them would have sued the company. It is obviously impossible to reduce this phenomenon to a dollar figure, but experience shows that it is not insignificant.
Interesting that oftentimes all people want is to be heard. If your company is considering implementing an ethics hotline, that's great! And you will surely reap the rewards. Want to learn more about how VoiceSifter could work in your company? Request a demo today!