Ethics hotlines are growing in popularity.
They provide an accessible and anonymous way for employees to report potential wrongdoing; and in principle, any straightforward means for a company to better protect itself from fraud or learn of employee misconduct is a no-brainer, right? Yet, many enterprise-sized organizations have opted out of an ethics hotline.
While on the surface hotlines may seem a convenient option to receive employee complaints, tips or concerns, often it’s the process that surrounds the hotline which can determine whether it ultimately succeeds or fails. Areas such as employee relations are particularly challenging when it comes to anonymous tips.
If your organization is considering an ethics hotline, here are 5 must-knows that can help ensure it’s an employee relations boon, not bust:
How Ethics Hotlines Work
Employees are provided with an ethics hotline, a broadly used term which may actually encompass a phone number, email address or web page where perceived wrongdoing can be reported. The hotline is staffed and monitored by specialists or support staff, and it can even be administered by a third party. Sometimes the ethics hotline phone number is extended to customers and vendors. With 24/7 access, employees can call from any location at any time, which means somewhere other than the office if they have concerns about confidentiality.
The breadth of issues employees can report on an ethics hotline may include suspicions of:
The specialist who receives the tip is charged with validating it, and therefore, typically receives special training on how to gather enough information to ensure the complaint is credible. The tip is then routed to the right department within the organization such as audit, legal, or human resources. The caller can remain anonymous or may want follow-up in which case (s)he will give contact details.
Ethics Hotlines as an Employee Relations Tool
Within the realm of employee relations, one striking statistic that supports the use of ethics hotlines relates to ethical violations which involve management. In a recent National Business Ethics Survey of the U.S. Workforce, “…60% of reported misconduct involved someone with managerial authority, the very people who should be setting a good example of ethical conduct.” The anonymity of an ethics hotline is conducive to reporting management misconduct, especially if employees fear retaliation.
For claims that fall into the enforcement arena of the Equal Employment Opportunity Commission (EEOC), the NBES Survey found that violations such as discrimination were witnessed by 12% of respondents and another 7% witnessed sexual harassment. Therefore, if employees are willing to report it, employee-related misconduct can easily be flagged via an ethics hotline.
It goes without saying that in the area of employee relations, wrongdoing can be hard to pinpoint and not as readily apparent as accounting fraud or reports of theft. Here are some often cited pros and cons to an ethics hotline:
Ethics Hotline Pros
Perhaps the most important pro is that ethics hotlines do, in fact, help organizations mitigate risk by providing a platform to field valuable tips. As just one example, the Association of Certified Fraud Examiners confirms that organizations with ethics hotlines are more likely to detect fraud, catch it quicker and ultimately experience a lower cost associated with the fraud.
Ethics Hotline Cons
The negatives that surround a hotline are daunting because they encompass intangibles such as perception and logistical hurdles such as administration. A few of the cons include:
Ethics Hotlines: Employee Relations Boon or Bust?
While many organizations view ethics hotlines as an employee relations best practice, successful implementation should not be underestimated. Unless rolled out with care, they can become an employee relations bust.
Whether a company chooses to manage its hotline internally or outsource it to a third party, parsing and routing the tips and complaints that come in require planning and resources. To succeed, an ethics hotline requires:
Ethics hotlines can be a powerful tool for company management teams. They set the tone for employee relations best practice internally and deliver positive knock-on effects for the organization’s culture and bottom line. Implemented haphazardly, the hotline will go unused or even worse, be abused by disgruntled workers. Therefore, while ethics hotlines are not quite a no-brainer, they nevertheless must be a strategic talking point for employee relations teams and managers everywhere.
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