There has been a significant generational change in what we all expect in the workplace and in our daily lives. Respect, harmony, good communication, transparency, and ethical behavior are what we’d all reasonably expect in our own workplaces, but it took Congress to pass the Sarbanes-Oxley Act in 2002 to bring many industries into line.
The Sarbanes-Oxley Act requires all public companies to have an ethics hotline implemented for the use of all employees. Before this act of Congress, so-called whistleblower hotlines were not quite as common. So, how are these hotlines affecting businesses and saving their bottom lines?
- Avoid Or Reduce Financial, Reputational And Legal Damage
The truth is that every industry must be accountable for the actions of its employees and business leaders. When unethical behavior is tolerated and even encouraged, the reputational damage that this can cause can affect the bottom line considerably. Furthermore, legal action taken by affected employees can result in additional financial losses and brand damage.
By implementing an ethics hotline, industries put in place a system to eliminate bad behavior. They potentially save millions of dollars in profits, guard against legal action, and save face. In today’s highly competitive and saturated business environment, what company can afford not to have such a reporting system in place?
- Eliminate Unethical And Criminal Behavior
The whole point of implementing a whistleblower hotline is to allow any employee to report unethical behavior at any time. When these measures are in place, bad behavior is less likely to flourish. The result of this is a better working environment for everyone.
A whistleblower hotline in this context creates a safe space for reporting. It allows employees to anonymously report unethical behavior without having to worry about their own careers and any personal repercussions.
- Better Business Performance
In a study by George Washington University in 2018, it was found that there is a strong correlation between the way that a business performs and whether it has a whistleblower hotline or not. Those companies with hotlines were found to have higher levels of productivity and increased profitability.
This is significant because it provides compelling evidence that the implementation of a whistleblower hotline actually improves business performance and increases profits. When employees feel safe and able to report bad behavior, it leads to eliminating that bad behavior and creating a more productive environment.
We’re All Benefiting
When businesses perform better and employees are happier and feel safer, we all benefit. The financial, legal, and brand damage that can potentially be caused by unethical behavior within an entire industry can be mitigated through the implementation of whistleblower hotlines.
Given that such reporting systems were less widespread before the passing of the Sarbanes-Oxley Act in 2002 by Congress, one must wonder why it took so long to recognize the many benefits? In this context, reporting systems are saving the profits of whole industries and generating real change in attitudes and better environments in which to work.