Reasons to Use a Third Party Hotline

Ethics hotlines play an important role in ethics and compliance programs. They provide an alternative path for communication between employees and management when more formal channels may present a barrier.

Some businesses provide internally managed hotlines as an option for employees, but it is common for such services to be outsourced to external hotline service providers like Ethical Advocate. Here are some important reasons why an external provider should be used.

Accessibility – Incidents of misconduct can be observed by contractors, vendors, customers and members of the public, in addition to employees, but internal systems often behind a firewall, completely inaccessible to non-employees and possibly also to employees who prefer to use the hotline from home. An external third party hotline increases accessibility to anyone who needs to report a concern.

Anonymity – One of the most important aspects of a hotline is that it provides anonymity to the greatest extent possible. A caller is more likely to have confidence that the call is truly anonymous when neither the caller nor the hotline operator knows one another, and when there is no possibility of someone else in the organization overhearing the hotline operator’s questions and comments.  A reporter may question the anonymity of an internally provided hotline.

Cost-Effectiveness – There are significant costs associated with establishing and maintaining infrastructure, reporting tools, and staffing for a hotline. With an internal hotline, all of these costs are borne by the business itself. With an external third party hotline, each individual client pays a fraction of the incurred costs, and benefits from the economies of scale.

Coverage: 24/7/365 – An effective hotline service must be able to receive reports and respond to callers 24 hours a day, 7 days a week, and 365 days a year. While reports could be submitted at any time via a web-based form, experience and research have shown that the best time to elicit needed details from someone is when they are making the initial report.  Few businesses can staff a hotline “round the clock”, but a third party vendor can.

Regulatory Requirements – The Sarbanes-Oxley Act mandates implementation of confidential, anonymous employee reporting channels for all public companies, as a means to encourage anonymous reporting of unethical activity without fear of reprisal. The Dodd-Frank Act rules promulgated by various agencies, and related international regulations also require reporting systems or related aspects of ethics and compliance programs. Ethics hotlines, or whistleblower hotlines as they are sometimes called, help businesses meet these requirements.

Unbiased Response – When a business uses an unbiased third party hotline it sends a strong message that all reports of misconduct will be taken seriously. This also helps a business to avoid the perception of impropriety when dealing with complaints.

A well-run third party hotline offers a credible, cost-effective way for an organization to receive, process, and track reports of misconduct leaving internal management more time to investigate and take corrective action.