Top Reasons for Implementing Ethics Hotlines

Why do organizations introduce and maintain ethics hotlines? Ethical Advocate has heard from a number of its clients, and here is a summary of what they had to say.

Risk mitigation: Employers recognize that ethical incidents or lapses may occur and want to have a process or system in place that will help to deter them.

  • A well-run ethics hotline (or webline) not only provides employees and others with an avenue to report concerns, it also reminds everyone that ethical lapses will be observed and likely will be reported.

Early warning: Employers want to learn about problems as early as possible, before they cause serious internal problems or go public. They want to have a chance to investigate and fix ethical concerns internally.

  • The Association of Certified Fraud Examiners (ACFE) has reported that organizations with hotlines are much more likely to catch fraud by a tip, which their data shows is the most effective way to detect fraud. Organizations with hotlines detect fraud 50 percent more quickly and experience fraud that is 41 percent less costly, according to ACFE’s 2014 Report to the Nations on Occupational Fraud and Abuse: 2014 Global Fraud Study.

Regulatory compliance: Employers want to maintain an ethics and compliance system that meets regulatory expectations and requirements of Dodd-Frank, the Federal Acquisition Regulation, the Foreign Corrupt Practices Act, Sarbanes-Oxley, and other federal, state, and local requirements.

  • Almost all of these regulations call for systems, such as ethics hotlines, that enable employees and others to report their concerns anonymously and without fear of reprisal.

Anonymity for users: Employers recognize that it can be difficult for employees to speak up. One of the reasons organizations implement third-party hotlines is to provide employees and other users with a secure, anonymous option for reporting issues and concerns.

  • As noted above, most regulations call for reporting systems that maintain the anonymity of those who wish to report. In addition, ACFE and other organizations have noted that fear of retaliation is one of the barriers to reporting. Ethics hotlines and weblines, especially those offered by reputable third-party providers, offer that anonymity.

Integrity: Some employers set a high bar for themselves; they seek to implement programs and processes that will support an ethical culture, whether or not they are required to do so. As one Ethical Advocate client put it, “we want to do the right thing, even when no one is looking.”

Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines. It also delivers training on-line and in person with content covering business ethics, harassment and discrimination, the Foreign Corrupt Practices Act (FCPA), fraud awareness, and more. Please contact us for more information.