How Effective Are Helplines at Enabling Compliance Reporting?

helplinesWhistleblowers can be one of the most effective ways for companies to find out about and address potential ethical and legal violations, making them an important part of any anti-corruption compliance effort.

Recently, the Society of Corporate Compliance and Ethics (SCCE) conducted a survey on helpline calls and incidents reports. The survey, based on 677 responses from compliance and ethics professionals around the world, revealed that over the last two years employees are reported to have grown more likely to come forward and raise concerns both through whistleblower helplines and directly to management and/or compliance officers.

An earlier SCCE survey from 2011 showed that 90 percent of compliance professionals surveyed reported that their employer had a helpline, with the number rising to 99 percent for publicly traded companies.

While the survey results are quite useful in understanding general trends, it is important to note that the survey’s relevance to emerging markets with spotty rule of law is in question. As noted by Ghulam Mortaza Korai, a lawyer and senior lecturer on compliance at the Institute of Business Management, Karachi, “In Europe the labor cost is greater than raw material because they spend huge amount in hiring and firing of employees, unlike Pakistan. There is a proper system in place. In the absence of strict implementation of anti-bribery laws, it is very difficult to have whistleblower helplines. However companies having strong internal control can have the system in place for curbing bribery in their rank and file. They can make an anti-bribery system while taking international anti-bribery laws into consideration.”

Key findings of survey are;

  • Most survey respondents (51 percent) report that the volume of calls to their helpline has remained unchanged over the last two years. Overall, 37 percent of organizations reported that volume had increased somewhat or a great deal in the last two years vs. just 12 percent reporting a decline. It should be noted that an increase in calls to the helpline is not always a sign of trouble. Greater awareness of the helpline and increased trust in the compliance department can both lead employees to feel more comfortable raising issues.
  • Incident reporting via all means, including reports directly to supervisors, has also increased substantially, even more so than through helplines. Just 35 percent of respondents said that the overall number of incident reports stayed about the same over the last two years, compared to 58 percent reporting an increase.
  • AWhile the number of incident reports is increasing, the percentage being reported anonymously does not appear to be increasing as steeply. The vast majority of respondents (70 percent) reported that the percentage of calls reported anonymously had stayed the same.
  • Despite the fear of a spike in whistleblower claims against the company, just 6 percent of respondents reported an increase in claims. Notably, the numbers were similar for publicly traded companies.
  • What is the substantiation rate of claims made anonymously? Opinions are split as to the trustworthiness of anonymous reports. Anonymous reports were reported to be substanti­ated at about the same rate as non-anonymous reports by 39 percent of respondents. They were reported to be substantiated more often by 9 percent of respondents, but less often by 35 percent, and another 17 percent didn’t know. There were no striking differences in the response rates by ownership type.

It is good to find out that an increase in helpline calls is not necessarily a red flag — in fact, a very low number of calls should be more worrying, as it indicates a lack of trust in the system. Direct supervisors are often the ideal contact point, at least in situations where they are not implicated in the potential violations being reported. Moreover, direct supervisors must build a proper follow-up mechanism to maintain employees trust. The survey also revealed the increasing trend of employees willingly coming forward to report wrongdoing, which should make others less fearful of doing so (provided the complaints are handled well and those reporting do not suffer repercussions).

The complete survey is available here.