Why do businesses implement ethics hotlines?  There are many reasons and here are two major ones.  One reason is to ensure compliance with regulatory requirements and with the business’s own policies.  The other is to support ethical values throughout the organization.

Few businesses are not subject to at least one regulatory requirement that either mandates or encourages the use of anonymous reporting mechanisms, such as ethics hotlines, to protect whistleblowers.

A growing number of countries have enacted laws or other regulations to protect whistleblowers. Sometimes these laws or regulations require or encourage the use of hotlines. Various federal, state, provincial, and local government agencies require or encourage businesses to show evidence of steps to prevent fraud and other unethical behavior prior to entering into contracts with them. Reporting mechanisms such as hotlines can constitute such evidence.

Even in the absence of external regulatory requirements, the presence of effective ethics hotlines can help a business monitor adherence to its own policies by encouraging staff and relevant third parties to report concerns. The anonymity offered by a hotline provides a safe option for those who might otherwise be reluctant to speak up.

However, hotlines offer benefits beyond providing external regulatory compliance or serving as a mechanism to double-check internal policy compliance.

Well-advertised hotlines can increase the detection of internal fraud or ethical lapses, and, perhaps more importantly, can increase the prevention of internal wrongdoing because of an increased perception that outright fraud and ethical lapses will be detected.

Hotlines can do more. When part of a broader ethics process that supports ethical values throughout the organization, their presence reinforces the sincerity of a business’s ethical message. When positioned as a tool and resource that benefits employees as well as organizations, hotlines encourage and support the vast majority of employees who want to be part of an ethical and high-performing business. This intangible benefit is a valuable outcome in and of itself, one that enhances the overall value of ethics hotlines for all businesses.

Ethical Advocate’s highly customizable ethics and compliance solutions will help your organization effectively manage risk and create a culture of ethics and accountability.  Contact us for more information.