A recent webinar held by NAVEX discussed findings from its 2022 “Hotline & Incident Management Benchmark Report,” providing chief compliance officers valuable insight into how their hotline and incident management program stacks up against their peers.
This year’s benchmark report took from 3,470 organizations who received 10 or more reports in 2021 and was based on an overall analysis of roughly 1.37 million individual reports.
Among the key findings: Whistleblowers are “more emboldened than ever,” according to NAVEX. One indication of this was the drop in anonymous reports, which is one way to take the pulse of employee culture. Fifty percent of reports were anonymous in 2021, compared to 56 percent in 2020 and 59 percent in 2019, according to NAVEX’s data.
This is a positive sign because it helps chief compliance officers “do a better job of being able to investigate a case, and it also demonstrates that employees trust us enough to give up their name,” NAVEX Chief Risk and Compliance Officer Carrie Penman said when discussing the findings.
The data in the report also showed a rise in fraud and bribery allegations. In addition, according to the data, the number of reports regarding alleged misconduct continues to be higher than inquiries. In 2021, 90 percent of reports were allegations, while just 10 percent were inquiries, according to NAVEX.
This is a bit concerning because, as FedEx Chief Compliance Officer Justin Ross pointed out during the webinar, “inquiries are absolutely important. It’s one of those canaries in the coal mine.”
“Also, one corollary to this is that a lot of programs now are tracking access and clicks on policies,” Ross added. “When you see a bunch more clicks on the code of conduct or the section on insider trading, for example, what does that tell you? We need to find ways that our employees may be innocuously asking about compliance issues.”
The overall trend of employees feeling more emboldened to speak their mind aligns with the Securities and Exchange Commission’s 2021 annual report, in which there were 12,210 whistleblower reports—nearly double the 6,911 reports cited the previous year.
The findings from both NAVEX’s data and the SEC’s annual report signal “a unique opportunity to think about how and why reporters are making reports now, versus in prior years, and what is driving the willingness to speak up,” Penman said.
Covid-19 trends remain
This year, report volume was at a median of 1.3 reports per 100 employees. “We did see an increase in reporting this year, but we are still not getting back to the pre-pandemic levels of reporting,” Penman said.
Because more reports have been found to correlate with positive business outcomes, “I wouldn’t be super excited if you’re at 0.2 reports per 100 employees, because that is the lower end of the range,” Penman said. In comparison, the highest range was 10.7 reports per 100 employees.
Regarding specific employee reports, Covid-19 cases are “still impacting our work as compliance officers,” Penman said. As Covid-19 cases spiked, so did calls about Covid-related issues.
“So, things external to our organization are still impacting us from an internal perspective,” Penman said.
Elevated levels of safety-related reports remain. In prior years, typically 6 or 7 percent of reports were environmental, health, and safety (EHS) reports, Penman noted. Specifically, EHS reports spiked significantly to 11 percent in 2020 before dropping to 9 percent in 2021, which is still at an elevated level compared to previous years.
Regarding EHS-related reports, the highest volume of reports (35.5 percent) concerned “HR, diversity, and workplace respect,” while the second highest volume of reports concerned “other business integrity” matters, according to the data.
NAVEX’s data also revealed case closure times still need to improve. In 2021, the median case closure time increased to 42 days from 39 days in 2020.
Anonymous reporting cases take longer to close. According to the data, where cases concerned anonymous reports, the median case closure time was 45 days, compared to 39 days for cases where employees did identify themselves.
Given that case closure time can cause employee angst if they believe their reports are not being taken seriously, Penman said, it’s “certainly something to consider when thinking about staffing levels and resources that may be available to investigate the reports that you may be receiving.”
Retaliation cases spike
The third key theme, according to NAVEX’s data, was the sharp rise in retaliation, discrimination, and harassment complaints. Retaliation complaints jumped from a median of 0.9 to 1.7 of all reports.
“That is a major jump,” Penman said. “I suspect it’s probably the tip of the iceberg.”
In addition, the data showed a significant rise in harassment/discrimination cases, even higher than the height of the #MeToo movement in 2018. The message here, Penman noted: Chief compliance officers should be thinking carefully about how to address this intensified focus on workplace civility issues, which affects their ability to be effective overall.
Penman will be presenting NAVEX’s hotline and incident management benchmark report as part of the panel, “More is Better! Empowering Compliance with Risk-Signal Data,” at Compliance Week’s 2022 National Conference, to be held May 16-18 at the JW Marriott Hotel in Washington, D.C.
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