Encouraging whistleblowers and ensuring that managers and coworkers don't retaliate against them are lynchpins in building an effective compliance program. Companies can create great processes and purchase the finest technology and systems, but their compliance programs won't be effective if their best eyes and ears—employees—don't feel safe reporting problems.
Most large organizations will have occurrences of wrongdoing that, if not addressed, could lead to bigger problems and a culture of misconduct. In fact, a survey of 6,400 U.S. employees conducted by the Ethics Resource Center found that 41 percent of respondents observed serious misconduct in their workplace in 2013. Nearly 20 percent described it as abusive behavior or behavior that would create a hostile work environment, said Patricia Harned, president of the Ethics Resource Center. Other common occurrences: lying, conflicts of interest, violating policies on internet use, discrimination, violating health or safety rules, falsifying time reports, or retaliating against someone who has reported misconduct.
Speaking at Compliance Week's recent annual conference, Harned said the survey results show that employees are far more likely to speak up and report abuses if they believe the company will act on their tip and they will be supported and not punished for reporting it. “If I come forward will it matter?” she said. “Will I be supported if I come forward? Will I be protected? Will somebody respond or do something about my report? That's the thought process that employees go through in deciding whether to report what they observe.”
That makes the presence of a strong ethics and compliance program important, but it's also important for employees to know about it and trust it, said Harned. “The more you can do to communicate that if you call the hotline here's what's going to happen, the better,” she said.
Building confidence in the ethics and compliance process is perhaps the most critical factor to encouraging employees to report abuses they witness, said Kevin O'Connor, vice president of global ethics and compliance at United Technologies Corp. Companies need to hear clearly and often from business leaders that integrity counts and the company wants to hear about misdeeds that merit investigation. “If I get up there and say ‘report wrongdoing,' they'll say that's the guy who gets paid to say that,” he said. “And they're right.”
The challenge for a company like United Technologies is communicating that message in all the various locations where the company operates and reaching remote employees who may not access electronic communication. “Half of our employees don't use computers,” O'Connor said. “They're factory floor technicians or in the field in foreign countries. You can't send them an e-mail or do a WebEx or online training, so how do you reach them?” U.S. regulatory officials are perhaps more concerned with how those employees view ethics and compliance than even senior executives, he said. “We have come to rely heavily on our communications folks.”
Panel from left: Patricia Harned, Ethics Resource Center; Regis Becker, Penn State University; Kevin O'Connor, United Technologies
At a place like Penn State University, the challenges are very different, says Regis Becker, chief ethics and compliance officer who has been on the job only a little more than a year. He was hired in the aftermath of the Jerry Sandusky sex-abuse scandal that decimated the Big 10 school's iconic football program. Higher education in some ways is similar to a corporate environment, he said. “Deans are like business unit leaders. But this is a very immature process at Penn State. The whole notion of an ethics and compliance office is new, said Becker, who joined Penn State last year from PPG Industries, where he served as chief compliance officer. “Starting at the top—the board of trustees, senior leadership, and deans—they don't really know how it works.
The Learning Curve
One of the challenges, Becker said, is getting Pen State employees to trust the compliance process when it comes to reporting. There's a tendency for folks to assume reporting something is an automatic declaration of guilt, he suggested. “I tell people to respect the process,” he said. “Don't worry about people who will report things. We have a process, and we will triage it. We get it. We will conduct a full investigation.” Trying to build a program in the post-Sandusky era has been both a blessing and a curse, he said. “We are very much under the microscope,” he said. “People understand we have to build a program to build on the greatness of the university.”
Higher education and the autonomy of tenured professors creates a much different environment from the usual corporate setting, Becker said. “I have to convince every single person in the room,” he said. “Oversight is a necessary evil to them. We are one of the best institutions of higher education on the planet, but we are trying to make them comfortable with the process that we're not going to interfere with the organization; we are going to enhance it. This will help us.”
The Penn State situation points out the importance of understanding the culture within the organization, Harned said. “The university culture is academic freedom,” she said. “So you have to win people over to say these systems are good. People really do agree with that, but it's a different environment. The program has to be a reflection of the culture of the organization.”
According to Pat Harned of the Ethics Resources Center, a speaker at CW's annual conference, fear, distrust & dissatisfaction drive external reporting. Below, respondents to an ERC survey mark the top reasons for reporting outside the company.
50% The problem was ongoing & I thought someone from outside could stop it.
45% I did not trust anyone in my company.
40% I was retaliated against after I made my first report inside the company.
40% I was afraid I would lose my job if I did not get outside assistance.
36% My company acted on my report, but I was dissatisfied.
29% My company did not act on my report.
22% I was afraid for my safety.
14% I had the potential to be given a substantial monetary reward.
Source: Ethics Resource Center.
Once a company adopts a robust process that employees believe in, the hotline number is sure to elicit complaints of a wide variety, the panel agreed. “The vast majority of complaints are HR-related—employees trying to get along,” said O'Connor. “So we try to triage the system and determine is there a compliance problem here?” The company makes it a practice to follow up on every call to the hotline, he said, to help further engender a sense of confidence among employees that complaints are vetted. “We collect a lot of stuff that's not related to the job, but if we give them a place to vent, maybe they will get that steam off and not take it out on their colleagues.”
Harned said survey results show employees are willing to report internally and not to some outside authority if companies have a culture that shows a concern for such reports. “One thing is clear: 92 percent of employees who had something to report reported it internally first,” she said. With all the concern in recent months over whistleblower bounties, companies can take comfort in knowing the majority of employees are not motivated by a possible payday. “Only 14 percent of people who went outside said the reason was the potential to receive a lot of money,” she said.