Each year, NAVEX produces the Hotline & Incident Management Benchmark Report – a comprehensive assessment of trends in whistleblowing. This year, our analysis included 1.52 million reports across 3,430 organizations and is in use by many organizations to benchmark their compliance programs against peers and industry standards.
The findings in this report illuminate trends in hotline reporting and the overall cultural health of thousands of organizations across the globe. This post explores one of the key findings from this year’s benchmark: reporting is at the highest levels ever, but reporters are proceeding with more caution –and, in some cases, reporting outside their organizations.
Key finding from this year’s report
Following a years-long trend, whistleblower hotline reporting continues to rise, with the highest median level of Reports per 100 Employees (1.47) in the history of reporting seen in 2022. However, there appears to be an increase in caution among reporters, as evidenced by a higher percentage of anonymous reports. Further, reporting to outside authorities, such as the U.S. SEC Office of the Whistleblower reached an all-time high in 2022, with 12,300 reports.
A rise in whistleblower reports is unequivocally a good thing, and data yielded from hotline reporting is a quintessential indicator of cultural health. However, a rise in anonymous reporting levels and external reports may indicate underlying issues that should not be swept under the rug.
Anonymous and external reporting trends
Anonymous reporting levels were trending downward over the past decade, dropping to 50% in 2021 as more employees were willing to put their names behind reports. However, in 2022, anonymous reporting levels rose to 56%, consistent with historic levels. This suggests employees are becoming more cautious, perhaps as a result of the recent economic conditions, the ebb of The Great Resignation, and concerns about retaliation.
Organizations must also be aware of the shifting landscape of external reporting. Whistleblowers are increasingly willing to take their concerns outside their organizations if they feel their issues are not adequately addressed. The increase in reporting to the SEC Office of the Whistleblower and the growth of social media sites like Glassdoor showcases this trend and is an area organizations should pay attention to. External reporting trends will continue to impact how organizations manage and communicate about their internal reporting systems. There are many reasons an employee may choose to report externally, including a lack of trust in the internal system or a fear of retaliation. To address this, organizations should look inward for signs of retaliation and at the effectiveness of the compliance program as a consideration as to why employees may be increasingly reporting externally. When issues of retaliation are identified and corrected, employees will gain trust in the system and are more likely to report internally first.
Regarding the fear of retaliation, organizations should address this head-on, with consistency and no-tolerance. The frequency of retaliation reports increased from 0.78% in 2021, to 0.96% in 2022. Though this increase is a relatively small percentage, it showcases the need for organizations to ensure reporting parties trust the system without fear of retaliation. Risk and compliance professionals should assess whether their organizations are doing enough to address the issue of retaliation.
The important role of whistleblower hotlines
Ultimately, the increase in whistleblower hotline reporting is a positive trend for organizations. It allows more issues to be identified and addressed internally, and when done properly improves the cultural health of the organization. Though some organizations may be reticent to believe increased reporting is a good thing, hotline data is a wealth of information about how employees are treated and how ethical conduct is. This year, the Hotline & Incident Management Benchmark Report webinar discussed how high adoption of internal hotlines see fewer reports to regulatory agencies, fewer material lawsuits, and greater profitability – the proof is truly undeniable.
Organizations should take steps to ensure internal reporting systems are trusted, effective and that their use is encouraged. Employees must be protected from retaliation, and anti-retaliation policies must be applied consistently as a first step. Doing so will foster a culture of transparency and accountability, and ultimately will decrease unethical behavior.
The benchmark report is full of data analysis and insight for you to improve your hotline program performance. To gain expert analysis and to access the full report:
