The findings from NAVEX's 2022 "Hotline & Incident Management Benchmark Report" were discussed in a recent webinar, giving chief compliance officers valuable insight into how their hotline and incident management programs compare to their peers. Emboldened whistleblowers is one of the year's major themes.
This year's benchmark report was based on an overall analysis of roughly 1.37 million individual reports from 3,470 organizations that received 10 or more reports in 2021.
One of the key findings, according to NAVEX, is that whistleblowers are "more emboldened than ever." One sign of this was a decrease in anonymous reports, which are one way to gauge employee culture. According to NAVEX data, fifty percent of reports were anonymous in 2021, compared to 56 percent in 2020 and 59 percent in 2019.
On a recent webinar discussing the findings, NAVEX Chief Risk and Compliance Officer Carrie Penman said that this is a good sign because it allows chief compliance officers to "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."
The report's data also revealed an increase in allegations of fraud and bribery. Furthermore, the number of reports of alleged misconduct continues to outnumber inquiries, according to the data. According to NAVEX, 90 percent of reports in 2021 were allegations, while only 10% were inquiries.
This is concerning because "inquiries are absolutely important," as FedEx Chief Compliance Officer Justin Ross stated during the webinar. "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 of 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 empowered to speak up is supported by the Securities and Exchange Commission's annual report for 2021, which cited 12,210 whistleblower reports, nearly double the 6,911 reported the previous year.
Both NAVEX's data and the SEC's annual report reveal "“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," according to Penman.
The data from NAVEX also revealed that Covid-19 reporting trends have not changed. This year, the average number of reports per 100 employees was 1.3. "We did see an increase in reporting this year," Penman said, "but we are still not getting back to the pre-pandemic levels of reporting."
"“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, because more reports have been found to correlate with positive business outcomes. The highest range, by comparison, was 10.7 reports per 100 employees.
Covid-19 cases are "still impacting our work as compliance officers," according to Penman, when it comes to specific employee reports. As the number of cases of Covid-19 increased, so did the number of calls about Covid-related issues.
"So, things external to our organization are still impacting us from an internal perspective," Penman explained.
The number of safety-related reports is still high. Environmental, health, and safety (EHS) reports accounted for about 6% to 7% of reports in previous years, according to Penman. EHS reports, in particular, increased significantly to 11% in 2020 before dropping to 9% in 2021, which is still a high level compared to previous years.
According to the data, the most common EHS-related reports (35.5 percent) were about "HR, diversity, and workplace respect," while the second most common report was about "other business integrity" issues.
The data from NAVEX also revealed that case closure times need to be improved. The median case closure time increased to 42 days in 2021, up from 39 days in 2020, according to NAVEX data.
Cases involving anonymous reporting take longer to resolve. According to the data, the median case closure time for anonymous reports was 45 days, compared to 39 days for cases where employees identified themselves.
Given that employee angst can be exacerbated by case closure time if they believe their reports are not being taken seriously, It is certainly something to consider when thinking about staffing levels and resources that may be available to investigate the reports that you may be receiving," according to Penman.
According to NAVEX's data, the sharp rise in retaliation, discrimination, and harassment complaints was the third major theme. Retaliation complaints increased from 0.9 percent to 1.7 percent of all reports.
“That is a major jump,” Penman said. “I suspect it’s probably the tip of the iceberg.”
Furthermore, the data revealed a significant increase in harassment/discrimination cases, surpassing the peak of the #MeToo movement in 2018. The takeaway, according to Penman, is that chief compliance officers should consider how to deal with the increased focus on workplace civility issues, which has an impact on their ability to be effective overall.
By fLEXI tEAM