2021 was a historic year for the US Securities and Exchange Commission (SEC) whistleblower program. Last year, the SEC awarded the highest number of awards both in terms of award volume and dollars in any given year to date. This was fueled in part by the record number of tips it received – more than 52,000. This follows a significant decline in reporting to organizations’ internal reporting systems in 2020, likely due in part to the pandemic. Furthermore, an early data analysis of 2021 data indicates that the internal reporting volume, while higher, has not yet returned to pre-pandemic reporting levels.
The potential for misconduct is unlikely to have diminished, especially as evidenced by the record’s SEC reporting. So, don’t employees report incidents? Or do they go straight to external reporting capabilities? Neither is good for organizations that want to make sure employees feel comfortable speaking internally.
There are two common reasons employees decide not to report misconduct. First, they may fear retaliation from the leadership team and/or the people they report to. Second, they may also feel that their reporting efforts are yielding nothing.
While there are incentives for employees to raise concerns and complaints, including financial ones such as the SEC Whistleblower program, there are steps compliance leaders and other business leaders can take to build trust in their internal reporting systems so they can be proactive. address problems before they escalate them further.
While some organizations may think that fewer reports mean fewer incidents, this is no less true. In fact, more reports show that employees feel comfortable speaking up – a sign of a great company culture and strong compliance program. Furthermore, a proactive strategy that encourages employees to voice their opinion can prevent incidents from becoming headlines — a situation no organization wants.
Therefore, here are three ways organizations can encourage employees to become comfortable with reporting systems and protocols, while also addressing the fear of retaliation or inaction.
Train managers in receiving and managing reports correctly.
Every organization should receive employee reports, even if they seem mundane at first glance. In fact, leaders can learn the most about their business and organizational culture from incidents that appear less serious.
The first step to normalizing a speaking culture is to ensure that all managers understand the importance of reporting processes and, most importantly, how to respond to issues presented to them. Most employees are told to “talk to their manager” during times of concern, but many managers don’t know how to receive reports, manage the next steps to take action, and avoid retaliation.
For this reason, it is critical for organizations to provide thorough and recurring compliance training that highlights how managers at all levels, but perhaps most importantly first-line supervisors, can best receive internal reporting, how to identify risk areas and why internal reporting of questions or possible misconduct is essential to business success. Employees are less likely to invest in business growth if they feel uncomfortable raising their questions or concerns.
Create transparency around the reporting process.
For many employees, reporting an incident or difficult situation to managers and senior colleagues can be a daunting task. Organizational transparency about how the reporting and investigation process works, as well as the types of information the organization will provide at the end of the investigation, will help employees make an informed decision about reporting.
In particular, review the process in onboarding training and in recurring organization-wide training sessions — and thoroughly outline what happens when reports are submitted, the expected timeline for action, and what is classified as a criminal offence. Also make sure that this information is available on all web reporting sites. This level of transparency shows employees that organizations take internal reporting protocols seriously and that there is an efficient, authentic system.
Show the success of the reporting program in action.
Just having a reporting program is not enough. Leading organizations are building a culture of compliance that is stronger than SEC reporting. This is done by demonstrating program success, whether in delivering on promised actions, or at a higher level, by demonstrating how a strong compliance program has led to better business results.
When employees feel heard, understood and valued, they show more pride in their work and provide more value to the organization. In addition, having a successful business depends on having a healthy compliance program – and vice versa. Neither can be independent of the other.
Successful internal reporting programs must be thorough, authentic and consistent. This is achieved through effective leadership training, system transparency, and most importantly, action. Fostering a culture of speaking that encourages internal reporting will help employees understand that a healthy workplace is paramount to the business, and is the foundation of a strong business.
The opinions expressed here by Inc.com columnists are their own, not Inc.com’s.
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