If you find yourself thinking, “there are so many whistleblower stories in the news these days,” you’re not wrong. From historic awards being distributed from the U.S. Securities and Exchange Commission (SEC) to the EU Whistleblower Protection Directive, there is a continued focus on whistleblower protections and programs from regulators across the globe. Whistleblower reports have uncovered incredible amounts of fraud and unethical conduct, and in many cases, resulted in huge shifts in company culture and business practices.
After the EU Whistleblowing Protection Directive was introduced on December 21, 2021, EU member states and institutions have been transposing the Directive into their respective national laws. The main goal of this Directive is to bolster protective measures across EU countries for individuals who want to report breaches of EU regulations or unethical behavior in the workplace. And while the EU Directive may not apply to many organizations, the core tenets serve as best practices for organizations to comply with.
So, let’s begin with some of the best practices mandated by the Directive and then apply them to general best practices for internal reporting programs and how this all leads to a more positive whistleblower experience.
EU Whistleblower Protection Directive best practices
What best practices will companies need to adhere to? As with many regulations, the EU is leading the way by expanding whistleblower protections and requiring member states to transpose them into national law. The key requirements outlined in the Directive encompass the following:
- Establishment of secure and easily accessible reporting channels.
- Ensuring employees are informed about how, when, and where to report misconduct, with a dedicated whistleblowing policy made publicly available. In the case of digital platforms, information can be incorporated directly into the whistleblowing system upon user login.
- Safeguarding the confidentiality of whistleblowers and individuals involved in reported incidents. The Directive mandates the whistleblower's identity should not be disclosed to anyone beyond those directly involved in handling the report, unless such disclosure is deemed necessary and proportionate during the investigation process.
- Compliance with specified timelines, including acknowledging receipt of reports within seven days and providing feedback to the whistleblower.
- Providing updates on the progress of investigations within three months of the initial report.
- Implementing measures to protect whistleblowers from dismissal, demotion, or any other form of workplace retaliation.
- Maintaining records of reports for no longer than required to comply with GDPR data retention regulations.
Recommended reading: Embracing the Whistleblower - 3 Ways Your Business Can Encourage Internal Reporting
7 benefits of a whistleblowing system
In the modern corporate landscape, establishing a whistleblower hotline offers many advantages. A whistleblower hotline provides employees, contractors, suppliers, and supply chain partners with a confidential avenue to report unethical behavior, thus fostering a culture of transparency and accountability.
1. Giving a voice to stakeholders
In any organization, individuals who witness or experience unethical practices must have an easily accessible and secure channel for reporting such behavior. A whistleblower hotline where reporters can easily raise an issue, either named or anonymously, eliminates the barriers often hindering individuals from reporting misconduct. Employees, vendors, suppliers, and contractors can freely express their concerns, ensuring unethical behavior is brought to light and subsequently investigated. Failure to provide such a channel may lead stakeholders to seek alternative (external) avenues for reporting, which can harm an organization's reputation and financial stability.
2. Fostering a speak-up culture
Bullying, harassment, and other forms of misconduct should never be tolerated. However, employees may hesitate to report such behavior if they fear retaliation. Failing to address these issues undermines the organizational culture, making employees feel unsafe and uncomfortable. It can also hinder productivity and morale, ultimately impacting the bottom line.
Implementing a reporting hotline, especially one that allows for anonymous reporting, helps ensure employees feel secure when reporting misconduct. When employees see their organization takes unethical conduct seriously, they are more likely to come forward with their concerns. Over time, this cultivates a speak-up culture where individuals feel safe voicing their concerns and trust the company to do the right thing.
3. Demonstrating zero tolerance for misconduct
One reason many employees refrain from reporting unethical behavior is the belief no action will be taken. The presence of an effective reporting system, coupled with prompt action against misconduct, encourages more individuals to report wrongdoing. Without such a system, employees witnessing violations may not know where to turn, potentially allowing misconduct to escalate into a corporate scandal.
A whistleblower hotline allows organizations to identify and address unethical practices early, preventing significant financial and reputational damage.
4. Ensuring anonymity
Raising concerns about unethical behavior can be a daunting task. Many employees may hesitate to report what they witnessed for fear of repercussions. For those who wish to remain anonymous, having this option can put employees at ease knowing their identity will remain protected. This encourages them to voice their concerns, knowing they won't face blame or retaliation.
Guaranteeing anonymity through a secure whistleblower hotline promotes a reporting culture and allows organizations to acknowledge and initiate vital conversations with those who come forward.
5. Preventing fraud
Fraudulent activities can occur in any organization, and identifying them, especially when committed by those in positions of authority, can be challenging. Anonymous whistleblowing mechanisms make it easier for reluctant witnesses to disclose misconduct, as they are protected by privacy. And to go even further, ensuring an effective internal reporting and investigation mechanism is in place will instill trust in the system that reports will be properly addressed, perpetuating a system that encourages reports and demonstrates zero-tolerance for unethical behavior.
6. Promoting cost-effectiveness
Internally operated ethics reporting mechanisms have substantial infrastructure, staffing, and reporting tool costs. Because an internally-run reporting mechanism is staffed by employees of the company, this could make employees wary of using internal hotlines due to privacy concerns.
In contrast, by implementing a third-party hotline, companies can significantly reduce these costs and maximize efficiency while also boosting employee confidence that their reports will be received by a neutral party. In reality, most organizations lack the resources to support an internally run hotline, so partnering with a trusted provider allows for more consistent results and a more cost-effective option.
7. Shielding business from unwanted media attention
If unethical conduct goes unaddressed, employees may resort to social media and other public platforms to voice their grievances absent a secure avenue for reporting concerns. In the age of rapid information dissemination, such issues can quickly escalate into public relations nightmares.
A trusted reporting mechanism allows employees to confidentially submit their concerns, stay informed during the investigation, and promptly address their issues. By addressing ethical concerns early, organizations can protect their reputation and attractiveness to future employees, customers, stakeholders, and investors.
Implementing a whistleblower hotline not only empowers employees, contractors, suppliers, and supply chain partners, it also safeguards your organization from the damaging consequences of unethical behavior. It fosters a culture of transparency, demonstrates a commitment to ethics, and ultimately contributes to the long-term success and sustainability of your business.
To learn about how NAVEX whistleblowing solutions can aid your business:
