Seventh annual report also reveals a rise in internal reporting volume, and longer case closure times
PORTLAND, Ore. – Ethics and compliance software and services leader NAVEX Global® today announced the release of its 2015 Ethics and Compliance Hotline Benchmark Report. An analysis of sanitized data from reports made through NAVEX Global’s hotline and case management systems in 2014 revealed a number of trends, actionable insights and benchmarks ethics and compliance leaders can use to gauge the health of their programs and organizational culture. The data encompasses 2.2 million reports over the past five years—representing 32 million employees at more than 4,600 companies—the largest repository of ethics and compliance-related data in the world.
One of the most noteworthy findings relates to reports of retaliation. While there was no significant increase in employee reports of retaliation in 2014 (5,189 compared to 4,594 in 2013), the substantiation rate for those reports increased 125 percent over 2013 (from 12 percent in 2013 to 27 percent in 2014). This significant increase may be a sign that ethics and compliance program leaders are taking a more serious approach to managing and investigating allegations of retaliation. Given the focus that external regulatory bodies have stated they are placing on retaliation, this statistic bears watching.
“Retaliation is perhaps the one compliance violation most likely to do irreparable damage to a company’s culture and employee morale,” said Carrie Penman, chief compliance officer and senior vice president, Advisory Services, NAVEX Global. “Retaliation is personal and strikes at the heart of an employee’s well-being: job assignments, pay and their sense of ‘belonging’ in the workplace community. It stifles transparency, erodes trust in leadership, eliminates future reports and, at its worst, it drives the disenfranchised employee outside the organization and into the arms of regulators.”
The report also showed that the five-year trend of rising report volume is continuing, with a 44 percent increase in volume per 100 employees since 2010. This trend likely indicates ethics and compliance programs are continuing to mature, aided by additional awareness of whistleblower cases and protections.
Of concern is that case closure times also continue to climb—from a median of 36 days in 2013 to 39 days in 2014. “With longer closure times, organizations risk the loss of employee trust and confidence in leadership, and the threat of getting too close to the waiting period for reporting to external regulatory bodies,” says Penman. The increase may in part be due to the increase in volume year-over-year, without an apparent increase in the number of compliance professionals available to investigate these claims.
NAVEX Global categorizes all reports into five Report Allegation Categories. Of those, case closure time was highest for the Accounting, Auditing and Financial Reporting allegation type—and yet the substantiation rate for this type dropped by ten percentage points over last year, and below 50 percent for the first time in several years. At an average of 57 days for that particular category, organizations are reaching the halfway point to the 120 day opportunity for an employee to also report directly to the U.S. Securities and Exchange Commission.
A new statistic added to the 2015 NAVEX Global Ethics and Compliance Hotline Benchmark Report is an analysis of the intention behind an employee’s report—whether their report is an allegation of misconduct or an inquiry related to policy or company practices. Data from the past five years indicates employees are overwhelmingly using reporting channels for allegations. Employers can encourage greater use of channels to tap ethics and compliance information and guidance, and avoid missteps altogether.
To download NAVEX Global’s 2015 Ethics and Compliance Hotline Benchmark Report, please visit:www.navexglobal.com/2015HotlineBenchmarkReport.
About NAVEX Global
NAVEX Global's comprehensive suite of ethics and compliance software, content and services helps protect your people, reputation and bottom line. The trusted global expert to nearly 75 of the FORTUNE 100 and 8,000+ clients overall, our solutions are informed by the largest ethics and compliance community in the world.
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