10 Tips for Encouraging Internal Misconduct Reporting


While many employers may feel uncomfortable in the face of headlines touting significant whistleblower payouts under provisions of the Dodd-Frank Act of 2010, the False Claims Act (FCA) and other federal laws, studies show that most whistleblowers attempt to first report their concerns internally before approaching the federal government.

Organizations that put procedures in place to facilitate reporting employee concerns about federal violations stand a much better chance of avoiding legal troubles and a variety of other negative consequences stemming from a federal inquiry.

A study by the nonprofit Ethics Resource Center found that 84% of whistleblowers filing reports of compliance violations outside their company first attempted to report their concerns internally. Only after hitting roadblocks in the internal process or becoming dissatisfied with the outcome did employees push the issue by reporting their concerns to government officials.

On the other hand, where procedures were in place for fair decision making and the company treated employees and their concerns with respect, employees were much more likely to be satisfied no matter what the outcome of their complaint.

Employees are well positioned in the workplace to understand the attitudes of their peers and management with respect to ethical issues and most likely to know if rules are being broken. By instilling confidence in the complaint resolution process, employees are more likely to share their concerns and enable management to effectively address issues and prevent additional problems.

Fostering employee input also benefits employers by revealing workplace deficiencies early which enables an organization to address problems before they can spread throughout the entire system. Additionally, fair complaint processes and procedures can enhance employee morale and loyalty to the company by demonstrating a commitment to an ethical workplace, as well as providing a stronger defense to outside challenges or legal inquiries.

Employers can reap the benefits of an effective ethics and compliance training program and fair and transparent internal reporting process by implementing these 10 measures:

  1. Train employees. Provide training on reporting and compliance programs to ensure employees understand the company's commitment to compliance and how issues are reported, handled and resolved.
  2. Humanize the process. Data shows most employees prefer to report wrongdoing directly to somebody they know rather than to a hotline. Appoint someone approachable, accessible and trustworthy to whom complaints should be reported.
  3. Implement an open-door policy. Encourage healthy discourse by fostering an environment in which employees feel free to discuss issues with management at any time.
  4. Provide an anonymous comment box. For those who feel uncomfortable raising issues involving possible illegal or immoral acts for fear of embarrassment or retaliation, provide a form, inbox or hotline for anonymous tips.
  5. Select a well-trained and neutral investigator. Ensure those charged with investigating complaints are trained on the appropriate laws and resolution methods to bolster confidence in the process.
  6. Be transparent with procedures. Use clear and simple terms to explain the process and reassure employees that retaliation for good-faith reporting is prohibited.
  7. Keep everyone informed. Share as much as possible about the process and results with the reporting employee, the accused and any witnesses interviewed.
  8. Show employees their comments are heard. Make small improvements or other efforts to show the company acts upon suggestions and values employee input. Employees who believe their voices are heard are more likely to continue providing information.
  9. Reward people for speaking up. Provide incentives — such as bonuses or letters of recognition — to encourage internal reporting.
  10. Provide a good example. Employees are less likely to report concerns to an organization with an unethical culture.

Successful complaint and resolution programs work best in an ethical environment where reporting misconduct is seen as a normal part of the job. Fostering an ethical culture requires proper leadership to ensure employees are aware of the organization's commitment to compliance.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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