NAVEX Global Incident Management Study Confirms Impact of COVID-19 on Employee Reporting

Michael Volkov
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The Volkov Law Group

NAVEX Global produces a number of important compliance program reports.  NAVEX Global always has played an important thought-leadership role in the ethics and compliance field.

NAVEX Global’s annual Incident Management Benchmark Report provides important data on employee engagement and reporting.  A copy of the Report can be downloaded here.

The Report is based on NAVEX Global’s massive incident reporting database connected to its hotline reporting system.  NAVEX Global’s database includes data from over 3000 organizations and 56 million employees worldwide.  The dataset is generated from organizations in a variety of industries.

The impact of COVID-19 and disruption to business operations was reflected in all of the measurements of employee reporting. Whether some of the unique changes will continue in 2021 is difficult to predict.  Employee reporting trends have to be considered in one other context – SEC whistleblowing reports set a record the past year in number of reports and the largest amount of total payouts. 

Interestingly, and in stark contrast to this important fact, employee internal reporting decreased for the first time in five years of NAVEX Global reporting. The median number of employee reports declined from 1.4 reports per 100 employees in 2019 to 1.3 reports per 100 employees in 2020.  Reporting levels have remained at this level even into 2021.

This result may be readily explained by the fact that the pandemic dispersed many employees to work-from-home arrangements.  With the reduction of day-to-day contact and observation, employees may have had reduced opportunity or motivation to report concerns.  On the other hand, given the stress created by the pandemic and working from home situations, some would expect more employees to report concerns. The month-by-month measurement of employee reporting revealed that in the first month of the pandemic, March 2020, employee reporting skyrocketed, while in the following two months, April and May 2020, employee reporting decreased to significant lows.

As everyone expected, employee reporting on environmental, health and safety (EHS) reporting increased as the pandemic shutdown kicked in – EHS reporting jumped from 10 percent of overall reports at the start of the year to 21 percent in March 2020.

Business integrity reports also rose in response to the COVID-19 pandemic, particularly potential fraud, waste and abuse.  As EHS report numbers decreased during the year, business integrity report numbers increased by 39 percent between July and September 2020.  A further analysis identified healthcare billing and coding as a key factor for this increase. 

Online reporting continues to grow over hotline reporting.  Online reporting reached a 48 percent median during 2020, while telephone reports fell to 31 percent.  NAVEX Global expects online reporting to represent a majority of employee reports.

Anonymous reporting continues to decline.  Over the last ten years, there has been a slow steady decline in anonymous reporting, declining to 58 percent.

There also was a decline in employee reporting of retaliation, harassment and discrimination reports.

The gap between an incident’s occurrence and the reporting of the incident increased from 16 days to 36 days, especially in accounting, auditing and financial reporting.

One bright point to highlight was the decrease in case closure time – the median time to close dropped from 45 to 39 days.  This is surprising given the difficulties to conduct investigation in the remote work environment.

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.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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