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Findings from NAVEX’s Annual Study

NAVEX Global recently released the annual Hotline and Incident Management Report, a key tool compliance practitioners can use to benchmark and evaluate the performance of the company’s reporting hotline. Michael Volkov provides an overview of the findings, discussing trends and assumptions.

Employee hotlines are – sorry about this – a “hot” topic these days in compliance.

NAVEX Global’s recent study confirmed the importance of an effective hotline system. Companies that implement robust and widely used internal reporting systems are more effective in identifying and responding to potential problems. Such an impact improves overall business performance as measured by return on assets, fewer material lawsuits, lower litigation costs and fewer external whistleblower reports.

Companies should use this correlation in performance and implement a robust hotline assessment program. Such an assessment should be based on regular analysis of hotline data. A company has to conduct such an assessment to ensure that the company: promotes a culture that supports employees who raise concerns, effectively communicates with employees to encourage such reporting and promptly and effectively investigates employee concerns.

NAVEX Global’s Annual Hotline and Incident Management Report is a valuable resource when assessing a company’s hotline system.

Over the last few years, overall employee reporting volumes have increased. From 2010 to 2017, the rate of employee reporting has increased when all forms of reporting (e.g., hotline, walk-ins) are calculated – a 56 percent increase, from a median report of 0.9 reports per 100 employees in 2010 to a median of 1.4 reports per 100 employees in 2017.

Interestingly, the substantiation rate for reported cases increased by 10 percent, from 40 percent in 2016 to 44 percent in 2017, reaching the highest level recorded by NAVEX Global. The highest increase in substantiation rates occurred with respect to human resources, diversity and workplace respect issues – from 38 to 44 percent.

In general, companies are receiving more employee reports and higher quality complaints, resulting in higher overall substantiation rates.

Employee reports received from sources other than a hotline had a significantly higher substantiation rate – 64 percent overall. This result suggests that managers have improved their ability to receive and respond to employee concerns.

The number of internal reports of retaliation against employees raising concerns dropped, but the substantiation rate increased significantly, from 26 percent to 32 percent. Companies need to remain vigilant in rooting out and preventing potential retaliation or harassment against employees who raise concerns.

The time to close investigations of concerns increased from an average of 42 days to 44 days. The number of anonymous reports continued to decline, however; in 2017, 56 percent of employee reports were anonymous (down from a peak rate in 2009 of 65 percent*). Such a decline reflects increased employee trust in the reporting system.

The number of HR-related cases reported stayed steady in 2017 at 72 percent. This reflects the general assumption that seven in 10 employee reports are about HR issues. With the increase in awareness over sexual harassment and assault, the number of reported cases was expected to increase. Such an increase occurred in the fourth quarter of 2017.

*Editor’s note


This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.


Michael Volkov

Michael Volkov

Michael-Volkov-leclairryanMichael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services.  He can be reached at [email protected].  His practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters. He is a former federal prosecutor with almost 30 years of experience in a variety of government positions and private practice.

Michael maintains a well-known blog: Corruption Crime & Compliance which is frequently cited by anti-corruption professionals and professionals in the compliance industry.Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues.

Michael has assisted clients with design and implementation of compliance programs to reduce risk and respond to global and US enforcement programs.

Michael has built a strong reputation for his practical and comprehensive compliance strategies.Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for 5 years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice.

Michael also has extensive trial experience and has been lead attorney in more than 75 jury trials, including some lasting more than six months. His clients have included corporations, officers, directors and professionals in, internal investigations and criminal and civil trials. He has handled a number of high-profile criminal cases involving a wide‐range of issues, including the FCPA and compliance matters, environmental crimes, and antitrust cartel investigations in countries all around the world.

Representative Engagements

  • Successfully represented three officers of a multinational company in two separate criminal antitrust investigations involving a criminal antitrust investigation in the District of Columbia and the Southern District of New York.
  • Defended pharmaceutical company before the Food and Drug Administration and Senate Finance Committee relating to application for approval of generic drug.
  • Conducted internal investigation which exonerated company against allegations of false statements in submissions to the FDA and against improper conduct alleged by Senate Finance Committee.
  • Represented company before the US State Department on alleged violations of ITAR which lead to voluntary disclosure and imposition of no civil or criminal penalties.
  • Advised several multinational companies on compliance with anti‐corruption laws, and design and implementation of anti‐corruption and anti‐money laundering compliance programs.
  • Advised hospitals, pharmaceutical companies and medical device companies on compliance issues relating to Stark law and Anti‐Kickback law and regulations.
  • Conducted due diligence investigations for large multinational companies for anti‐corruption compliance of: potential third party agents, joint venture partners and acquisition targets in Europe, Africa, Asia and Latin America.
  • Represented individual in white collar fraud case in Alexandria, Virginia and secured dismissal of criminal charges and expungement of criminal record.
  • Represented company before Congress and Executive Branch in effort to modify Justice Department regulations concerning use of federal funds.
  • Advised and assisted World Bank in review of global corruption policies, enforcement programs and corruption investigations and prosecutions.

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