red phones hanging by their cords

Bells & Whistles: Whistleblowing Portal or Corporate Hotline?

In this second installment in a series on whistleblowing solutions VinciWorks’ Sandra Erez envisions corporate whistleblowing hotlines as an outgrowth of the infamous “red phone” from the era of the Cuban missile crisis and discusses how whistleblowing methods have evolved over the years.

Read Part 1 here.

It is October 1962, and the winds of war have unearthed Soviet missiles planted in the unyielding Cuban soil. With their snub noses pointing superciliously towards the U.S. mainland, the recalcitrant warheads taunted the Kennedy administration, threatening to heat the Cold War up until it burned out of control.

With no other recourse, John F. Kennedy dances Khrushchev into the diplomatic boxing ring in an effort to sidestep a full-out nuclear war. Unfortunately, although neither of the two men wanted to step on each other’s toes, the flow of encrypted messages relayed by telegraph or radio between the Pentagon and the Kremlin progressed like a child’s game of musical chairs – the stilted, halting musical accompaniment almost leading to a “dancing of the stars” mega disaster.

As a direct result of the Cuban missile crisis, and fearing more awkward foxtrots, the White House installs the very first hotline to “help reduce the risk of war occurring by accident or miscalculation.” Launching the first direct communication link with the message, “the quick brown fox jumps over the lazy dog” it seems that ironically, the administration unconsciously summed up the sad state of affairs.

Pulsating its way into popular culture, the infamous red phone pops into American households in the form of the “Bat Phone” – a futuristic call-to-action device that nips evil in the bud. Used by the commissioner to reach the dynamic duo in their cave or batmobile, this 1966 device surprisingly still rings true by today’s hotline standards: 1) it is answered outside of working hours, 2) the number is only given to selected persons and 3) it rings straight through to the relevant person without any time delay.

Life continued to imitate art with hotlines growing in popularity as a way of dealing with life’s many jokers. Starting out as grassroots organizations manned by do-gooders, hotlines slowly evolved over the following decades to become part of the establishment – more professional and less on the fringe. In the 1980s, the hotline even snakes its way into the corporate basket of accepted mechanisms to report fraud and other wrongdoings.

However, it was not until the Sarbanes-Oxley Act (SOX) was enacted in 2002 that the hotline started changing its tune from a low-pitched ring to a high-pitched whistle. In the aftermath of Enron-like scandals exploding and dotcom bubbles bursting in air, this piece of legislation mandated that public companies set procedures for anonymous reporting, consequently firing up corporate interest in the cost-efficient hotline solution. In 2010, following the subprime mortgage crisis and related financial meltdown of 2007 and 2008, the Dodd-Frank Act was passed, further motivating employees to blow the whistle on suspected fraud and misconduct. The legislation’s promise of monetary compensation together with legal support incentivized whistleblowers to come forward and prompted employees to open their mouth in the hope of filling their pockets.

By this time, although the U.S. Federal Sentencing Guidelines deemed hotlines as a good business practice to identify and render wrongdoings, many individuals were hesitant to parachute into the no man’s land of manned hotlines, not knowing whether they or their message will end up in enemy territory. It’s hard to fight the deeply ingrained messages against being a “tattletale,” and the act of calling a hotline requires sparks of courage that will be easily extinguished if 1) there is a lack of trust in the organization’s handling of the complaint – such as the threat of retaliation or failure to act, 2) the management exudes ethical indifference by holding to different standards and 3) inadequate resources and poor product design lead to callers getting answering machines, being put on hold or other strange encounters of the third kind. This lack of transparency, combined with inconsistent and unfair outcomes over time, will eventually lead employees to chill out rather than dial in.

However, as Bob Dylan once said, “the times they are a-changin’”… and that applies to whistleblowing methods as well, where technology has evolved to include other ways to get the word out. According to the Association of Certified Fraud Examiners’ 2016 report, almost 40 percent of identified fraud emanated from hotline tips, while the combined rates of email reporting (34.1 percent) and web-based reporting (23.5 percent) show that the internet has outdistanced the phone lines in the race to deliver the goods. So do we slay the messenger? Absolutely not. We ring out the old and ring in the new and go with a whistleblowing portal.

A secure and confidential reporting system, the whistleblowing portal is a software solution that acts as an early warning system and internal control for any behavior that is unethical, illegal or unfair. However, as opposed to the hotline, a robust whistleblowing portal solution provides the tools to not only capture phone or hotline calls, but also emails, walk-ins, text messages and manager submissions while keeping tabs on the incidents until their resolution.

Furthermore, if we take into account that an ethics and compliance tool is only as good as the employee’s perception of it, it is critical to note that the whistleblower portal solution can diminish some of the barriers to use that are common to hotlines. For example, by giving the employee a choice of preferred communication medium (instead of just vocal), they will be able to air their grievance in a way that better fits their personality or way of expressing themselves.

Lack of trust in the black hole where the hotline complaints reside can be mitigated by configuring specific portal access across a diverse organizational population or departments, ensuring transparency and preventing the fallout that occurs when the fire chief is also the arsonist. Other built-in checks and balances, such as notifications and red flags, can assure complainants that nothing gets lost in space or runs out of oxygen while the whistle is still blowing.

Acting as a centralized incident management system, the whistleblowing portal opens a window of opportunity for stakeholders to monitor behavior flying under the corporate radar. With employee reporting at an all-time high and whistleblowing here to stay, it would be wise to take into account statistics from Navex’s 2018 Hotline & Incident Management Benchmark Report, which indicated that multi-channel reporting captured 58 percent more reports than organizations utilizing only web and hotline channels. Conclusively, with the capability of analysis across the wide swath of organizational happenings, it is evident that companies using only hotlines will lack the critical data to spot hidden risks and smouldering trends before they ignite and blow up in somebody’s important and potentially surprised face.

However, if there is anything to be learned from the Cuban missile crisis that can be applied to the current whistleblowing culture, it is that open lines of communication and fact-checking controls are critical to fair conflict resolution in any situation. With little or no input from foreign policy people and no real plan in place, a series of  assumptions, miscalculations and miscommunications between President Kennedy and Premier Krushchev brought the world perilously close to a thermonuclear war.

Stumbling around in the darkened ballroom with half-truths and no contingency, the dynamic duo were not able to dance as if no one was watching; the entire world was watching, holding their breath – one misstep and all would be kaput. In the end, the red phone hotline that saved the world from disaster has matured into an adolescent whistleblowing portal whose job is to be the guardian of a free and democratic society – and ultimately a deliverer of justice. Let it ring, loud and clear.

Sandra Erez

Sandra Erez is Director of U.S. Compliance at VinciWorks, a leading provider of online compliance training and risk management software. VinciWorks provides an award-nominated online sexual harassment course, MyStory. The course directly applies the lessons of #MeToo to the corporate world. If you have any questions about compliance with U.S. sexual harassment regulations, you can contact Sandra directly at [email protected].

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