What is an Ethics Hotline?

4 Min Read
Remi Silva
May 21, 2021

Whether your company is a startup or publicly traded, an ethics hotline should be in consideration. We recently did a study on workplace wrongdoing and found that 26.5% of employees have witnessed workplace wrongdoing but haven’t reported it, and the primary reason they didn’t report it was because they feared retaliation. In a followup study, we found that 74% of employees would be more inclined to share feedback if it’s truly anonymous. To bridge this gap, utilizing an anonymous ethics hotline will help employees feel safe to report illegal, unethical, and/or improper conduct, and ultimately help your organization uncover and address underlying issues. Before we get into how to implement an ethics hotline, let’s first get into what exactly is an ethics hotline.


What is an ethics hotline?

An ethics hotline, also known as a compliance hotline, is an anonymous reporting tool that allows employees to report and  possibly uncover illegal, unethical, and/or improper conduct. This communication is used when standard channels have been proven to be ineffective or impractical given the circumstances. For example, if the employee that has witnessed or been a victim of these actions does not feel comfortable directly reporting this information to human resources (HR) or leadership, then an anonymous, ethics hotline is the communication channel that will be used. 


How do ethics hotlines work?

When an employee believes to have witnessed or experienced possibly illegal, unethical, and/or improper conduct, they should be able to report it through an ethics hotline. The ethics hotline typically is a third-party provider so there are no conflicts of inflicts with the company receiving the report. In addition, the ethics hotline provider should allow for anonymous reporting so the employee feels safe to speak up and remove the possibility of retaliation.

After the report is submitted, the third-party provider will send along the report to the appropriate department and/or manager. The department and/or manager receiving the report should be able to follow up with the anonymous reporter by having an encrypted messaging system so the reporter remains anonymous while the company can follow up with any additional questions to investigate the report. 


Are ethics hotlines effective?

If your goal is to empower employees to root out cultural issues at companies, then yes, ethics hotlines can be effective. Human resources, legal, and company leadership aren’t always in tune with what’s going on culturally at the company, and getting direct feedback from employees allows the company to make the employees feel like they’re heard, start finding trends of underlying issues, root out issues before they become company-wide issues, and establish a culture of feedback.

  • Find and Address Underlying Issues - We found that 26.5% of employees have witnessed workplace wrongdoing but haven’t reported it. Of those employees, 28% feared retaliation, 26% didn’t know if the issue was big enough to report, and 24% didn’t think it was their place. Ultimately, this means that their employers were unaware of underlying issues happening at their company, and this results in setbacks of their company’s business goals. By making it clear to employees that you care about their feedback and want to actively address underlying issues, it signals to the employees that the feedback is welcomed and you should an increase in reports. In addition, by working with a third-party vendor, it provides additional assurance to the employee that this feedback is truly anonymous.

  • Make Employees Feel Heard - Employers want feedback, and employees want to provide feedback. Where’s the disconnect? Our research has found that 36% of employees said their company doesn’t have a feedback program or aren’t aware of one. In addition, only 38% of employees believe that feedback will lead to change at the company, and 41% of employees have left a job because they didn’t feel heard.

    Ultimately, the way to address this issue is by making it clear to employees that you want their feedback, that their feedback will be acted on, and that the feedback will be anonymous.

  • Establish A Culture of Feedback - By successfully implementing an ethics and compliance hotline, and making it clear to employees that their feedback is wanted, you’ll create a culture of feedback at companies. By receiving steady feedback, acting on that feedback, announcing changes based on that feedback, and asking for more feedback, your employees will truly feel that they’re making a difference in shaping company culture and slowly establish a culture of feedback at your organization. In addition, this culture of feedback could potentially act as a deterrent to potential perpetrators as they’ll likely be aware that their misconduct will be reported. 


How do I choose an ethics hotline vendor?

Given that trust, anonymity, and availability are the key variables for determining if a whistleblower comes forward with a report, an ethics and compliance hotline should be available to employees 24 hours a day, seven days a week, and run by an independent, third-party vendor. Let’s go through each element:

  • 24/7 Availability - if an ethics and compliance hotline was only available during certain times of the day, the likelihood of a person reporting will likely decrease as employees will assume that the hotline is closely being monitored, the report can be traced back to an individual based on the time of the report and the time the employee wasn’t actively working, and ultimately it makes it inconvenient for the reporter as they would have to schedule out time to submit a report.

    The ethics and compliance hotline should be cloud-based and available to employees on any browser, device, and location at any time. By making the hotline as comfortable and easy-to-use as possible for the witness and bystander, you should see an increase in reports compared to an open-door policy where the report is not anonymous.

  • Independent, Third-Party Vendor - up to 80% of employees don’t trust their company’s human resources department. If trust is a key variable in determining if a witness or bystander submits an ethics report, then the likelihood of a person submitting a report to human resources is very low if most people don’t trust their human resources department. By introducing an independent, third party vendor, employees are much more likely to report an issue as they’ll feel safe knowing that their report is not directly being sent to human resources. In addition, 74% of employees said they would be more inclined to share feedback if it was truly anonymous. Ultimately, by taking human resources out of the reporting equation, there is likely to be an increase in the number of ethics and compliance reports being submitted.


In addition, the ethics and compliance hotline should have dashboards and reports readily available. Over time, you should start seeing trends, such as common issues in certain departments, and be able to address underlying issues before they start becoming company-wide issues and impact your company’s business goals. Moreover, these underlying issues can fester into public relations fiascos. Experts estimate that 63% of a company’s market value is tied to its overall reputation, and by not addressing these issues before they become public, your company’s valuation can drop. Notably, WeWork’s valuation fell by $39 billion after the controversy with its founder, Adam Neumann.

Along with the elements above, other considerations to include when choosing an ethics hotline vendor are:

  • Security - the data that you receive from employees is confidential and should remain safe. The ethics hotline vendor you move forward with should have stringent data management practices, and ideally be SOC2 and SOX compliant. This will help your employees feel safer using this vendor as it’s guaranteed that their reports will remain anonymous, as well as protect against any data leaks or hacks.

  • Multilingual Reporting - Spanish is the second most spoken language in the United States, which means that there are a lot of employees that primarily speak Spanish. These employees will encounter illegal, unethical, and/or improper conduct, and the ethics hotline vendor should allow for employees to submit reports in any language. 


Next Steps On Choosing An Ethics Hotline Vendor

Picking the right ethics hotline vendor is a key decision as it impacts the amount of feedback you’ll receive and create a culture of feedback. The right vendor should not only provide a tool to allow employees to submit feedback, but also partner with you to help uncover issues and help shape the culture of feedback you’re trying to establish. 

AllVoices’ ethics hotline is an anonymous reporting platform that is modern and user-friendly. Our platform is simple to configure and a cost-effective solution that will help your company receive employee feedback and help create psychological safety in the workplace. 

Schedule a demo with us today as we’d love to show you how our product works and how it can address your ethics hotline vendor needs.

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