EQS Group has, in conjunction with the University of Applied Sciences HTW Chur, developed the first comprehensive scientific study on the use of whistleblower systems in Swiss companies*. We surveyed 364 national and international companies to collect data on the distribution, technical and organizational design, and effectiveness of whistleblowing hotlines.
Results of the Study
1. Reporting Capabilities Are Standard in Large Companies
Whistleblower contact points are an integral part of risk prevention for companies with more than 249 employees. More than 70% of companies of this size segment already rely on internal or external reporting offices. Moreover, more than half of large companies are equipped to receive anonymous feedback.
For small and medium-sized enterprises (SMEs), hotlines are currently still an exception: to date, only 10% have established whistleblower systems. Instead, more than half of SMEs surveyed rely on clear leadership signals to inform employees that unethical and illegal behavior is unacceptable.
Actions of risk prevention by company size
2. Whistleblower Systems Are an Effective Tool in Combatting Compliance Violations
Reports transmitted via internal or external whistleblower systems are vital in uncovering illegal and unethical behavior. The Whistleblowing Report 2018 shows that every second tip received by companies last year contained relevant and meaningful information about compliance issues. Early knowledge about misconduct and compliance violations helps companies to fix them before they become public. As a result, whistleblowing systems are an important means of protecting the invaluable reputation of a company.
3. The Number of Messages Is Manageable
The Whistleblowing Report 2018 shows that companies need not fear an overwhelming flood of reports. On average, respondents from small and medium-sized enterprises received less than one notification per year. But it is also the case that the number of reports increases as staff size grows. Companies with more than 249 employees receive an average of 54 reports per year.
Number of reports at whistleblowing systems by company size
However, the number of reports depends not only on the size of the company, but also on a variety of other factors. A company whistleblower system accessible to non-company stakeholders (such as suppliers, customers, or the general public) can affect the frequency of reporting. In addition, the nature of the offered reporting channel plays a significant role, for example. Reporting systems such as apps, hotlines or web-based whistleblower systems (for example our whistleblowing solution) raise reports’ confidence in the communication path and at the same time facilitate contact actually occurring. Potential whistleblowers therefore prefer to report compliance violations via these reporting channels rather than through personal visits, letters / emails or telephone calls.
4. Anonymity Does Not Increase the Risk of Abuse
For fear of abuse, many companies are afraid of introducing anonymous reporting channels. However, the results of the study show that the number of anonymous reporting does not increase system abuse. The evidence suggests that just 3% of reports prove to be intentionally false. In fact, the study shows that the existence of a web-based reporting system with anonymous contact channels, eliminates the whistleblowers’ fears of reprisals, which in turn increases the number of relevant reports.
Percentage of relevant and abusive reports
Use Findings from the Whistleblowing Report 2018
Based on the study, we offer important recommendations for the introduction of a whistleblowing communication channel:
- Offer different and specialized channels: the more means of streamlined communications (for example, hotlines, apps and web-based reporting systems) available, the greater the number of relevant reports result.
- Involve many stakeholders: offer non-company stakeholders (such as customers, suppliers or shareholders) the ability to report compliance violations.
- Providing anonymity: protecting potential whistleblowers against sanctions through anonymity creates trust and will increase the relevance of reports.
- Recognize the benefits of seemingly irrelevant messages: even feedback not directly related to compliance can help to improve the organization of the company.
- Communicate about your whistleblower systems: report on the successful detection and elimination of violations and non-compliance. This shows you take whistle-blowers seriously and creates trust. At the same time, transparency about risk management can prevent other employees from unethical and illegal behavior.
- Integrate reporting in compliance measures: don’t consider a whistleblower system as an isolated tool, but see it as part of a comprehensive compliance program.
Would you like to learn more? Read the Whistleblowing Report 2018 (in German).
A management summary of the report is available in English.
*Produced by Integrity Line GmbH, a part of the EQS Group since 2018.