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Why is employee hotline that important?

· Compliance

Why is employee hotline that important?

Some companies may be proud of their small number of employee hotline cases. Some other companies may be hesitant to disclose such number. Both are unhealthy. What they should do is, with a healthy number of cases, to fine-tune their process.

As described in my previous article of “How to change your corporate DNA,” the median of hotline cases per year per 100 employees is 1.4. If your number is less than 0.3, your company is outside the middle 80% of the bell curve. That means you are not able to listen to your employees when the potential problem is still small. You will not realize until the problem gets big. No matter how good your compliance training may be, small compliance miss is inevitable. If you try to diminish that likelihood totally, you will have to close the business. What you have to do is to identify the issue as early as possible when it is small. If you can do so, you can change the process so that you can achieve the business goal with integrity.

Many compliance misses are not just a single isolated incident that happened all of a sudden, but a result of a series of events taking place for an extended period gradually worsening. At an early stage of such series of incidents, some irregularities may take place, often in a location (e.g., South America or the Middle East) far away from the headquarters (e.g., Tokyo). One who may be witnessing such irregularities is in such a remote site. The witness is neither a compliance person nor a director participating in Board Meetings on the executive floor of the headquarter. There is a moment where such a witness on a remote site sees something irregular and think “this does not seem right.” That moment is the first chance for the company to identify and fix a potential problem. Grab this opportunity. This is the best prescription to cure the problem when it is so small that you would use a Band-Aid, rather than going through a major operation.

Examples

Having said that, let us take a look at the data of those who experienced a big compliance miss. Not many companies disclose this hotline data.

Let us start with Toshiba. According to Toshiba’s CSR Report for 2018 (http://www.toshiba.co.jp/csr/en/report/download.htm), the number of concern reporting in 2017 is 286 (p154). The number of employees (consolidated) is 141,256 (p5). Thus, the number of reports per year per 100 employees is 0.2. This is not just below the median of 1.4, but also below 0.3.

How about Nissan? In July 2018, Nissan released its SUSTAINABILITY REPORT 2018. According to this report, the number of reports in 2017 is 1,022 (p233). The number of employees (consolidated) is 138,910 (p241). Thus, the number of reports per year per 100 employees is 0.73. While this number is around half of the median, the number is still within the mid 80%. They are listening to employees voice to some extent.

Let us take a look at Volkswagen. According to their Group Sustainability Report 2014, they had 140 reporting, and the number of employees is 592,586. Thus, VW’s number is 0.023. (See http://sustainabilityreport2014.volkswagenag.com/sites/default/files/pdf/en/Volkswagen_SustainabilityReport_2014.pdf) 

How about GE? They received 4,440 “integrity concerns” in 2017 (https://www.ge.com/sustainability/integrity). The number of employees in 2017 seems to be 313,000 (https://www.statista.com/statistics/220718/number-of-employees-at-general-electric/).

Thus, the number is 1.41, almost the median. For your information, GE discloses more detailed data.

[For GE's updated data in 2019, click here.]

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