Improving ethics reporting by establishing internal direct reporting
ESG metric: Any ethics related metrics
Ease of implementation: Easy
Suitable for: All businesses
Suggested functional lead: HR team, Leadership team
Summary
Internal direct reporting allows employees to report on ethical issues within the workforce directly to a manager or leadership team. To implement internal reporting, you must set up a simple and confidential reporting channel, such as Google Form. Your company Code of Conduct must be readily accessible to all so everyone is aware of how to conduct themselves at work. This allows for little interpretation of non-ethical behaviour and will make it easier to spot unethical situations that require reporting. For internal reporting to be affective, all teams must work to actively encourage employees to speak up. The reporting system must also establish an effective response system so employees feel heard and understood. In cases of ethics reporting, the employees reporting a situation may be concerned about financial or phycological consequences. Reassure employees this is not the case and protect them from potential retaliation.
Background Information
Internal direct reporting refers to complaints made directly to a line manager or via an online portal. The reports can be anonymous where allowed by local law. The complaints are then reported to HR or a compliance officer, and can be escalated to the legal department and Chief Risk Officer if necessary. It is crucial that employees feel safe to speak up and know they will be protected for retaliation. According to a study at the Institute of Business Ethics, a shocking 43% of 10,000 employee surveyed experienced retaliation as a result of reporting ethical misconduct. Confidentiality is therefore vital to ensure employee protection against retaliation when reporting internally.
Implementation Steps
Set up a confidential reporting channel
Provide a reliable and accessible channel to report misconduct, guaranteeing anonymity and confidentiality. This can be a simple Google Form including questions such as:
What do you wish to report?
Where did it take place?
When did it take place?
How did it take place?
Option to add documents
Clearly outline your code of conduct
It is important all employees have clear access to guidelines of how to behave in the work force. Ensure the code of conduct is readily accessible for all employees ie. in a shared drive or on your internal communication channel.
Actively encourage employees to speak up
Once a channel has been set in place it is crucial to inform employees what type of issues to report and where to go for ethical behaviour information. Cultivate a positive, speak-up culture through clear communication of what behaviours are acceptable and how to report it if not. Reiterate the process can remain completely anonymous if preferred.
Establish an effective response system
Set up procedures to report to any reporting. Assign responsibility to the appropriate member of staff to investigate and respond to the reports and reassure the employee the case is being handled. The investigation procedure must be timely and thorough. This may include collecting other documents, testimonials, electronic devices and other materials as evidence.
Protect the employee reporting the case
It is crucial that the people reporting misconduct are protected from potential retaliation. The employee reporting an issue must be reassured that their job is not in jeopardy and they will not be in danger of financial or phycological harm. Investigations must be executed if retaliation complaints are reported.
Benefits of internal reportingCommitment to social responsibility and integrity
Effective internal channels to report ethics is growing in demand for shareholders, investors and the public. It signals that your organisation prioritises integrity, social responsibility and risk management.
Prevents and mitigates liability
Detecting misconduct early allows your organisation to address core issues at an early stage before it escalates.
Prevents and mitigates financial loss
Prevent fraud and liability as well as potential criminal or civil crimes. It will discourage individuals from misconduct knowing ethics is taken seriously and reporting has been set in place.
Improving compliance and risk management
Internal reporting allows for improvement on procedures and policies. It also identifies gaps in resources and any unclear guidelines that might requires clarifying.
Strong reputation
Ethical breaches can strongly affect your reputation. Internal reporting allows the leadership teams to mitigate and prevent these reputable damages.
Enhance culture
Internal reporting can build a more open and trustworthy company culture, especially when backed by leaders and senior management teams.