1

Ethics/Compliance Hotline Benchmarking:Best Practices and Data Trends

Society of Corporate Compliance and Ethics

2009 Compliance and Ethics Institute

Nick Ciancio

Senior Vice President, Global Compliance

Carrie Penman

Vice President, Ethical Leadership Group,

A Global Compliance Company

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.2

● Founded in 1993

● Consulting in ethics, compliance, values, and corporate responsibility is all we do

● A Global Compliance Company

● Categories of services● Assessment and monitoring● Communications● Training● Strategy

● Have worked with over 25% of Fortune 200. Have worked in 40 countries on every continent

● Obsessed with quality, thoroughness, objectivity, and

service

About Ethical Leadership Group

2

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.3

About Global Compliance●28 years experience in ethics and compliance

●Introduced the original compliance reporting hotline in 1981

●Currently providing hotline services to over 3,500 clients

including:

Serving more than 23 million employees with hotline/helpline

services in more than 200 countries and territories and in more

than 80 languages on behalf of our clients

●Most comprehensive and integrated ethics and compliance

offerings in the industry: assessment and evaluations, training,

communications, hotlines/helplines, information management,

analytics, exit interviews, mystery shopping

● 1/2 of America’s Fortune 100 ● 1/3 of America’s Fortune 1000

● 1/3 of America’s Fortune 500 ● 1/4 of the Global 500

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.4

Ongoing challenges for ethics and compliance officers – the conundrum

● So much data, but not always clear what it means

● Need to demonstrate program effectiveness

● Need to report meaningful and actionable data to

senior leadership and the Board

● Need to know how the company compares to

other organizations inside and outside of the

industry

● Finding context…

3

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.5

Informed decision-making comes

from a long tradition of guessing

and then blaming others for

inadequate results.

- Scott Adams

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.6

Q. What type of call data is your leadership most interested in receiving?

● Total numbers of reports received

● Total number of substantiated allegations

● Severity of allegations

● Number of anonymous reports

● Location of issues raised

● Call resolution time

● Disciplinary actions taken

● Industry comparisons

● Implicated groups

● Other

4

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.7

The only sure things…

● Too many calls is not good news.

● Very few calls is not good either.

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.8

Some factors influencing call volumes and types

● Company and industry risk areas

● Workforce breakdown and staffing

● How reporting system is advertised

● Alternate reporting channels available to

employees and access to them

● Geographic location of employees

● Organizational culture

● Economic climate…

5

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.9

Context is best conveyed through:

● Comparisons and trend analysis using internal and external benchmarking

● Look for:

● Significant changes in internal data

●Deviations from internal and external norms

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.10

Internal benchmarking● Should look at:

● Types of reports - call categories

● Allegations versus inquiries

● Anonymous versus named reporters

● Allegation priority

● Substantiation percentage

● Discipline/remediation actions

● Case cycle time

● Online vs. telephone reports

● Source of awareness

● Follow-up contacts from anonymous calls

● Sources and allegations - groups, locations, businesses or services

6

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.11

Internal benchmarking● Should also drill into:

● Geographic locations

● Anonymous calls

● High volume of HR related calls

● Business segments

● Levels of employees calling (and not calling)

● Case closure time by investigating department or

investigator

● Case substantiation rate by investigating department or

investigator

● Disciplinary actions taken by business, by location, and by

level of employee

● Any anomalies

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.12

Measurements and benchmarks currently available:

● ELG/ECOA surveys – last one had 64 participants

● Data from outsourced helpline provider

● Other published data

● Informal benchmarking with peers

● Internally created spreadsheets and databases

Note: Data published typically has not included ranges and is

sometimes based on averages rather than medians

7

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.13

Why use medians and rangesand not averages?

● Median - midpoint of the data

● Eliminates skew due to company/bus. unit size or

outlier data

● Reflects general trend of all companies/organizations in the database

● Ranges – capture the spectrum of experiences

● Takes into account the variety of cultures

● Flags the most extreme examples as potential

areas of concern

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.14

Demonstrating context to leadership

Acme’s 2008 anonymous report percentage

The range of

anonymous report percentages of the central 80% of Acme’s industry

The median anonymous report

percentage of Acme’s industry

The median anonymous report

percentage of all industries

The range of anonymous report

percentages of the central 80% of all industries

Data on this slide is fabricated for demonstration purposes

8

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.15

Demonstrating context to leadership – trends over time

Data on this slide is fabricated for demonstration purposes

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.16

What may cause changes in reporting trends?

● Training and communication initiatives

● Published (or rumors of) internal cases and disciplinary actions

● Internal restructuring /management changes/layoffs

● Policy changes – Code or HR

● Mergers/acquisitions/changes in lines of business

● Regulatory changes

● News articles re: industry, competitors, or the latest compliance scandal

● A real problem

9

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.17

Number of days to respond to a question (from 2006 ELG/ECOA survey)

Days 2006

1 day 38%

2 days 16%

3 days 10%

4-13 days 16%

14+ days 16%

Median = 2 days

Average = 5 days

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.18

Number of days to close a case involving

an allegation (from 2006 ELG/ECOA survey)

Days 2006

1-3 days 2%

4-10 days 13%

11-21 days 33%

22-30 days 35%

30+ days 17%

Median = 30 days

Average = 29 days

10

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.19

Reporting to leadership: the most frequently asked question…

How are we doing compared to others in the industry?

Requires: External Benchmarking

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.20

External benchmarking –our research

● Data analysis of Global Compliance database – approximately 225,000 reports in 2008

11

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.21

We currently calculate:

By industry, by client, by country (assuming sufficient

data) with cross tabulations using these categories:

● Types of reports

● Case closure time

● Anonymous vs. named reporters

● Allegation priority

● Substantiation percentage

● Anonymous substantiation percentage

● Online reports

● Source of awareness

● Follow-up contacts

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.22

Categories of calls used:

● Accounting, Auditing, and Financial Reporting

● Financial Misconduct, Internal Controls, Expense Reporting

● Business Integrity

● Falsification of documents, Fraud, COI, etc.

● Diversity, HR, and Workplace Respect

● Discrimination, Harassment, Compensation, General HR

● Environment, Health, and Safety

● Environmental Compliance, Assault, Safety, OSHA

Reporting

● Misuse, Misappropriation of Corporate Assets and Information

● Computer Usage, Employee Theft, Time Clock Abuse

12

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.23

Some interesting findings:

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.24

Rate of reporting

(2008 data from 396 companies with US

locations only)

Where do you stack up?

13

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.25

Percent of Employees Reporting (U.S., 2008)

0.4%

1.1%

1.3%

2.8%

0.0%

1.0%

2.0%

3.0%

Consumer Manufacturing All Industries Median Healthcare Non-profits &

Associations

% of Employees Reporting

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.26

2008 Data – Report breakdown

Type

Percentage of all

2008 reports

Inquiries 26%

Reports 50%

Follow-ups 24%

14

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.27

2008 Data – How often do the same employees call with new issues?

● First time callers = 85%

● Repeat callers (as identified by the caller and includes prior years) = 15%

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.28

2008 Data – Repeat reporters varied significantly by industry

7%

15%

26%

0%

10%

20%

30%

Mining All Industries Average Industrial Manufacturing

% of Repeat Reporters

15

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.29

2008 Data – Substantiation rates by caller frequency

Substantiation Rates

Substantiated Unsubstantiated

First Time Caller 30% 70%

Repeat Caller 39% 61%

Which caller do you expect to be more credible – the first time caller or the repeat caller?

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.30

Some data points had very wide ranges across all industries

● Human Resource issues

● Anonymous reports

● Follow-ups on anonymous reports

● Online reporting versus phone calls

● Case closure time

16

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.31

2008 Data – Range of Human Resources/Diversity calls

● Diversity/Human Resources/Workplace

Respect

●Range = 55% to 80%

●Median = 73%

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.32

Anonymous reporting

● Source of frustration for Ethics Officers and

senior leadership because of missing data and

inability to talk directly with the reporter

● Senior leaders often push back on accepting

anonymous calls because:

● Fear of malicious calls

● Fear of inability to resolve case

● Strong belief that reporters with real issues

should be willing to give their name

17

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.33

2008 Data – High range of anonymous calls across industries

40%

60%

80%

30%

40%

50%

60%

70%

80%

90%

Construction All Industries Median Mining

% of Anonymous Reporters

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.34

2008 Data – Substantiation rates of anonymous versus named reporters

Is there a difference in substantiation rate if the reporter gives his or her name?

Call Type Median

Percent of cases substantiated with a

named reporter28%

Percent of cases substantiated with an anonymous reporter

28%

18

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.35

.

How do cases come in?(from 2006 ELG/ ECOA Survey)

Cases come in

by:

2001 2004 2006

Phone 79% 73% 66%

Email/Internet 7% 14% 19% (Email)

9% (Internet)

Total = 28%

In person 6% 8% 10%

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.36

2008 Data – Online reporting

7%

17%

22%

43%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Administrative

Support Services

Health Care and

Social Assistance

All-industry Median Professional,

Technical Services

% of Reports Submitted Online

19

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.37

How reporters heard about the hotline/helpline:

Source of Reporter’s Awareness

Poster 28%

Other 21%

Other Person 17%

Code/Handbook 10%

Internet/Intranet 7%

Training 6%

Magnets, pens, etc. 6%

Internal Communications 4%

Compliance Office 1%

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.38

Five most common mistakes we find in ethics helplines:1. Discouraging callers with questions or requests for

advice

2. Investigations missteps:

● Investigations that take too long

● Poorly trained investigators

● Maintaining objectivity and professionalism

● Not vigorously protecting confidentiality

3. Not publishing sanitized outcomes to employees

4. Not looking for trends and related variables

5. Call data to Board and senior management without context

20

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.39

Some advice and best practices:

● Use a robust case management system

● Run your data different ways

● Research anomalies

● Drill down to locations and businesses; issue types

and topics; anonymous calls; substantiated

allegations;

● Sometimes you “don’t know it until you see it”

● Follow your gut instincts on brewing problems

● Track and report on quality of case management and investigations

● Track disciplinary actions by offense, level of employee, or group…

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.40

Questions?

21

© 2009 Global Compliance and Ethical Leadership Group. All Rights Reserved.41

Contact information

Nick Ciancio

Global Compliance

Nick.Ciancio@globalcompliance.com

866-434-7009

Carrie Penman

Ethical Leadership Group

Carrie@ethicalleadershipgroup.com

781-271-1317