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Empow ering the employee

A US senior manager who embezzled

$400,000 from his employer was caught as a

result of a call to the companys hotline. On

the surface, what could be more innocuous

than a toll-free telephone number for employ-ees to report problems, ask questions or air

grievances? But the hotlines are tinged with

controversy.

Ethics hotlines can be seen as part of a

continuing movement toward employee

empowerment. T hey give a disgruntled

employee the right to discuss issues with an

ethics officer, ombudsman or outside hotline

operator in other words, a representative

who stands outside the corporate chain of

command.

The mere existence of a hotline can bring

employees satisfaction, whether or not they

use the device. Employees should be able to

talk to their managers or supervisors about

problems first, but hotlines can provide a

critical outlet when employees feel unable to

do this.

Hotlines can make managers do their jobs

better. Managers are encouraged to deal with

complaints when they know that people have

recourse outside the management chain.

Hotlines enable employees to ask questionsbefore they take action. This makes it more

likely that they will do the right thing first

time.

Prote cting t he comp anys reputa tion

From the companys point of view, a hotline

may get something disclosed internally that

may otherwise be the subject of litigation

later. Hotlines can therefore help to protect a

companys reputation. The existence of ahotline at United Technologies Corporation

(UTC) has enabled the company to head off

sexual-harassment and age-discrimination

cases that might otherwise have been dealt

with in court.

Hotlines can support a companys total

quality management effort. Bath Iron Works

Corporation, of Maine, USA, dramatically

improved surface coatings for naval vessels

after an employee called the corporate hotline

about recurring problems in this area.

US sentencing guidelines suggest that there

should be some way for employees to commu-

nicate their concerns, or problems that may

be developing. Ethics and compliance

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Management Development Review

Volume 10 Number 4/5 1997 pp. 159161

M CB Un iv ersi ty Press I SSN 0 96 2- 25 19

PerspectiveLukew arm on thehotline?

AbstractSome people regard comp any hotlines as an effective way

of cutt in g organizational w aste, fraud and abuse. Others

hear Big Brother call ing. Explores the evidence for each

point of v iew.

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hotlines have been the preferred choice of

many companies to achieve this.

In addition, hotlines can be seen as part of

the movement toward self-regulation in soci-

ety.

Trust and confide ntiality

Questions about hotlines focus mainly on the

issues of trust and confidentiality. M any US

employees appear not to trust corporate-

ethics reporting mechanisms. A recent study

showed that only half the employees who had

witnessed misconduct in the previous year

had reported the wrongdoing to their organi-

zation.

Ombudsmen pledge to maintain employee

confidentiality and have gone to court todefend that privilege. However, ombudsmen

and ethics officers, particularly younger ones,

do not always remain in the same job within

the organization and the fact remains that

they are paid by the company.

Some workers doubt that the anonymity

usually promised to hotline callers is real.

With a toll-free number, the company can

usually tell where the call originated. F irms

are also generally aware of who knows about

the matter under discussion.

In response to these potential problems,

some companies go to great lengths to ensure

confidentiality. UTC, for example, has a rule

that no one will receive a telephone bill item-

izing the source of incoming calls.

The danger of false accusat ions

Some firms have an outside consulting or law

firm running the hotline, and stipulate that

the obligation of the hotline operator is to the

person making the call and not to the compa-ny. At a small company, it is probably difficult

ever to feel safe with a hotline, so an outside

line may make sense. However, one purpose

of hotlines is to provide guidance on ethically

sensitive situations. Outside services may not

be well trained in this.

Hotlines can create an environment of

distrust. Based on anonymous accusations,

they deny people what the legal system allows

the ability to stand face to face with an

accuser.False accusations can easily be made.

Hotline operators and ethics officers must

make sure that the rights of the innocent are

protected as much as possible. T raining can

be given to make hotline operators better able

to identify crank calls.

An investigation instigated by a hotline

complaint can taint an individual, even if he

or she is ultimately cleared. One way to

remove the uncertainty is for the company to

issue a memorandum when the investigation

is over. In addition, the company can make

clear that disciplinary action will be taken

against people found to be misusing the hot-

line.

Companies must check all serious allega-

tions. Otherwise, people who make the tough

decision to call the hotline who make the

emotional commitment that it often entails

will rapidly be disappointed.

The quickest way to build trust is through

word of mouth. I f someone resolves a particu-lar issue by calling the hotline, that person

tends to talk about it afterwards. T he individ-

ual is proud of what he or she did, and wants

to take credit. T hat builds trust.

The Sears a ssist line

Sears, Roebuck and Company had a long-

standing tradition that every managers door

was open to any associate, at any time. But the

company decided to set up an assist line in1994 because, over a period, more associates

had been calling on outside sources like their

union, local minister or lawyer.

The assist line now handles up to 18,000

calls a year from employees. Only a small

number are reporting wrongdoing. M ost calls

deal with personnel matters. Sears has sought

to measure the success of its hotline by how

many people we help, rather than how many

we catch.

UTC gives 24-hour access to its corporatehotline, because people call from around the

world. But Sears elected not to establish a

round the-clock service because the company

did not want to be seen as bypassing manage-

ment particularly store management.

In general, firms report that well below 10

per cent of hotline calls deal with waste, fraud

and abuse. WMX Technologies, of I llinois,

USA, has encouraged employees to call about

any matter they wish to air. The company

helpline received some 4,000 calls in its first

year. Around 2,500 people used the service

about 4 per cent of the companys north

American workforce. But most of the calls

dealt with questions about corporate benefits

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Lukewarm on the hot l ine?

Author/s

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or issues such as favouritism charges

regarding a job promotion.

Simple snitch or mo ral hero?

There is a deeply ingrained belief in many

Western societies that people ought not to

inform on others. The pupil who reports a

classmate for cheating in a spelling test is

frequently among the least endearing people

in school. In the USA, company hotlines are

often referred to as snitch lines. But what if

someone had called up Oklahoma before

T imothy McVeigh blew up the federal build-

ing there? At some point, societys snitch can

be transformed into moral hero.

Chester Walsh hit the headlines after

exposing wrongdoing at General Electric.

From time to time, other corporate whistle-

blowers come to the fore. But the whistle-

blower does not depend on the existence of a

hotline to make his or her point. Indeed,

evidence suggests that few of the calls received

by hotlines actually relate to waste, fraud and

abuse. T here may well be a case for setting up

a hotline in your firm but do not expect the

move to transform the companys moral

climate overnight.

This is a prcis of an article entitled 1-800-

snitch, which was originally published inAcross

the Board, September 1995, pp. 16-20. The author

was Andrew W. Singer.

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Lukewarm on the hot l ine?

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M anagement Development Review

Volume 10 Number 4/5 1997 159161