After recent corporate scandals, a number of companies are setting up toll-free ethics hotlines and encouraging whistle-blowers to come forward.
Some have had the hotlines for years and are now trumpeting them to employees, while others are setting up new toll-free numbers or Web sites where workers can anonymously sound off. After being relatively ignored for years, ethics are becoming a major issue for company leaders.
”You’re seeing a whole environmental shift,” says Tom Casey, a principal at human resources company Buck Consultants.
At PNC Financial Services Group, an ethics hotline was launched in September. The hotline is available 24 hours a day, and reports are forwarded to the bank’s corporate ethics office.
In October, the Montvale, N.J.-based Institute of Management Accountants opened up its ethics hotline to non-members. Any finance professional can get free, confidential guidance on ethical issues.
Dell Computer has an ethics hotline that employees can call anonymously to report infractions. The company then will follow up.
”We are very aggressive about communicating to employees that it exists,” spokesman Bob Kaufman says.
Charlotte-based Duke Energy conducted an internal audit last year based on a call placed to its toll-free ethics hotline, which is run by an outside organization. An employee can leave his or her name or remain anonymous. To preserve confidentiality, a unique case number is assigned.
Employment experts expect to see a surge in such hotlines. Legal experts say that’s because the Sarbanes-Oxley Act, passed this year by Congress, requires publicly held companies to have a mechanism for employees to raise anonymous questions about securities fraud. Since its passage, private firms are also setting up such programs.
National Hotline Services of Fredericksburg, Va., which provides ethics hotline services, has 25% more clients than a year ago. Nearly one-third of new business since August can be attributed to the act.
Clients with ethics hotlines include financial institutions, the defense industry, health care and retail.
Another reason for the growing interest in ethics: the potential cost of fraud to companies.
Employers lose an estimated 20% of every dollar to workplace fraud, according to a 2002 survey of 617 workers by Ernst & Young.