Perspective Lukewarm on the hotline?

Empowering 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 employees 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. They give a disgruntled employee the right to discuss issues with an ethics ofcer, 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 rst, 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 questions before they take action. This makes it more likely that they will do the right thing rst time.

Abstract Some people regard company hotlines as an effective way of cutting organizational waste, fraud and abuse. Others hear Big Brother calling. Explores the evidence for each point of view.

Protecting the companys reputation

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 a hotline 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 communicate their concerns, or problems that may be developing. Ethics and compliance 159

Management Development Review Volume 10 Number 4/5 1997 pp. 159161 MCB University Press ISSN 0962-2519

Lukewarm on the hotline?

Management Development Review Volume 10 Number 4/5 1997 159161

Author/s

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 society.

Trust and condentiality

Questions about hotlines focus mainly on the issues of trust and condentiality. Many US employees appear not to trust corporateethics 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 organization. Ombudsmen pledge to maintain employee condentiality and have gone to court to defend that privilege. However, ombudsmen and ethics ofcers, 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. Firms 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 condentiality. UTC, for example, has a rule that no one will receive a telephone bill itemizing the source of incoming calls.

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 hotline. Companies must check all serious allegations. 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. If someone resolves a particular issue by calling the hotline, that person tends to talk about it afterwards. The individual is proud of what he or she did, and wants to take credit. That builds trust.

The Sears assist line

Sears, Roebuck and Company had a longstanding tradition that every managers door was open to any associate, at any time. But the company decided to set up an assist line in 1994 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. Most 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 corporate hotline, 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 management particularly store management. In general, rms report that well below 10 per cent of hotline calls deal with waste, fraud and abuse. WMX Technologies, of Illinois, USA, has encouraged employees to call about any matter they wish to air. The company helpline received some 4,000 calls in its rst 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 benets 160

The danger of false accusations

Some rms have an outside consulting or law rm running the hotline, and stipulate that the obligation of the hotline operator is to the person making the call and not to the company. At a small company, it is probably difcult 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 ofcers must make sure that the rights of the innocent are protected as much as possible. Training can

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or issues such as favouritism charges regarding a job promotion.

Simple snitch or moral 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 Timothy McVeigh blew up the federal building 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 whistleblowers come to the fore. But the whistleblower 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. There may well be a case for setting up a hotline in your rm but do not expect the move to transform the companys moral climate overnight.
This is a prcis of an article entitled 1-800snitch, which was originally published in Across the Board, September 1995, pp. 16-20. The author was Andrew W. Singer.

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