News for all internal reporting and compliance hotline enthusiasts: companies are now taking more time to close cases that come through the internal hotline, and a surge in workplace harassment complaints after the birth of the #MeToo movement may be receding.
So says the latest hotline benchmarking report from Navex Global, which reported its findings during a webinar on Tuesday afternoon. The full benchmarking report won’t be available for a few weeks yet, but yours truly took a peek at the webinar presentation and we have all the important details below.
First, the median number of reports per 100 employees held steady at 1.4, although 19 percent of companies (larger businesses, presumably) are receiving 5 or more reports per 100 employees. Then again, another 40 percent of all companies in Navex’s study receive less than 1 report per 100 employees.
So roughly one-fifth of all firms see fairly brisk internal reporting activity; two-fifths see hardly any, and the remainder are somewhere in the middle. See Figure 1, below.
Second interesting nugget: the median number of reports per 100 employees that arrived via online channels rather than a telephone hotline — that number doubled, from 1.0 in 2018 to 2.0 last year.
That suggests that the general social trend away from using the telephone continues. It also makes me wonder about the future of online anonymous reporting, since numerous startup firms are talking up the idea of apps that let an employee gather evidence and then submit it to a company through intermediary software. We’ll explore that subject another day.
Third (and for the first time ever), this year’s report also looked at the median lag time between when an employee witnessed an incident and when he or she reported it. The good news is that 19 percent of companies had a median of less than five days, meaning employees generally reported misconduct promptly. On the other hand, 20 percent of companies had reports coming in more than 60 days after employees witnessed the incident.
That is not a good thing. Carrie Penman, Navex’s chief risk and compliance officer, who presented the benchmarking data today, warned that long lag times can indicate any number of weaknesses: retaliation fears, lack of awareness among employees that reporting systems exist, or the absence of reporting systems at certain locations. Regardless, long lag times can make investigations more complicated, so compliance officers would do well to know what their own company’s lag time is, and why.
Case Closure Times
Navex also had a few data points about case closure times. None of them were welcome news:
- Median case closure time jumped from 40 days in 2018 to 45 days in 2019, the highest median number since 2015.
- Average case closure time jumped from 60 to 66 days.
- Twenty percent of companies needed more than 100 days to close cases — up from 17 percent in 2019. For comparison purposes, 32 percent of companies closed their cases in less than one month.
These trends worry me for two reasons. First, because the cases that take longer to close are usually about business integrity or accounting issues. Sure enough, we do see that business integrity issues rose from 16 percent of all reports in 2018 to 21 percent in 2019; and accounting issues went from 2 percent to 3 percent. See Figure 2, below.
Median case closure time for accounting issues in 2019 was 56 days; for business integrity reports, it was 44 days. Those numbers were higher than for any other category of report. So companies are seeing more complex issues arrive through internal reporting channels, and those cases are taking longer to solve.
Second, thanks to the Covid-19 crisis, we are also entering a period of severe economic disruption, so your budget for investigations or case management may well be in jeopardy — at just the same time employees might be more likely to engage in fraud or misconduct, because they’re worried about keeping their jobs.
Altogether, that could mean a difficult time for compliance functions trying to stay ahead of misconduct allegations. Plan accordingly.
Other Hotline Items
Today’s benchmarking report was the second one with a full year’s data since the #MeToo movement began at the end of 2017. While last year’s report showed an increase in harassment reporting to 5.46 percent of total reports, this year the category dropped to 4.81 percent this year, close to the historical norms of reports received prior to #MeToo.
Why is that? We’re not sure. It could be that #MeToo reports spiked in the last few years because of greater awareness, and inappropriate behavior is now receding. It’s also possible that would-be reporters are less eager to speak up these days, if they believe companies aren’t as serious about anti-harassment or because retaliation against reporters still persists. (Your thoughts are always welcome: [email protected].)
Speaking of retaliation complaints…
As a percentage of all internal reports a company receives, retaliation complaints have more than doubled in the last decade — but they still comprise only a tiny fraction of all complaints, going from 0.52 percent in 2011 to 1.1 percent in 2019.
Substantiation of retaliation reports stood at 23 percent in 2019. That’s also more than double the figures at the start of the 2010s, when only 10 percent of all retaliation complaints were substantiated; but it’s down from the middle of the decade, when substantiation rates were at 27 percent.
That’s all for now. Look for Navex’s complete hotline benchmarking report later this month.
Disclosure: Yes, Navex Global does pay me to write occasional blog posts on its Ethics & Compliance Matters blog. Navex did not pay me to write this one, and did not see any advanced copy of it.