Harvesting the Company Gripevine

As every business is no doubt aware, the Sarbanes-Oxley Act, passed in 2002, requires public companies to provide a confidential reporting mechanism that allows employees to report incidents or concerns anonymously and without retribution.

Unfortunately, many of the hot lines and services used by companies to comply with this law have been less than effective and often let important information slip through the cracks.

Further eroding their credibility, claims made through hot lines have been suppressed or edited by the company auditors or executives.

Steven Foster, executive vice president and CEO of Colorado-based Business Controls, tells the tale of a Fortune 25 company that thought it had a handle on transparency, with around 150 benign reports a year through its employee hot line system.

When it switched to MySafeWorkplace, Business Controls' anonymous incident reporting system, though, the company received 527 employee reports in the first seven months and expects 1,000 by year's end.

What companies must learn, says Foster, is that a low number of reports doesn't mean all is well. In fact, it probably means employees aren't reporting information that could cost the company a bundle. One in every 10 reports saved the company about $60,000 in prelitigation costs that might have occurred had the situation gone unreported.

The idea, says Foster, is to raise the number of reports and make the most of information received. His reporting service, which boasts clients from Dow Jones (DJ Quote) to various small businesses, is taking revolutionary steps in both areas.

Trust Us

Lack of trust is the biggest barrier to getting employees to report, says Foster.

A company can't just adopt a reporting system and expect employees to dive in head first. The key to trust lies in how the system is deployed and communicated to employees.