Harvesting the Company Gripevine

Third-party employee hot lines can help small businesses avoid costly burdens down the road.
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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)

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.

"It depends on the mind-set from the top down," says Foster. "Organizations that see the greatest benefit

from reporting systems really embrace the concept."

To aid in employee awareness, MySafeWorkplace offers marketing materials including posters, wallet cards and paycheck stuffers. "We like to explore with clients how they communicate employee benefits and leverage those channels," Foster explains.

Employees are right to be wary of companies that have access to reports and have deleted or altered those reports in the past. MySafeWorkplace eliminates this fear because it, rather than the company, receives the reports first. Information can be added to a report by someone else but never erased or ignored, making it impossible for an otherwise telling report to get watered down.

First-Call Foibles

Employee-hot line companies train their own employees to get as much as possible out of that all-important first email or phone call, which is often the only communication they will have with the reporter.

"But in a lot of cases, employees might not

initially know what information is needed," explains Foster.

Using MySafeWorkplace, employees can post anonymously on message boards 24/7 for executive management eyes only. If more details are needed, management can submit questions to the reporter and create a dialogue in order to effectively recognize and respond to the issue at hand.

Because not every executive manager is well-versed in employment law or criminal science, MySafeWorkplace provides experts in various fields to answer questions and speculate about what a report may indicate, free of charge.

This consulting practice, which Foster claims is unique to his company, can also offer employees a vital third option between remaining anonymous and full disclosure.

Clients can also reveal their identities to the MySafeWorkplace staff only, allowing MySafeWorkplace to contact the employee confidentially to gather additional information about the report.

Size Doesn't Matter

MySafeWorkplace is serious about its tagline, "insight in an instant," which guarantees that any report will be made available to the appropriate people in less than three minutes, while many other hot lines can guarantee only 12 to 24 hours.

It's all about recognizing and responding to issues before they become an expensive problem.

"You can be sitting in Indonesia and make a report instantaneously," says Foster, whose company won a Global Award from

Microsoft

for this technology. "The sooner information is relayed, the more valuable it is to our customers," Foster adds.

While reports are only available to certain individuals in a company, the MySafeWorkplace system gives a business bragging rites."

Our clients advertise and tell the world that they are a well-run ethical company ... with a wide-open environment where communication can flow," Foster says.

This raises the question, if a business isn't boasting, what is it hiding?

MySafeWorkplace isn't just for white-collar big business. It serves companies as small as 12 employees. It adjusts its fees on the basis of employee count.

"What kills small business in America is fraud and cash flow," Foster notes. For relatively little -- a couple of thousand dollars a year -- a small business can have the system up and running.

In blue-collar environments such as factories, safety concerns get reported often. "Information is typically known by individuals working on the floor, but they don't know how to get to management without revealing their identity," says Foster.

For example, even though they might be adversely affected, no employee wants to rat out a colleague who is drinking on the job. But if the person gets hurt, the company has the medical costs to deal with. Anonymity assurance helps the right people to come forward.

Business Controls -- which started out with four customers in 1999 and is now in 87 countries -- has shown that a service like this is invaluable.

"This type of solution is emerging as a top priority for board members that make decisions worldwide," says Foster. Any small business with a big scope would agree.