Whistle-blowers are a sign of healthy companies

More whistles blown are a sign of health, not sickness. Firms whose hotlines get used more, tend to be more profitable and have less legal exposure. The more employees use whistle-blowing hotlines, the less lawsuits companies face, and the less money firms pay out in settlements. Companies that more actively use their own reporting tools can detect and address problems internally before litigation becomes likely. This lowers legal costs, damage to brand reputation and stock price. Higher use of internal reporting tools doesn’t mean more external reports to regulatory authorities, or that problems at the firm are more frequent or serious. Often, high usage shows open communication between staff and management (and a belief that issues raised will be resolved), rather than real trouble. However, when employees report externally, it signals management’s failure to address problems internally. Managers should see hotlines as a key part of the audit process. Read more at https://hbr.org/2018/11/research-whistleblowers-are-a-sign-of-healthy-companies

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