NAVEX Global's Benchmarking Your Hotline in 2016: What is your Data Telling You?

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Benchmarking Your Hotline in 2016: What is Your Data Telling You?

March 16, 2016



P R E S E N T E D B Y

Operations Manager, Advisory Services NAVEX Global

Carrie PenmanChief Compliance Officer & Senior Vice President, Advisory ServicesNAVEX Global

Edwin O’Mara



Agenda

• Introductions• Our Benchmarking Methodology• Business Imperatives

of Benchmarking• Key Findings • Key Takeaways & Best Practice

Recommendations• Q&A• Additional Resources



Our Ethics & Compliance Ecosystem



Benchmarking Methodology & Business Imperatives



Hotline Benchmark Statistical Snapshot• Our database starts with 12,500+ NAVEX Global clients

• Of those 4,900+ received a report in 2015 through NAVEX Global’s Hotline and EthicsPoint Incident Management solutions

• 2,300+ clients received 10 or more reports in 2015 (representing 34 million employees)

• These 2,300+ clients received approximately 867,000 reports in 2015

• Data reflects all reports documented in clients’ EthicsPoint Incident Management system regardless of reporting channel (web, hotline, walk-in, mobile, email, mail, etc. )

• Data covers 26 industries, and an additional 45 sub-industries• We use medians (or midpoints) rather than averages to reduce the impact of outliers

Normal ranges identify extreme data points as potential areas of concern Medians and ranges provide context for benchmarks



Key Findings



K E Y F I N D I N G # 1

Report Volume per 100 Employees



Significant Increase in Median Report Volume Rate

Source: NAVEX Global's 2016 Ethics and Compliance Hotline Benchmark Report



Survey Question:What do you think is the biggest driver of report volume increases? E&C initiatives and training helping employees know when

and what to report Senior leaders encouraging a “speak-up” culture Providing additional methods for employees to use to report Departments outside of (HR, audit, security)

documenting reports Documenting reports received from all sources (not just

hotline and web―including email, walk-ins, etc.) A true increase in E&C issues we need to address Other (please use the chat window to share specifics)



Documenting More Reports Creates Significantly Greater Ability to Spot Trends, See Risks




Survey Question:What is your organization’s approach to documenting E&C reports? Advanced: Document reports from all reporting channels

(hotline, web, mail, email, in-person, etc.), in a centralized incident management system. Leverage advanced analytics.

Basic: Document reports from hotline and web forms only in an incident management system. Leverage basic analytics.

Maturing: No incident management system in place yet; still using manual approaches and spreadsheets.

Not a Priority: We do not have an incident management system in place, and do not feel we need one.



Organizations that documented reports from all channels in their incident management systems captured 72% more reports.

Don’t Miss Critical E&C Data Capture

INTAKE METHODS

Incident Management System Centralized Report Documentation,

Workflow & Analytics

MEDIAN NUMBER OF REPORTS

CAPTURED = 1.9

Nearly 2x Visibility Into Organizational Culture and Trends

INTAKE METHODS

MEDIAN NUMBER OF REPORTS

CAPTURED = 1.1



Health Care Leads in Reporting Volume1) Health Care2) Not for Profit3) Retail4) Real Estate5) Energy & Utilities6) Business Support Services7) Automotive Transportation8) Arts & Entertainment9) Finance & Insurance10) Pharmaceuticals11) Aerospace & Defense12) Food Services13) Mining14) Professional, Scientific & Technical Services15) Agriculture, Forestry, Fishing & Hunting16) Construction17) Government18) Security19) Consumer Manufacturing20) Commercial Transportation21) Education22) Wholesale Trade23) Industrial Manufacturing24) Computer Services, Hardware & Software25) Media26) Electronics




Report Allegation CategoriesK E Y F I N D I N G # 2



Categories of Reports Used




Allegation Categories

2011 Median

2012 Median

2013 Median

2014 Median

2015 Median

Accounting, Auditing and Financial Reporting 3% 3% 3% 2% 2%

Business Integrity 16% 17% 18% 17% 15%

HR, Diversity and Workplace Respect 68% 69% 73% 69% 71%

Environment, Health and Safety 9% 7% 7% 6% 5%

Misuse, Misappropriation of Corporate Assets 7% 6% 6% 6% 7%

Categories of Reports Remain Relatively Consistent




Industries with the Highest Median Reporting Rate by Allegation Category

Allegation Categories 2015 Median

Accounting, Auditing and Financial Reporting 2%

Business Integrity 15%

HR, Diversity and Workplace Respect 71%

Environment, Health and Safety 5%

Misuse, Misappropriation of Corporate Assets 7%




Anonymous vs. Named ReportersK E Y F I N D I N G # 4



Survey Question:Is there a bias against anonymous reporting in your organization? Yes. Senior leaders are reticent to accept and/or encourage

anonymous reports for a variety of reasons (anonymous reporters not seen as credible; fear inability to resolve cases, etc.).

Somewhat. Named reporters are preferred, and may be generally seen as more credible.

No. The ability to report anonymously is seen as critical for maintaining a healthy organizational culture.

Not Sure. This issue hasn’t come up for us.



Anonymous Reporting Rate Drops Below 60% For the First Time Since 2008




Anonymous Substantiation Rate Holds Steady




No Improvement in Anonymous Reporter Follow-Up Rate: More Education Needed




1) Education2) Mining3) Security4) Industrial Manufacturing5) Media6) Consumer Manufacturing7) Not for Profit8) Real Estate9) Wholesale Trade10) Automotive Transportation11) Electronics12) Construction13) Energy & Utilities14) Finance & Insurance15) Government16) Retail17) Health Care18) Arts & Entertainment19) Commercial Transportation20) Computer Services, Hardware & Software21) Professional, Scientific & Technical Services22) Agriculture, Forestry, Fishing & Hunting23) Business Support Services24) Food Services25) Aerospace & Defense26) Pharmaceuticals

Education Leads Anonymous Reporting by Industry

Lowest Rate

Highest Rate

Overall Median Rate: 59%




Substantiated ReportsK E Y F I N D I N G # 5



Substantiation Rate Hits All-Time High




Business Integrity Substantiation Rate Down by 8%

Overall Median Substantiation Rate in 2014 = 40%Overall Median Substantiate Rate in 2015 = 41%




1) Not for Profit2) Real Estate3) Consumer Manufacturing4) Media5) Health Care6) Government7) Retail8) Finance & Insurance9) Pharmaceuticals10) Education11) Aerospace & Defense12) Arts & Entertainment13) Energy & Utilities14) Industrial Manufacturing15) Professional, Scientific & Technical Services16) Security17) Construction18) Electronics19) Computer Services, Hardware & Software20) Automotive Transportation21) Agriculture, Forestry, Fishing & Hunting22) Food Services23) Mining24) Wholesale Trade25) Business Support Services26) Commercial Transportation

Not for Profit Leads in Substantiation Rate

Lowest Rate

Highest Rate

Overall Median Rate: 41%




Case Closure TimeK E Y F I N D I N G # 7



Another Significant Case Closure Time Increase




Survey Question

What do you think is the biggest factor in increasing case closure times? Resource Constraints: Resources not keeping pace with

volume; “less serious” cases get stalled. Case Complexity: Cases are taking more time to resolve. Inefficiencies: Processes and tools used to assign and

execute investigations are not as streamlined as they should be, resulting in lag time.

Ownership Confusion: Not clear who owns resolution for cases.

Other: Please chat your reasons.



Case Closure Time Increases in Three of the Five Allegation Categories

Median Case Closure Days in 2014 = 39 days Median Case Closure Days in 2014 = 46 days




Survey Question:

Do you follow up and have input on the outcomes of reported issues referred to HR or other departments for investigation? Yes, informally. Yes—and we don’t close a case in the system until

we have reviewed and concurred with the findings and any actions taken.

No, once we make a referral, we close the case in our system.



1) Mining2) Government3) Education4) Computer Services, Hardware & Software5) Automotive Transportation6) Not for Profit7) Real Estate8) Consumer Manufacturing9) Pharmaceuticals10) Media11) Electronics12) Business Support Services13) Commercial Transportation14) Industrial Manufacturing15) Construction16) Professional, Scientific & Technical Services17) Aerospace & Defense18) Energy & Utilities19) Security20) Arts & Entertainment21) Finance & Insurance22) Food Services23) Health Care24) Wholesale Trade25) Agriculture, Forestry, Fishing & Hunting26) Retail

Mining, Government, Education Have Highest Case Closure Times

Lowest Rate

Highest Rate

Overall Median Rate: 46 Days




Report Intake MethodsK E Y F I N D I N G # 8



Web Reporting Continues to Trend Up




K E Y F I N D I N G # 9

Reports of Retaliation



Survey Question:

Where does retaliation prevention fall on your list of E&C program priorities for 2016? Top Priority: We are actively looking for new tools,

resources, training and investigation approaches to move the needle on this issue.

Important, But Not in Top Three Priorities: Other issues are more pressing than retaliation for us this year.

Not a Focus Area for Us: Not a focus for our organization this year; measures we’ve already put in place are effective.



Organizations Still Not Getting the Chance to Address Retaliation Allegations Internally




Retaliation Substantiation Rates Remain Elevated




Moving Beyond the Basics: Advanced Incident Management & Benchmarking

K E Y F I N D I N G # 1 0



• Nearly Double Risk Visibility: Documenting reports from all intake channels (not just web & hotline) in an incident management system creates nearly twice as much visibility into potential E&C risks

• Work Smarter: Customized workflows standardize and simplify report management tasks, helping you capture, assign and resolve cases more effectively, efficiently and consistently

• See Trends: Advanced analytics gives you the ability to see program gaps, measure program effectiveness, proactively spot trends and identify and address issues

• Make it Easier to Document Issues: Custom web forms allow you to more efficiently capture and route reports—and make it easier for employees and managers to document issues

• Better Protect Your Organization: More documentation also provides a stronger legal defense in the event of a lawsuit or regulatory action

Incident Management Systems Create Exponential Visibility & Program Effectiveness



Industry-Specific Benchmarking Provides More & Better Insight Into E&C Health

• As our industry ranking slides showed, using accurate industry-specific benchmarking is critical, as there can be striking differences in benchmarks across industries.

• Industry-specific benchmarking can help you, your board and your senior leadership understand critical issues such as: Are our metrics consistent with or out of line with peers? What E&C trends are prevalent or unique in our industry—and which ones

should we focus on? Are there opportunities to achieve a competitive advantage by adding focus

or resources to an aspect of our E&C program that may be an issue for competitors?



Integrity Diagnostics: Turning Metrics Into Action

Source: Advisory Services: Integrity Diagnostics Sample Report

http://www.navexglobal.com/sites/default/files/uploads/NAVEXGlobal_Integrity%20Diagnostics%20Sample%20Report_032315.pdf



I’d Like To Speak With a NAVEX Global Solutions Expert About… Implementing a uniform and consistent process for tracking and

responding to incident reports Consolidating reports from multiple channels and sources

(hotline, open-door, mobile, web-based, email) Scheduling a demo of EthicsPoint Incident Management

Software Assessing whether my current hotline/incident management

solution is effective and utilized to its full potential Getting expert advice on improving my compliance program

(code of conduct review; program, risk or culture assessment, board training, etc.)

Other compliance program challenges (optimizing training, managing policies, third party due diligence, or other)



Key Takeaways & Best Practice Recommendations



1) Increase focus on anti-retaliation efforts

2) Work on getting case closure times back within best practice ranges

3) Get a more complete picture of your risks by documenting all reports in one centralized incident management system

4) Make the business case for matching your report volume with appropriate resources

5) Encourage employees to see your hotline as a resource for information, not just a channel for reporting

5 Key Takeaways



Additional Resources NAVEX Global offers many valuable resources for helping you increase program effectiveness by leveraging your hotline and incident management data. Visit our website www.navexglobal.com to find these resources and more:

White Papers:• Whistleblower Hotlines and Case Management Solutions—Major Challenges and Best Practice Recommendations

• Key Elements for Effective Compliance Program Board Reporting

• Maximizing the Benefits of Hotline Data: Analysis and Benchmarking

On-Demand Webinars:• Whistleblowing & Retaliation: Legal Developments And Practical Advice

• How Do I Prove My E&C Program is Effective? The Art & Science of Effectiveness Measurement

Learn More About Our Solutions:• Hotline Solutions

• EthicsPoint Incident Management

• Integrity Diagnostics™ Custom Benchmarking

• Strategic Consulting: The Advisory Services Team

http://www.navexglobal.com/

http://www.navexglobal.com/resources/whitepapers/whistleblower-hotlines-and-case-management-solutions-major-challenges

http://www.navexglobal.com/resources/whitepapers/Key-Elements-Effective-Compliance-Program-Board-Reporting

http://www.navexglobal.com/resources/whitepapers/how-maximize-benefits-hotline-data-benchmarking

http://www.navexglobal.com/resources/webinars/whistleblowing-and-retaliation_legal-developments-and-practical-advice

http://www.navexglobal.com/resources/webinars/how-do-i-prove-my-ec-program-is-effective_the-art-and-science



http://www.navexglobal.com/products/report-resolve/hotline-reporting

http://www.navexglobal.com/products/report-resolve/incident-management

http://www.navexglobal.com/products/report-resolve/incident-management

http://www.navexglobal.com/products/assess-monitor/custom-benchmarking

http://www.navexglobal.com/products/expert-guidance/strategic-consulting



Please Submit Your Questions

If we are unable to answer your questions now, we will be sure to

follow up with you!



Thank You for Your Participation

Carrie PenmanChief Compliance Officer & Senior Vice President, Advisory Services

[email protected]

Edwin O’MaraOperations Manager, Advisory Services

[email protected]

mailto:[email protected]

mailto:[email protected]