If your company is big enough and has the resources to consider establishing an internal ombudsman’s function, consider yourself lucky. When compliance professionals and lawyers use the term “ombudsman,” it is important to define how the term is being used.

The most effective model for an ombudsman is the creation of an entire independent investigation and resolution function within a company. In this model, the ombudsman will receive employee concerns and complaints through a separate reporting avenue, interact with the employee (if disclosed or anonymous), investigate the complaint, and then resolve the complaint as substantiated or unsubstantiated.

Based on the result of the investigation, the ombudsman could make recommendations for resolution and other changes at the company. In most cases, the ombudsman would not have the authority to discipline or make changes at the company but would make recommendations and the company would normally follow the recommendations unless there are countervailing considerations.

A separate and independent ombudsman’s office can result in robust reporting of employee concerns. It can be an extremely effective engine used to create and reinforce a speak up culture.

The downside of creating an independent ombudsman’s office is usually the cost. Depending on how it is established and the level of work required to carry out its responsibilities, an ombudsman can become a very costly internal function. This cost, however, may well be worth incurring if the company identifies an independent ombudsman as a valuable and necessary function to promote organizational justice.

When estimating the cost, it is important to consider that the resources needed for non-ombudsman cases, such as routine human resource matters, and other less significant concerns, will still be needed. The overall cost for internal investigations will be reduced and reallocated to supporting the ombudsman function. In the end, the overall cost may not be as significant as originally thought, depending on the level of reporting of concerns to the ombudsman.

The most important value of an internal ombudsman is independence. An ombudsman who is supported by the CEO and the board can establish an important avenue for employees to raise concerns and deciding not to report their concerns to the government. A vigilant and robust ombudsman who is viewed as someone who conducts fair inquiries and secures favorable results can be an important internal asset to a company’s culture.

A company that commits to an ombudsman, byt definition, is sending an important message that the company wants to hear about concerns and is not afraid of employee concerns. Such an institution can be very powerful in reassuring employees that they will not be retaliated against if they raise concerns to the company.

Employees want to trust their companies and when they experience or perceive that the company has created a reliable and trustworthy system to report concerns, employees will use the system. In addition, company managers will find that the system provides valuable insights and communications needed to respond to concerns and improve overall employee performance.

Companies should take the time to survey their employees on the perception of the company’s internal investigation and justice system. If employees express a lack of trust with regard to the system, companies should consider establishing an independent ombudsman – it can result in a quick turn around of a weak internal reporting and investigation system.