NAVEX Annual Hotline and Incident Report: A Mixed Bag of Reporting Trends

NAVEX recently released its annual Hotline and Incident Management Report.  Given NAVEX’s strong position in the hotline service market, NAVEX has access to a large volume of reporting data.  As a result, its annual report is always interesting and a must-read ethics and compliance report.

NAVEX’s report revealed several important trends:

A larger number of employees are willing to report misconduct.  Overt the last ten years, the percentage of reports alleging specific misconduct rose from 86 percent to 90 percent. 

The percentage of reports that are anonymous decreased below 50 percent, which was a record low percentage.  In fact, NAVEX noted that the rate of anonymous reporting is decreasing rapidly.  Employees appear to be emboldened to report misconduct.

Interestingly, NAVEX’s report confirmed a trend that I have always emphasized — employees prefer to report misconduct to their managers or functional groups.  Many managers and function heads, however, feel unprepared in handling employee in-person reports of misconduct.  This is high-priority area for manager and function head training.

Companies have to track incident report to include in-person walk-ins to maximize monitoring and improvement of reporting rates. companies that fail to monitor such reporting are missing a significant portion of employee reporting trends. Companies that track walk-ins had a reporting rate of 1.7 per 100 employees, while companies that monitor only hotline and web reports had a reporting rate of 0.9 per 100 employees.

Substantiation rates rose a percentage point from 42 to 43 percent.  The highest substantiation rates involved data privacy concerns, environmental issues and confidential and proprietary information.

The substantiation rates for anonymous reporting increased to 39 percent in 2021 from 35 percent in 2020.

Reports of harassment and discrimination each increased to record levels under NAVEX reporting data.  These results exceeded reporting rates of harassment and discrimination in the beginning of the “MeToo” issue.

On the negative side, NAVEX’s report confirmed the disturbing trend of increasing retaliation claims.  In 2021, reports of retaliation nearly doubled.  The rate increased from 0.9 percent in 2020 to 1.7 percent in 2021.  Interestingly, the substantiation rate for claims of retaliation was only 24 percent, well below the overall substantiation rate of 43 percent.

The NAVEX Report noted an important trend — employees are more comfortable reporting issues of misconduct.  In addition, NAVEX noted that employees are submitting reports more quickly even though many are working remotely.  The median gap between observation and reporting misconduct fell from 36 days in 2020 to 27 days in 2021.

The five most common types (excluding “Other”) were: (1) Health and Safety 11.3 percent; (2) Conflicts of Interest 9.3 percent; (3) Data Privacy and Protection 5.1 percent; (4) Discrimination 4.3 percent; and (4) misappropriation of assets 4.1 percent.

Finally, the median time to investigate and resolve a report increased from 39 days in 2020 to 42 days in 2021.  In 2019, the median length of time between a report and resolution was 45 days. 

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