The ROI of a Speak-Up Culture
If you’ve ever wondered just how valuable your reporting system really is, you’re not alone. Ethics and compliance officers have long sought to quantify the business benefits of a speak-up culture. The good news is that groundbreaking research by Professors Kyle Welch and Stephen Stubben (of George Washington University and the University of Utah respectively) provides valuable statistical support for investing in a stronger compliance program.
It is well known – or at least long suspected by those of us in compliance – that employee willingness to “speak up” is a strong indicator of a healthy workplace culture. Welch and Stubben examined the relationship between internal reporting system usage and overall business performance. The study used a massive database of internal report records provided by NAVEX, the industry leader in employee reporting systems. The reference set included more than 3 million reports from roughly 5,000 public companies, including more than half of the Fortune 500. What the researchers found is highly validating: The correlation between greater internal reporting “intensity” and better business performance is strong and can be quantified.
The study shows a clear link between reporting systems usage and better business performance—more reports actually mean better results. Statistical evidence shows that your reporting system is in fact an early warning system that allows you to address issues before they grow into bigger problems.
Some highlights:
More reports, greater profitability: Companies with higher hotline usage tend to see a bump in their return on assets (ROA)—up to 2.8 percent higher compared to their less-reporting peers.
Fewer lawsuits, smaller settlements: High hotline activity also translates to fewer material lawsuits and smaller settlement costs. That means big savings in legal fees and less time spent in court.
Better governance, less risk: Companies with robust reporting systems also tend to have stronger governance practices and lower levels of financial reporting issues. It’s like having an extra layer of protection against potential scandals.
Using this data
When coupled with other internal compliance program metrics, these findings can be a game-changer for risk and compliance professionals. It shows that compliance isn’t just about checking boxes—it’s about creating real value for the organization. And for executives and board members, it’s a wake-up call to take reporting seriously. Because when employees feel comfortable speaking up, it’s a win for the organization as a whole.
What’s Next?
This study is another strong indicator that E&C is central to business strategy and investment in the program generates real returns. It also suggests that compliance officers would do well to track reporting metrics and benchmark against industry peers. Use the data and benchmark comparisons to identify possible weaknesses and drive improvements. Once enlightened, all of your stakeholders will thank you for it.
To read the full whitepapers summarizing this research, click the links below:
Strength in Numbers – The ROI of Employee Reporting (insert link to ECI website)
Hotlines & Headlines – Employee Reporting and Corporate Reputation (insert link to ECI website)
For additional observations by the study’s authors, see these HBR articles:
