Alice Peterson is the president of Listen Up Group, a provider of confidential whistleblower systems and related ethics and compliance services. In this interview she discusses her company’s work and how a whistleblower hotline can help improve the workplace.

What prompted you to start Listen Up Group?
I was chairing the board’s audit committee for a public company while a scandal was unfolding in 2002, and I began to worry that people might be trying to get information to me. I questioned the management of that company about the mechanisms that they had in place to elicit information that people might want to share confidentially. That led me to an analysis of the marketplace in which I discovered that there was no serious solution available for companies that wanted an independent third-party provider of confidential communications services. Just about the time I was concluding that there was a market for such a service, Sarbanes-Oxley was passed. It required that public companies have an independent mechanism for soliciting and handling accounting- and auditing-related complaints. That was the genesis of Listen Up Group.

How does the service work?
Our confidential communications service is predicated on trust. Most organizations have an open-door policy where they state that there will be no retaliation for bringing forward bad news; however, human nature being what it is, most employees will only speak up when they know that they personally will be safe. If you don’t have a service that’s trusted by employees, then you have no chance of hearing from them.

We do a variety of things that fosters trust. Submissions can be made via a toll-free phone number, a secure Web form or even a post office box. We like to give people a choice because different people will chose different media. The submissions are then read by what we call a submitter advocate. The submitter advocate goes over the submission to be sure that any inadvertent clues to identity have been removed. They then assign a significance level to the submission (high, medium or low), categorize it and finally release to the client’s database. Once it’s released, an automatic e-mail goes out to the client team designated to address these issues. In that notification e-mail, the client review team member simply reads that something new has happened, goes to the My Listen Up web portal, puts in their ID and password, and finds out what it is. We never put anything confidential in an e-mail because it is an insecure communication medium.

To what extent has Sarbanes-Oxley played a role in companies examining their whistleblower policies and procedures?
In our world, Sarbanes-Oxley has actually paid a relatively small role. The reason is that if you just want to comply with Sarbanes-Oxley, there are things you have to do to be in compliance, and we don’t believe that those solutions are the ones that are effective. If they’re not effective, of course, then why do it. We serve small private companies. We serve companies where there’s an absentee owner. The owner wants to be sure that he or she knows exactly what early warning indicators are out there for them. We serve not-for-profits who don’t have any requirement to have this kind of service in place. We are available to government agencies, higher education – really any entity. Some people believe that if you’re a small company, you don’t need it; but in fact, statistics show that smaller companies suffer disproportionately larger losses from fraud than bigger companies. Even if you thought that the only thing you would find out through a confidential mechanism would be a heads up on fraudulent activity, it would pay for itself.

Your Web site talks about “putting teeth in ethics.” How does an organization do that? What are some best practices that you’ve seen?
I would say that creating a healthy culture starts with a bigger set of things than simply ethics training or a whistleblower hotline. Those are important features and services, but a company that wants to do it right really needs to focus on all of the Building Blocks. This is not just one thing; it is a tone set at the top. In other words, does the leader or do the leaders of the company embody in all of their actions the kind of behavior that is expected of every employee in the company? It’s the trust, it’s respect, it’s all of those things that you would expect and want to see everyday at work in a company because they help encourage people to behave well. When people are treated well, they are far more likely to behave the way the company would expect and want them to behave. So, we have to really think about that bigger context because even though our company is offering services that are critical, they are not the end all and the be all.

One best practice with respect to our specific service is promptly responding to submitters’ requests with something along the lines of: “Thank you for taking this seriously. We appreciate your trust in this service and your willingness to come forward, and you can expect that we will take action.” That is a very positive statement. First of all, information ripples through an organization. Employees will recognize the value of the service and utilize it, if management treats these issues seriously. If management, on the other hand, says to submitters, “What do you expect me to do? Call your HR manager.” That likewise ripples through the organization and can undermine the whole process.

What kind of impact does having a whistleblower hotline have on a company’s culture or workforce?
Again, it depends on all the other things that go on around it. But what I can tell you is that when a company puts a service in place like Listen Up – and if it’s serious, if it’s substantial – it can act as a deterrent. To begin with, when you stand up and say you want to hear about illegalities, your people will know that it’s going to be safe to speak up. Likewise, employees will understand that their colleagues could report them, if they break the law, making them less likely to do so. Deterring bad behavior to begin with is the best thing you can do.

People are very aware, more so today than ever before, that their own pension and savings could go away if their company doesn’t remain viable. When leaders make sure people feel like they can speak up about what will make the company stronger, then that makes people feel better about coming in to work every day. It makes them feel like their future is more secure and that they’re working at a place with integrity.