Last Line of Defense: The Role of the Hotline in Ethics Programs for Construction Companies

A new study conducted jointly by FMI, the largest provider of management consulting and investment banking to the engineering and construction industry, and the Associated General Contractors of America (AGC), establishes best practices for running an efficient and effective reporting system, with specific regard to hotlines.

FMI’s research team spoke with general counsels, senior vice presidents and compliance officers from 22 construction and construction management firms to determine their processes for dealing with reports of ethical misconduct. Key findings were presented at AGC’s annual Surety Bonding and Construction Risk Management conference in Naples, Fla.

Ethics programs have been praised roundly for the effect they have had on the engineering and construction (E&C) industry, shoring up the reputation of firms, and bringing stricter oversight and regulation of work practices. Although only an estimated three percent of reports come through the company hotline, according to research by the Ethical Resources Center (ERC), the importance of having a trustworthy and confidential reporting mechanism in place cannot be understated. A phone call or email may be an employee’s only chance to make a report.

As one participant states, “The hotline is only one piece of an ethics program. You have to have an ethical culture to be successful,” he says, “and I think one of the reasons we’ve had so few calls and reports is because we have a good strong ethical culture in the company, which we’re always trying to reinforce.”

Key highlights of the article include:
1. Background information and key statistics from the Ethical Resources Center on who’s telling you what you need to know and who isn’t
2. Mechanisms an effective hotline should offer the whistleblower
3. Synopsis of how companies assess and investigate ethical breaches
4. Synopsis of how companies respond and communicate in the aftermath of an ethical breach
5. Best practices regarding ethics programs, and the reporting mechanisms that underpin them

The gamut of interviews conducted for this study, as well as the research that preceded it (“Ethics programs: Federal mandate, cultural opportunity”) point toward the ongoing importance of a vital ethical culture within each company. Ethics is not an end point, but an ideal that must be communicated, discussed, referenced and investigated on a continuous basis.