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Many retailers operate hotlines to provide employees, suppliers, and customers with a way to confidentially and anonymously report misconduct or policy violations. Coldwater Creek is one such retailer. But when Divisional VP of Internal Audit Fred Halpin found effectiveness and efficiency problems with the retailer's homegrown management-operated voicemail-based hotline, he knew it was time to overhaul the problematic system.

Coldwater Creek operates 355 stores across the United States, specializing in women's apparel. Therefore, the retailer provides a dedicated hotline service that allows callers to report concerns in a discrete way to its internal audit function to identify trends and resolve concerns. Anyone can call the 1-800 hotline number, which is posted on Coldwater Creek's website.

Avoid In-House, Voicemail-Based Hotlines
When someone called the hotline, they were not connected with a person, but rather a voicemail message. The voicemail message instructed the caller to describe the concern, and to provide contact information if they'd like to be contacted, or to omit contact information if they wished to remain anonymous. "Our hotline system had efficiency and effectiveness problems," explains Halpin. "Because our hotline system was voicemail and spreadsheet-based, listening to the voicemails and plucking important data points in what were sometimes rambling voicemails was time consuming and inefficient." Members of the internal audit function manually entered data from each voicemail into a spreadsheet for follow-up and record-keeping purposes. "Anonymous callers would not always include pertinent points we needed to address their concern," says Halpin. "That affected our ability to act on those concerns. Sometimes we were forced to drop the case altogether due to lack of information and hope the caller called back." Also, the fact that it was an in-house, internally-managed process and system created the potential for a negative perception in people's comfort level. For instance, some callers might have questioned whether their company-related concerns would be objectively addressed given the company managed the process itself.

In addition to the aforementioned issues, each voicemail presented the internal audit function with two important yet daunting tasks. As the gatekeeper of the hotline's voicemails, the committee prioritized each voicemail based on its severity. Level A calls were allegations of serious infractions (e.g. laws were broken or code of ethics was violated). Level B calls were complaints (e.g. unfair treatment by a supervisor). Level C calls were innocuous inquiries (e.g. how is vacation calculated on my paycheck?). The internal audit function had to diagnose the call, and once they did, they had to determine who within the organization was best to address it. "Diagnosing and assigning calls is very important to success of the program," says Halpin. "But it takes a long time when you couple it with screening voicemails."

Let Call Centers Field Your Caller's Concerns
Given the homegrown hotline system's inefficiencies, Halpin chose to overhaul it and replace it with case management software. Halpin researched three companies before choosing EthicsPoint Issue and Event Management software and call center services. The vendor operates a call center in which college-degreed employees receive several weeks of training before taking live calls. "Call center employees are trained to probe for actionable data for the caller's concerns," says Halpin. "Now we have two automated means by which a person can voice their concerns. The first is the call center, and we did not have to change the telephone number, making the transition seamless for callers. The second is Web-based self entry." Via the retailer's intranet, an employee can visit the Coldwater Creek area within the Ethics Point software to enter a concern. If the person is at home, they can log onto www.ethicspoint.com to enter a concern. The questions and prompts people receive on the Web are the same questions in the same order as call center questions and prompts.

EthicsPoint is an application service provider (ASP), and the software is hosted at EthicPoint's data center. Coldwater Creek accesses it via the Web. Halpin uses Issue and Event Manager's analytic capabilities to study call data in detail. If an issue becomes bigger than an isolated incident, Halpin can identify it, and Coldwater Creek has the opportunity to address it early. Indeed, after a concern has been reported either via the call center or the Web, the retailer's internal audit function receives an email, which explains that a new concern has been reported. Internal Audit determines if the concern is A, B, or C level and to whom within the organization it will be assigned. Internal Audit sends the designated person an email explaining that a concern has been reported, and attaches the caller's report, which is generated from Ethics Point, to the email. The report provides details of the caller's concern (e.g. name, store location, and nature of call). The internal audit function gives the person assigned to the call two weeks to report on how the investigation went. For A-level concerns, when the investigation is complete, the internal audit function meets with others in management to discuss the results, at which point they close the case or ask additional questions of the people involved.

When employees trust management and see that there is a consistent and timely response to their issues, they are more productive and less likely to violate your code of conduct.

Indeed, Coldwater Creek has benefited from implementing the vendor's call center services and Issue and Event Management software reporting tools. The software reduced by half the internal audit function time spent analyzing calls. Because of the live call center, the retailer's internal audit function no longer deals with hotline calls. "The reporting packages we receive now as opposed to the manual reports we used to use offer more information and are much more detailed," says Halpin.