Any compliance officer wanting to see how their whistleblower hotline stacks up against their industry peers may want to take a look at the latest findings of a new benchmarking report, which finds that incident reports are on the rise.

According to the 2013 Corporate Governance and Compliance Hotline Benchmarking Report published by The Network and BDO Consulting, which is based on more than 624,046 actual incident reports from 2008 to 2012, incident reports increased in four of the five organizational size categories.

The overall incident report rate has steadily increased over the past two years, led by reports in companies with 5,000 to 10,000 employees (12.6 percent), and companies with more than 50,000 employees (12.1 percent).

Only companies with 20,000 to 50,000 employees—the second largest group—experienced a decrease in its incident rates. On average over the past five years, companies with fewer than 5,000 employees continue to experience the highest number of reported incidents, which the report said may reflect a “lack of segregation of duties that is prominent in smaller organizations and provides for fewer checks and balances.”

The leading incident category across all industries continues to be personnel management, comprising 46 percent of incident reports. These incidents include human resources issues and incidents related to wage and hour and employee relations. Other common incidents include employment law (15 percent), corruption and fraud (13 percent) and employment law violations (12 percent).

Reporting of fraud-related incidents (reports on corruption, fraud, misuse of assets or information, conflicts of interest, Foreign Corrupt Practices Act violations, etc.), climbed to 23.6 percent—an all-time high since the Corporate Fraud Index was first published in 2005. In comparison, the Index stood at 21.1 percent in 2011.

Industry Trends

Incident reports increased in seven of the ten industry categories. The only three industries that experienced a decline in reporting included Agriculture, Forestry & Fishing; Retail Trade; and Services Industries.

The most significant increase occurred in the construction industry, which experienced a nearly 12 point increase from 2011 to 2012, showing a dramatic 197 percent increase in the reporting rate per 1,000 employees over the previous year. The employee count in this industry also saw a dramatic change, from 211,000 employees in 2011 to 60,000 in 2012.

Wholesale Trade saw the next largest reporting incident increase (19 percent) for an entire industry. Only the Retail Trade and Services Industries experienced a year-over-year decline in incident reports.

Based on company size by industry, construction companies with 5,000 to 10,000 employees saw the largest increase in report rates by a wide margin (497 percent). The Public Administration sector with 10,000 to 20,000 employees also saw a substantial increase (147 percent) in its incident reporting rates.

The largest decrease in the number of reports (-40 percent) was seen in the Finance, Insurance & Real Estate industry, with 5,000 to 10,000 employees.

Other TrendsSeventy-two percent of participants did not notify management of an issue before making a hotline report in 2012. That statistic has stayed steady over the past five years. “The high percentage of participants not informing management indicates a preference among the majority of employees to use a reporting mechanism other than a face-to-face conversation,” the report stated.

The report highlights the important role that anonymous employee hotlines continue to play. According to the report, the level of anonymous reports has remained relatively stable over the past five years, with a slightly higher percentage of participants (51 percent) choosing to reveal their identity rather than remain anonymous.

By industry, anonymous reporting is most prevalent in the Public Administration on (60 percent) and finance, insurance and real estate (57 percent) industries. Anonymous reporting is lowest in the construction (32 percent) and transportation communication and utilities (39 percent) industries.

In 2012, 72 percent of reports warranted an investigation, an increase of six percentage points from 2011. Of the total reports that warranted an investigation, 44 percent resulted in corrective action—reaching the highest level over the last five years.

The poster continues to be the most popular means of hotline awareness (33 percent). The report stated, however, that a company's Intranet and other electronic means are modestly rising in popularity.