It’s an industry operating under the premise that companies run better when workers can safely sound the alarm on everything from bad breath to bribery. The task is often farmed out to third parties with names like SpeakUp, Navex and EQS.
SpeakUp, based in Amsterdam, helps operate Nestlé’s line. In 2024, it handled 3,218 calls and messages with allegations ranging from bullying and harassment to fraud and conflicts of interest at Nestlé and its suppliers. Nestlé says it substantiated 20% of them, and 119 people left their jobs as a result.
“Hotlines are magic,” said Raheela Anwar, president and CEO of Group 360 Consulting, a Chicago-based corporate advisory firm. “Because people are willing to tell the truth.”
At public companies, they’re also required. The post-Enron Sarbanes-Oxley financial reforms passed in 2002 mandated that companies have a process for whistleblowers to report potential ethics violations. A 2019 European Union directive does the same. More than 90% of U.S. firms with at least 1,000 employees provide a hotline for workers, according to HR Acuity, a company that helps employers track internal investigations and includes employee hotlines among its offerings.
HR Acuity CEO Deb Muller says companies need to publicize those tools and make sure employees can access them easily: “You want to encourage people to speak up, and not just when things are on fire.”
How it works
Most employee complaints are handled the old-fashioned way: People go directly to their manager or to the human-resources department with workplace concerns. Hotlines come in when things get trickier. Nearly a quarter of hotline tips are made anonymously, according to an HR Acuity survey of employers this year.
Hotlines gained favor in the 1980s as channels for government whistleblowers to report on waste and excess following tales of $659 ashtrays and $435 hammers purchased by the Defense Department, recalled David Childers, the founder of EthicsPoint, which later became Navex, the leader in the hotline business. Early hotlines were literally red phones placed on someone’s desk or in a little closet, he said. When the red phone rang, the person tasked with answering might shoo others out of the vicinity. So much for confidentiality, he says.
As the industry evolved, teams of third-party operators started taking calls, and were often available 24 hours a day in case urgent matters came up, said Richard Kusserow, a former officer at the Federal Bureau of Investigation who started one of the first big third-party hotline companies in the early 1990s, called National Hotline Services.
The 2002 passage of Sarbanes-Oxley gave the industry a huge boost. Even more companies got on board around 2018 after the #MeToo movement prompted a deluge of sexual-assault and harassment allegations. That year, for example, the National Basketball Association launched a hotline for use by employees of all 30 teams as well as the league itself.
These days, most allegations come in through online portals rather than phone calls, says Muller, and third-party hotline operators don’t screen those messages. The complaints are typically routed to either HR or a legal and compliance group that might be part of a company’s general counsel’s office. Dedicated staffers, often called the employee-relations team, sometimes conduct internal investigations.
At Nestlé, most “Speak Up” reports are handled by local offices around the world, but are escalated as high as to the CEO if they are sensitive or involve a member of the executive board. When someone sent in a tip about the CEO, Laurent Freixe, earlier this year, the Swiss food giant’s chairman and another nonexecutive board member took the lead.
Complaints to tiplines have felled other executives, too. Alleged mistreatment of women helped topple a Credit Suisse executive board member in 2021 after an anonymous hotline tip. And Teflon-maker Chemours last year launched an accounting probe after an anonymous tip on its ethics hotline. The company later determined that top executives had shifted cash flows at year-end to hit targets that determined their annual stock and bonus awards. Its CEO and chief financial officer subsequently resigned.
A Chemours spokeswoman declined to comment. Last year, the company said an internal review into the matter didn’t result in any material misstatements of financial statements or disclosures.
When allegations are serious or involve senior leaders, companies are wise to engage an outside team—a law firm, usually—to investigate, HR Acuity’s Muller said.
“If you do it internally and you find nothing has happened or there’s no merit to the allegations, there will be a lot of naysayers,” she said. Not to mention, it’s natural to hesitate investigating someone who “signs your paycheck.”
Most investigations are of less-prominent employees, and often happen without public disclosure. A common scenario is a hotline report saying a manager is dating a subordinate, violating corporate policies. An employee-relations representative may not initially confront any of the people involved, but instead stealthily pull their emails, Slack messages, meeting invites and other correspondence to scour for any indication of a relationship, veteran human-resources advisers say. Often, they look for keywords, such as “dinner” or “date.”
“You investigate it,” said LeShanda Davis, a longtime senior director of employee relations, whose role occasionally includes these “pan and scans,” as she calls searches through employees’ communications. “You have to do things based on fact.”
Nestlé’s gossip line
This year, Nestlé’s whistleblowing hotline became a gossip line of sorts for tips involving the CEO’s love life. An anonymous tipster had reported that Freixe was in a relationship with a marketing executive directly under his command, and also wrote directly to Nestlé’s chairman. As Nestlé made queries, both parties denied being romantically involved, a Nestlé spokesman said. Freixe is married to another former Nestlé employee.
Nestlé’s board brought in a law firm, Bär & Karrer, to investigate after further concerns came in over Speak Up, and a Zurich blogger reported on the affair. Such relationships are against company policy.
The law firm confirmed the relationship, a Nestlé spokesman said. Freixe met with members of the board and exited without a severance package. The company announced his departure Sept. 1.
Freixe didn’t respond to requests for comment. In public messages to colleagues on LinkedIn last week, Freixe congratulated his successor, Philipp Navratil.
Nestlé rolled out its first internal reporting system in 2002 to enforce commitments it had made to restrict marketing of its infant formula, a hot-button issue for Nestlé that had triggered boycotts since the 1970s and tarnished its reputation.
The hotline expanded in 2012 to include any type of employee concerns. Within months, hundreds of messages had poured in. Early complaints were about leadership styles, conflicts of interest and harassment, Nestlé said at the time.
Over the years, the company has had to contend with reports of forced labor, corruption and safety deficiencies, and stood up incidents of bribery, environmental abuses and leaks of confidential information, it has said in reports it puts out each year about the hotline. Nestlé provides more detail in the report than is required, but Swiss and European companies increasingly share such data under rules aimed at combating human-rights abuses, corruption and other risks in their supply chains. A sampling of some other large Swiss companies shows message volume per total employees at between around 0.5% and 2% last year, with Nestlé’s at 1.16%.
Abuse of power, bullying and mobbing—when workers gang up on someone—has been one of the largest categories at Nestlé. The 277,000-employee multinational firm typically gets a few complaints a year involving an executive board member or other senior leader in Switzerland, according to its reports.
Detecting patterns
In most workplaces, the largest share of calls generally involve interpersonal conflicts between co-workers or between managers and direct reports. Some employees complain their boss is asking too much of them, or call the hotline to express their disappointment at how they were rated in a performance review. A rude joke, a reference to someone’s appearance or allegations of discrimination are also common fodder for hotlines, HR executives say. So are colleagues who fart excessively or heat up fish in the microwave.
At their best, hotlines help companies identify not just code-of-conduct violations and ethical problems, but also trouble spots like a toxic manager or a department with a poisonous culture.
When patterns emerge in multiple complaints, a company has to act, said Jennifer Dulski, a former Meta executive who teaches at Stanford Business School and leads Rising Team, an AI management-coaching company.
“When they’re not effective is when they’re ignored,” she said.
At well-managed companies, boards get an update on hotline activity—complaints, resolutions, high-risk matters—at quarterly meetings, said Dulski, who has served on the board of Weight Watchers and other public companies. Some companies provide boards with a quarterly dashboard of hotline reports, summarizing the most serious complaints in a few sentences.
‘You want to encourage people to speak up, and not just when things are on fire,’ says HR Acuity CEO Deb Muller.
Muller, of HR Acuity, estimates the industry around hotlines and other software that tracks internal probes now exceeds $18 billion in annual revenue globally.
The largest player in the hotline industry is Navex, which grew from the merger of David Childers’s EthicsPoint and two other firms into a software provider that offers tiplines and other tools for 13,000 employers. Over the years, it has swallowed up many smaller firms (including Kusserow’s National Hotline Services) and now has around 50% market share, according to the HR Acuity survey this year. In July, a consortium led by Goldman Sachs Alternatives acquired a majority stake in the company; the private-equity giant Blackstone also became a minority investor.
Last year, EQS Group, a Munich based compliance-software provider, bought a business that included Convercent, a popular hotline provider in the U.S.
Buy-in from Buffett
The corporate tip line has some notable fans, including billionaire Warren Buffett. His Berkshire Hathaway—which owns dozens of companies, from Dairy Queen to auto insurer Geico and the paint company Benjamin Moore—gets about 4,000 reports to its hotline annually, he once told investors.
“At Berkshire, the main source of information for me about anything that’s being done wrong at a subsidiary is the hotline,” Buffett said at Berkshire’s annual meeting in 2017. “And most of them are frivolous: ‘You know, the guy next to me has bad breath,’ or something like that.
“But,” he said, “there are a few serious ones.”
The company’s audit team reviews complaints, and Berkshire has at times hired special investigators to review tips when necessary, Buffett said, without revealing specifics.
“Anything that looks serious, you know, I will hear about,” Buffett said. “It has uncovered certain practices that we would not at all condone at the parent company. I think it’s a good system. I don’t think it’s perfect.”
Write to Lauren Weber at Lauren.Weber@wsj.com, Margot Patrick at margot.patrick@wsj.com and Chip Cutter at chip.cutter@wsj.com