Every whistleblowing system is cheaper than having none at all Away from „Do I need a whistleblowing system?“...
As a successful entrepreneur, it is in your interest for your company to remain successful. That is why you have already recognised the correct answer: the question is no longer „Does my company need a whistleblower system or not?“. The question is about finding the right whistleblower system for you and your company – with a focus on implementation and finances. What costs will a whistleblower system incur for your company?
… to „How much does a whistleblower system cost me?“
A rough calculation is quickly made: Regardless of which type of whistleblower system you choose, it will cost you less than a business-threatening scandal, which in the worst case will be reported in the media. And this calculation does not include the fines for violations of the Whistleblower Protection Act (or GDPR for data protection violations in the reporting channel) have not yet been factored in.
Different whistleblowing systems, different costs
However, navigating the jungle of possibilities isn't straightforward. Whistleblower systems are based on different approaches, and it's not always immediately clear which of them also Requirements of the Whistleblower Protection Act fulfil.
As senior management, you think in numbers and naturally strive to understand the costs associated with each solution for you and your company. The following overview focuses on the cost perspective rather than a detailed comparison of market technologies. For deeper insight into the different configurations, please read the article „What is a whistleblower system?„.
Letterbox
Everyone knows that it doesn't take much time or money to attach a postbox to the house wall. However, the cheapest solution is rarely the best solution when dealing with sensitive data. This is also the case when it comes to implementing a legally compliant reporting channel. With the supposedly practical postbox solution, data protection and confidentiality can hardly be guaranteed, as the processing of the report is only possible analogously. Furthermore, this solution does not allow for any dialogue between the anonymous whistleblower and the person processing the report.
Call centre
The quality of a call centre solution depends heavily on three factors: Is 24/7 availability guaranteed? Which languages are offered? And how is data processed? Costs vary significantly here depending on the provider and availability, but quickly reach 15,000 euros per year. The problem: If you opt for a whistleblowing hotline, or already have one in use, you will have to install an additional channel that covers the receipt of written reports – this is required by the Whistleblower Protection Act. So, the bill for hotline services is usually not the end of the story.
Technical solutions
The costs for the most affordable technical solutions for businesses with few employees range from approximately €500 to €12,000 per year. However, some providers do not offer a transparent price overview, and additional implementation costs are often hidden. Of course, it pays off to get an idea of the product and its functionalities during a demo and to get to know the provider as a company. But to be completely honest: A price indication beforehand is fundamentally decisive for whether you want to invest any time in further research at all. Above all, do not skimp on data protection and IT security aspects.
Solicitor
As a guideline for annual costs, you can expect approximately €5,000. However, these costs only cover the lawyer's involvement as an email or telephone contact. Any further services provided by the lawyer are often billed separately and additionally. In the meantime, there are also offers for an external Ombudsperson as support in fulfilling the Whistleblower Protection Act.
Appointment of a Compliance Officer
In large corporations, the person responsible for the internal reporting channel is usually part of the compliance or legal team. Aside from large corporations, however, this is a less realistic but costly solution for your company.
When considering this, also take into account: a solution via a trusted and independent external provider makes it easier for you to convince your employees that the appropriate confidentiality and anonymity will be guaranteed by the internal whistleblower system.
Costs of economic and reputational damage
The costs of the whistleblowing solutions presented can all be quantified with concrete figures. However, the risks and damages that can arise if no (legally compliant) whistleblowing system is introduced cannot. Furthermore, many small and medium-sized enterprises (SMEs) are unaware of the real risks, underestimate them, or even believe that such a scandal could never occur in their business.
However, precisely in companies with structures where a strong basis of trust plays a significant role in collaboration and which therefore employ fewer control mechanisms, the risk is all the greater that a problem may remain undiscovered.
According to a report in the EY Finance & Performance Management Magazine from March 2020, companies reportedly lose an estimated 5 percent of their annual revenue to economic crime each year. How many euros of revenue would that be annually in your company?
Find the optimal whistleblower system for your needs
Consider the various design options for your internal whistleblower system, you will find that the technical solution offers the most benefits. However, even in the area of digital whistleblowing systems, there is a large number of providers, from whom you must first select the right partner for you. The costs amount to a two- to five-digit sum per month. Many providers also charge a so-called setup fee (costs for implementation). You are probably also asking yourself the question: Can such a software solution meet the individual demands of my corporate management and corporate culture?
Value for money
Imagine you're booking a flight for your holiday with a budget airline. The cheap price, compared to competitors, sealed the deal for you. But at the airport, when checking in your luggage, you're asked to pay extra – you've overlooked the small print. The onboard catering is also correspondingly meagre, and back home, looking at your bank account, you realise you've also been charged extra for reserving your window seat online. In the end, you've spent considerably more than you had originally budgeted for the round trip.
When choosing a digital reporting channel, be sure to consider what services the software provider includes in its package. No one wants to be surprised by hidden costs later on. It's best to choose a provider that offers not only an attractive price-performance ratio but also other things that are important to you as an entrepreneur, such as meaningful references or personal contact persons in customer service.
Whistleblower system with a focus on small and medium-sized enterprises
There are providers that specialise in the SME sector. Why does this make sense? German SMEs have a strong interest in avoiding scandals long-term to secure their existence sustainably. Every company wants to meet legal requirements with relatively little financial and personnel effort. Every managing director likes to see their company's name in the newspaper, but never in connection with negative press. Furthermore, as a managing director, you need flexibility. Your company is growing, employee numbers are rising, perhaps you are even planning to expand. Keep these future developments of your company in mind. Take these aspects into account when searching for the optimal whistleblowing system.
Conclusion on the costs of a digital whistleblowing system? 50 percent less loss
How can you make the right choice?
- Keep track of your company-specific requirements. Meeting legal requirements should be a given when using an external provider.
- Concentrate on the providers who also concentrate on you and who convey the same transparency in their presentation and offer that you also aim to achieve with the product.
- Accept whistleblowing as an opportunity to counter revenue losses: According to the EY Finance & Performance Management Magazine of March 2020, companies with an internal reporting system experience 50 percent fewer losses. How? By uncovering misconduct and taking proactive countermeasures in a timely manner.
Simply put: Failing to implement a whistleblowing system can be costly and even drive your company to the brink of collapse. With a solution, you can avoid fines and prevent sensitive information from leaking. You have the opportunity to take proactive measures and thus maintain control.
Do you want to act now? Are you looking for a simple solution explicitly developed for small and medium-sized enterprises? Do you want to precisely calculate the costs your company will incur if you implement a digital whistleblowing system such as LegalTegrity Introduce?
Then, as a next step, download our Guide „On the implementation of the Whistleblower Protection Act in your company“ down. Or Contact Arrange a personal consultation with one of our experts.
(The masculine form used refers to all people, regardless of gender.)
