2021 marked a historic year for the U.S Securities and Exchange Commission's whistleblower program. Last year, the SEC gave the highest numbers of awards, both in terms of award volume and dollars in any given year to date. This was fueled in part by the record number of tips it received--more than 12,000. This follows a significant decline in reporting to organizations' internal reporting systems in 2020, likely due in part to the pandemic. Further, an early data analysis of 2021 data indicates that internal reporting volume, while higher, has not yet returned to pre-pandemic levels of reporting.

It is not likely that the potential for wrongdoing has declined, especially as indicated by the record reporting to the SEC. So, are employees not reporting incidents? Or are they going straight to external reporting options? Neither is good for organizations that seek to ensure employees feel comfortable speaking up internally.

There are two common reasons why employees decide not to report misconduct. First, they may fear retaliation from the leadership team and/or from the people they are reporting. Second, they may also feel nothing will come of their reporting efforts.

While there are incentives for employees to take their concerns and complaints outside, including financial ones like the SEC Whistleblower program, there are steps that compliance leaders and other business executives can take to build confidence in their internal reporting systems so they can proactively address issues before they escalate further.

While some organizations may be of the mindset that fewer reports mean fewer incidents, this couldn't be further from the truth. In fact, more reports indicate employees feel comfortable speaking up--a sign of a great company culture and a strong compliance program. Further, a proactive strategy that encourages employees to speak up can keep incidents from becoming a news headline--a situation no organization wants.

Given this, here are three ways organizations can encourage employees to feel comfortable with reporting systems and protocols, while also addressing the fear of retaliation or lack of action.

1. Train managers on how to receive and manage reports properly.

Every organization should be receiving reports from employees--even if they seem mundane on the surface. In fact, leaders can learn the most about their business and organizational culture from incidents that may seem less severe.

The first step to normalizing a speak-up culture is ensuring that all managers understand the importance of reporting processes, and most significantly, how to respond to issues raised to them. Most employees are told to "talk to their manager" in times of concern, yet many managers are unaware of how to receive reports, manage the next steps to ensure action, and prevent retaliation from occurring.

For this reason, it is crucial for organizations to deliver thorough and recurring compliance training that highlights how managers at all levels, but perhaps most important the first-line supervisors, can best receive internal reporting, how to identify risk areas, and why internal reporting of questions or potential wrongdoing is essential to business success. Employees are less likely to be invested in business growth if they feel uncomfortable raising their questions or concerns.

2. Create transparency around the reporting process.

For many employees, reporting an incident or difficult situation to managers and senior-level colleagues can be daunting. Organizational transparency about how the reporting and investigation process works, as well as the types of information the organization will provide at the completion of the investigation, will help employees make an informed decision about reporting.

Specifically, review the process in onboarding training, and in recurring organization-wide training sessions--and thoroughly outline what happens when reports are submitted, the expected timeline for action, and what is classified as an actionable offense. Also, ensure this information is available on any web reporting sites. This level of transparency shows employees that organizations take internal reporting protocols seriously and that an efficient, authentic system is in place.

3. Show reporting program success in action.

Simply having a reporting program is not enough. Leading organizations build a compliance culture that is stronger than SEC reporting. This is done by demonstrating program successes, whether it is following through on actions that were promised, or, at a higher level, showing how a strong compliance program has led to better business outcomes.

When employees feel heard, understood, and appreciated, they show more pride in their work and offer more value to the organization. With that, having a successful business is dependent on having a healthy compliance program--and vice versa. Neither can be independent of the other.

Successful internal reporting programs should be thorough, authentic, and consistent. This is accomplished through effective leadership training, system transparency, and, most important, action. By fostering a speak-up culture that encourages internal reporting, employees will see that a healthy workplace is paramount to the company, and that's the foundation to a strong, business.

Correction: An earlier version of this article misstated the number of tips the SEC got last year. The correct number is over 12,000.