"Fear of retaliation for speaking up about ethical violations in the workplace not only affects whether workers are willing to report wrongdoing to management, it drives the level of misconduct itself," according to a recent study released by the Ethics Research Center. See Research Brief, Retaliation: The Cost to Your Company and Its Employees (http://www.ethics.org/files/u5/Retaliation.pdf).
Second, employees are less willing to report wrongdoing when it is perceived that the report will not be taken seriously. One of the proposed amendments to the Organizational Sentencing Guidelines also emphasizes "taking reasonable steps" in reaction to incidents. See Amendments to the Sentencing Guidelines: http://www.ussc.gov/2010guid/20100503_Reader_Friendly_Proposed_Amendments.pdf.
Strengthen your employee hotline by a clear non-retaliation policy and a commitment to appropriate and timely report follow-up.