Whitepaper: How to Avoid 15 Common Pitfalls that Undermine Workplace Investigations


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Whitepaper: How to Avoid 15 Common Pitfalls that Undermine Workplace Investigations

  1. 1. Whitepaper Whitepaper Human Resources, Internal Audit, Corporate Security, Legal, Compliance How To Avoid 15 Common Pitfalls that Undermine Workplace Investigations Written in partnership with Meric Craig Bloch. Meric is the author of An Insider’s Guide to Workplace Investigations. He is a frequent Ethics Point webinar presenter on investigations and fraud topics. His three-part webinar on workplace investigations was Ethics Point’s most-attended webinar series.
  2. 2. Executive Summary Companies routinely conduct internal investigations of suspected workplace misconduct. When done well, investigations offer a significant return on investment because the investigation determines both wheth- er misconduct occurred and identifies areas of unacceptable business risk. All too often, however, compliance professionals make predictably wrong assumptions about their in- vestigations processes. This compromises the utility of their workplace investigations and minimizes the ROI contribution. Similarly, some investigation methods needlessly expose both the investigation and the investigator to criticism and challenge. This usually occurs after the investigation has been completed when management used the findings to discipline offending employees. However, by then it is too late for the in- vestigator to have avoided the predictable and preventable errors which undermine many investigations. This article explains how investigators and investigation-process owners can avoid some common in- vestigation pitfalls. This will lead to more valuable and defensible investigation findings. Believing that the fewer hotline calls you receive, the less your #1 company is at risk for employee misconduct. Many companies view the whistleblower hotline as the lynchpin of their Compliance efforts. If employees suspect misconduct, they will just call the hotline, right? Well, if you think this, you probably also think that if the hotline is silent, misconduct is not occurring. Either way, you’d be wrong. How to Avoid the Pitfall: Compliance departments must learn about misconduct reports from all possible sources – the hotline is just one source. In fact, most companies have a stated preference for employees to report misconduct to their managers, so you must have an effective way to learn of misconduct allegations whenever and wherever someone makes them. The hotline can never be your exclusive source because it depends on someone’s willingness to use it. This is not enough. Anonymous or confidential reports may be made through the hotline, but they are also regularly made to direct supervisors, the legal department, human resources; your CFO and field managers. Protect both the company and your position by creating “pipelines” so relevant reports received by these other departments are referred to you. The bottom line: ensure you learn of all misconduct allegations however they are re- ported to management. 2/11
  3. 3. #2 Not using a company-wide investigation protocol. Should investigations be consistent regardless of company department? Usually the focus of an investiga- tion reflects the investigator’s professional discipline: lawyers investigate through the prism of potential legal claims (by and against the company), auditors scrutinize affected financial processes and internal controls, and HR managers consider the extent to which offending employees should be disciplined. These part-time investigators have accumulated good and bad habits, and the inconsistency in methodology may lead to a lawsuit sooner or later. How to Avoid the Pitfall: Set a baseline standard for conducting misconduct investigations. The protocol prescribes a methodology incorporating best practices and business objectives. Typical protocols include how to (i) contact the re- porter, (ii) determine the investigation plan, (iii) inform management, (vi) retain pertinent documents, (v) conduct interviews, and (vi) prepare reports. Because each investigation is different, sometimes informed deviations from the protocol are necessary. But the protocol ensures process consistency regardless of the investigator’s company department and experi- ence level. This results in better-quality and more-defensible investigation results. tracking this kind of issue becomes much trickier in such a serious recession, but on the bright side, the infor- mation you need exists. To understand the issues, you just need a way to gather the data. #3 Thinking that employees willingly report suspected misconduct. As kids, we were constantly admonished not to be a tattletale. As adult employees, those lessons remain in our minds. Unfortunately, many employees are worried about retaliation and they doubt that their anonymity will remain protected – even after being told the protective steps companies and call-center vendors take. Also, many employees prefer to take action themselves or believe that reporting misconduct isn’t worth the effort because management either does not care enough about the problem or is unwilling to take the necessary corrective steps. Many employees don’t feel obligated to report misconduct, preferring not to get involved. (One survey showed that 44 percent of the employees asked said they observed misconduct but did nothing about it). How to Avoid the Pitfall: Your effectiveness depends on learning about suspected misconduct, so address employee doubts head-on. 3/11
  4. 4. Remind them of the hotline’s protections and emphasize your company’s zero-tolerance retaliation policy. Publicize certain investigation outcomes to highlight how the company was protected by an employee who cared enough to report misconduct. Finally, emphasize that employees are expected to report suspected misconduct personally and not to ignore it. Treating anonymous reports as inherently unreliable because #4 the reporter is not identified. Sure, anonymity might allow someone to gratuitously denounce a co-worker without leaving a trail. Knowing that, some investigators incorrectly doubt the accuracy of anonymous reports, however the identity of the reporter is irrelevant considering the initial report. You care about whether the reporter knows what she is talking about. Her name is not critical to the success of your investigation; her information is. Focus instead on the quality of the information and its perceived credibility because an anonymous report may be as valid as one with an identified reporter. How to Avoid the Pitfall: If the Reporter is anonymous, learn about the report in other ways. If the report specifies a company office, speak to its manager. If a co-worker is named in the report, check with his or her supervisor or Human Resources. The reporter is just an information source even when identified. There are usually other sources of information for you to check. Whatever you do, don’t try to identify anonymous reporters. An anonymous reporter may voluntarily iden- tify himself if you develop the reporter’s trust, so don’t undermine the promised anonymity of your hotline – or violate your stated policies – thinking that your investigation depends on it. It’s just not worth it. Adopting the reporter’s characterizations and trying to provide #5 the relief he or she seeks. Many investigations get off to a poor start because the investigator misuses the initial report. For example, if the reporter alleges that his boss is prejudiced, an investigation reflexively frames the investigation as a search for illegal discrimination. The investigator winds up looking for something to confirm that conclusion. 4/11
  5. 5. How to Avoid the Pitfall: Treat the report only as initial information. Consider its facts, not its characterizations. Ignore the reporter’s legal conclusions. Remember that reporters may indiscriminately use words carrying legal or emotional meanings. The reporter may use these words without understanding them, to give his report some heft, or to lay the groundwork for a legal claim. Remember that workplace investigations are conducted to satisfy the company’s objectives, not the report- er’s. The reporter’s suggested remedy for the misconduct may be someone’s firing or a promotion to which the reporter thought he was entitled, but these are management decisions, not yours. Manage the reporter’s expectations from the start. Don’t let the reporter walk away believing that you may – or even can – deliver a result you already know will not happen. Disappoint the reporter now, not later when it will appear to him that you are whitewashing the investigation findings. Investigating misconduct allegations solely to make an #6 employee-specific finding. Workplace misconduct can have a significant effect on the company. For example, a customer relationship may be threatened by the misconduct, and the customer now seeks “assurances” (financial and otherwise) that it still has the right business partner. Similarly, misconduct may show that new internal procedures are needed to combat a previously hidden problem. Misconduct does not happen in isolation. How to Avoid the Pitfall: Consider the range of business risks and threats created if the misconduct is proven, not just the employee’s specific circumstances. View the situation from the perspective of a company shareholder trying to protect his investment. Limiting the output of an investigation to assessing employee conduct does not do enough to protect shareholder value. Partnering with affected managers when conducting #7 investigations. Employee misconduct does not occur in a vacuum. Some departments in your company have been affected. These departments have managers who now have a vested interest in your investigation. They may see the investigation as a bureaucratic nuisance and resent the reporter’s story. They may have already concluded 5/11
  6. 6. that the implicated employee should be summarily dismissed so no investigation is needed. They may also fear blame for allowing the misconduct to occur, so your inquiries are seen as an inquisition. Whatever their concerns, allowing management to play a significant role in your investigation frequently derails it. How to Avoid the Pitfall: The investigator must “quarterback” the investigation independently and determine the steps to be taken alone. Collaboration with management is fine, but don’t investigate by committee. Management interfer- ence also creates the appearance that the inquiries are just a corporate ritual to justify management’s pre- determined conclusion. Treat the managers only as the investigation’s beneficiaries. Solicit their views to ensure an effective inves- tigation, but keep your independence. By the way, remind the managers about your company’s zero-tolerance retaliation policy and the need to avoid even the perception of retaliation. People are likely to be sensitive and may misinterpret otherwise benign actions as retaliation. Determining the scope of the investigation as the investigation #8 proceeds. You can’t investigate on autopilot or by the seat of your pants. You must decide in advance what you need to do and how you will do it. Too many investigations start with interviews, not planning, and the investigator hopes that the witnesses will help him frame the investigation issues. The result is a rambling inquiry going in every direction without gathering sufficient evidence for a credible, defensible finding. How to Avoid the Pitfall: Plan the investigation first. Imagine the end of your efforts to determine the scope of the investigation.() What exactly did you need to know? Is the allegation related to a company policy only? If so, focus on the relevant facts, comparing them to the specified company policy, and then suggest business-process improve- ments. If the investigation concerns criminal conduct or financial irregularities, the investigation should as- sess possible criminal and civil exposure against wrongdoers. An investigation’s scope is not engraved in stone. It can always be narrowed or expanded as more informa- tion is learned and additional issues are raised. 6/11
  7. 7. #9 Letting the witness control the interview. One person invariably leads, and the other one follows in an interview because, like any conversation, an in- terview is affected by interpersonal dynamics. Interviews are usually the most important investigation phase, providing valuable facts and explaining underlying dynamics which put the situation in context. But if the wit- ness leads, he, rather than the investigator, decides what information the interview yields. How to Avoid the Pitfall: An investigator asserts and retains control in two simple ways. First, the investigator must determine in advance what he wants to learn from the witness. An outline or list of topics to cover keeps the discussion focused. If the discussion starts to drift away, either innocently or deliberately, the investigator can steer the conversation back. The second way to establish control is to read the witness a standard set of instructions. Because he sets down the interview rules, the investigator establishes control from the start. A standard set of instructions also protects the integrity of the information learned by minimizing the risk that a witness could successfully recant his statements later by claiming ignorance about the interview process. #10 Failing to preserve strict confidentiality. Even if the existence and substance of an allegation is unsubstantiated, a black cloud may hover over an employee’s reputation if the investigator fails to maintain the investigation’s confidentiality. As the inves- tigation proceeds, it only gets harder to keep things quiet because the allegation’s substance spreads with each witness and manager. How to Avoid the Pitfall: Protect yourself and the investigation with abundant discretion. Reveal information only on a need-to-know basis. Don’t make negative statements about current or former employees. Don’t say anything unless you know it is true. Don’t reveal your personal views about the investigation. Admonish witnesses and managers both to keep your discussions private and not to speculate about the alle- gation. If challenged later, the investigator will be able to show that he did all he reasonably could to protect the investigation’s confidentiality. Safeguard the documents you create, especially interview notes and memos. When possible, upload these documents to your case-manager platform for security against both loss and inadvertent disclosure. 7/11
  8. 8. Finally, never promise to keep any discussion secret. You can only promise confidentiality. A witness or manager may tell you something which your legal and professional obligations require you to disclose. #11 Trying to interview every possible witness. The more people you speak to, the more complete an investigation will be, right? Think again. If you believe you need to interview everyone, it usually means you do not have an effective strategy because you haven’t connected each witness with a specific fact-finding goal. How to Avoid the Pitfall: Instead, decide what specific information you need to prove the misconduct, and find people who might have that information. Investigations are disruptive things. The more people you interview, the more you distract people from their daily jobs. The more people you speak to, the more likely it is that the information will get circulated, possibly tainting the recollections of later witnesses so they are influenced to say things differ- ently than if they had not heard the rumors – this could derail the investigation. Stay focused on the limited scope of the investigation. Seek interviews with people who you believe can specifically help you. #12 Failing to document interviews promptly. An investigation is based on what you can prove, not what you know. So if you want to use a witness’s in- formation, document it. Don’t just drop your handwritten notes in the file. Your notes are your subjective understanding of the interview and they are also written in your unique shorthand. Others may review these notes and draw different conclusions. Worse, you may not be able to decipher your writings if challenged later. The risks are compounded if you have someone taking notes for you, especially the risk that two sets of notes contradict each other. How to Avoid the Pitfall: Draft a simple memo to the file transcribing your notes into either simple declarative sentences or a narra- tive of the conversation. Then destroy your handwritten notes. The memo is now the sole written record. Through the drafting process, you’ll identify any gaps to be filled by supplemental questioning. 8/11
  9. 9. You can remember details left out of your notes but you now know should be added. And if for some reason you cannot decipher your notes, you can correct the situation quickly. Remember to avoid asking witnesses to review the interview memo or confirm its accuracy. The memo represents your recording of information gathered from the witness. The memo is not a collaborative ef- fort. #13 Telling an incomplete story in the Final Report. Many companies fear that a robust Final Report amounts to a plaintiff’s roadmap to prove company liability. Consequently, investigators are told to write as little as possible. This means that the report does little more than show some investigation occurred, but a more robust Final Report actually helps the company because it can be used as both a sword and shield. When misconduct is enabled, at least in part, by the contributory fault of third parties, the Final Report can detail their fault to reduce the damages the company may later pay. Conversely, the Final Report can be used as a shield to explain how the misconduct was limited to a rogue employee who bypasses the company’s otherwise effective internal controls. How to Avoid the Pitfall: A complete Final Report defends the company’s investigation processes by showing it was objective and neu- tral. The report also details the investigation’s procedural history to underscore its reliability and thorough- ness. Most importantly, the Final Report offers a full factual narrative of the misconduct and surrounding events because the report becomes the basis for post-investigation purposes. Although the Final Report is almost always discoverable in litigation, the risk that the report could hurt the company is overstated. The underlying witness information and documents on which the Final Report rests would be available to the plaintiff anyway. #14 Assuming all misconduct is the result of intentional wrongdoing. Investigators too commonly look for just enough facts to justify an employee’s termination, assuming the misconduct is willful. More often, however, proven misconduct is the result of ignorance, negligence, poor training, inadequate supervision, spotty internal procedures, or a failure to consider the consequences of 9/11
  10. 10. some action. And when you look closely, the mistakes are rarely stupid. The mistakes are usually forced on people by their perception of their circumstances. The misconduct comes as a result of the unintended consequences of a decision they thought was right at the time. How to Avoid the Pitfall: Don’t investigate by looking only for bad guys. Look instead for the factors which, however unintentionally, created a perfect storm for the misconduct to occur. If the misconduct was intentional, the proof will show that soon enough. Recommending discipline for the implicated employee as an #15 investigator Investigators commonly recommend what discipline the implicated employee should receive, which is a bad idea. Perhaps this stems from the investigator’s superior knowledge of the findings, or maybe because the investigator is also the decision-maker (such as an HR manager). Either way, it shouldn’t happen. How to Avoid the Pitfall: The investigator and the Final Report should not recommend how an offending employee should be disci- plined. Post-investigation steps should be beyond the scope of the investigation. This is for a good reason. If you can decide on the resulting disciplinary action, a conflict of interest may be created to interfere with your ability to explain the objective, credible truth of what happened. This exposes the investigation to a claim that the findings were slanted to support the result the investigator sought. 10/11
  11. 11. Conclusion Investigations are serious business. They significantly impact everyone involved. Investigations also pro- tect a company by substantiating misconduct and identifying unacceptable business risks. By sidestepping common pitfalls, investigators and Compliance professionals promote fair and objective investigations to maximize the ROI of your company’s workplace investigations process. Questions? Comments? Contact sales@ethicspoint.com www.ethicspoint.com 11/11