The importance of effective internal investigations

Why organisations should avoid papering over the cracks

Although the regulatory landscape and ethical considerations have put compliance and integrity on company agendas, no business – even one with the best compliance systems in place – is immune from wrongdoing, be It from senior managers, employees or third parties.

Whether it be incidents of bribery and corruption or financial fraud, employee misconduct in the workplace, or human rights violations in operations abroad, businesses are exposed to multiple sources of ethical risk. It is therefore crucial that companies act at the first sign of trouble both to mitigate the problem and try to prevent repercussions. One of the most effective ways of achieving this can be through an internal investigation for the following reasons.

Putting out the fire: the risks of not conducting an investigation

While investigations, even internal ones  are likely to incur costs, failing to address actual or potential misconduct can be far more costly and damaging.

In the worst cases, failing to properly investigate fraud or embezzlement, for example, can enable a perpetrator to drain an organisation’s resources with potentially dire consequences for both the business and its employees. In the case of workplace misconduct, choosing not to investigate can fuel an atmosphere of mistrust and low morale among employees, undermining any commitments to wellbeing and potentially affecting performance and productivity as a result.

Moreover, the longer the organisation waits to proactively tackle such issues, the higher the potential incurred costs are in terms of fines, legal fees and reputational damage.

In simple terms, an investigation is the process of examining a wrongful act carefully to discover the truth. This process can encompass; identifying the alleged perpetrators and witnesses, analysing evidence and assessing the relevance of the allegations in order to reach a resolution.

Implementing disciplinary measures post internal investigations

After an investigation has been conducted, organisations should be able to draw conclusions regarding the cause of the initial problem and, importantly, apply appropriate disciplinary measures where necessary. Such measures are seen both as a means to ‘punish’ the perpetrator for the wrongdoing and as a way of preventing any recurrence. For example, it is important to note, that if an instance of corruption has occurred, implementing a disciplinary regime to sanction any employee who has violated the organisation’s code of conduct is a legal requirement.

Ensuring that the appropriate disciplinary measures are taken is essential, especially when misconduct has occurred in the workplace, as it can provide a clear demonstration to other employees of what the business will and will not tolerate.  

Preventing recurrence through remediation measures and training

Investigations are extremely useful when trying to determine the root case of an issue, which is essential for any company that has faced an allegation of misconduct. Understanding the factors that contributed to the misconduct, and how it came about, can inform the degree of remediation needed to prevent similar events occurring in the future. Organisations can use this information to amend relevant policies and procedures and draft an appropriate action plan to tackle similar potential challenges.

It can also help organisations prevent recurrence by communicating information about the incident to employees. Instead of using abstract examples of wrongful acts, training employees using real-life situations faced by their organisation and colleagues  can fuel more productive internal discussions around ethics. Such an approach enables colleagues to fully envision the effects that misconduct can have, which can act as a more meaningful deterrent. However, when using real-life scenarios in this way, care must be taken to preserve the confidentiality and anonymity of the people concerned.

The role of investigations in building trust and employee confidence

Investigating misconduct can help organisations build trust in the systems in place, particularly in their internal reporting channels, which is critical for all stakeholders. By investigating misconduct, organisations can help instil confidence among employees and make them aware that misconduct is taken very seriously.

Moreover, when necessary, conducting internal investigations also allows organisations to demonstrate to regulators the credibility of the controls and systems in place to detect and prevent misconduct, as well as the robustness of their approach to ethics overall.  A well-scoped internal investigation can also showcase the organisation’s commitment to tackle the issue and can foster cooperation with authorities.

By proactively addressing misconduct, organisations can limit costs, safeguard their reputation and foster a positive corporate culture that relies on accountability and transparency. Internal investigations are an investment to secure sustainable commercial success over a long-term period and minimise the risk of prosecution for the business and its employees.

GoodCorporation regularly provides investigations services to its clients on bribery, fraud, workplace misconduct, safeguarding and human rights matters. Click here to find out more about these services or contact us directly.