The Importance of Getting Internal Investigations Right

The Importance of Getting Internal Investigations Right

Internal investigations are a vital function for maintaining integrity, addressing misconduct, and mitigating legal liability. A proper internal investigation can shine light on the facts of an incident during a difficult time, bolster a company’s policy adherence, and discover gaps in current processes. However, when these investigations are conducted poorly or mishandled, they pose significant risks to the organization. Bad or incomplete data analysis and mishandled interviews lead to legal liability, damaged employee morale and reputational harm. The consequences of a flawed internal investigation can be far-reaching and severe.

Bad or incomplete data analysis

In many investigations, good clean data and strong data analysis are the keys to a successful resolution. The expression “garbage in, garbage out” rains truest in internal investigations. Seasoned professional investigators are adept in reviewing data for accuracy and implementing diverse methods of data mining. Examples of applying data mining techniques, such as clustering, classification, and association analysis, are used to uncover patterns indicative of fraudulent behavior. Professionals may also use innovative technology to aid in the process by utilizing machine learning algorithms to identify anomalies and deviations from expected behavior, flagging suspicious transactions or activities. A professional investigator has his or her past work experience to aid in understanding current and future situations. Using historical fraud data, a seasoned investigator can build models that can predict and prevent future instances of fraud, very similar to NAFA’s FraudSeeker™ model.

Mishandled Interviews

Admission seeking interviewing is both an art and a science. There are organizations that offer one-to-three-day courses on interviewing techniques – training is a vital component to conducting proper interviews, but experience is perhaps the most critical. It is one thing to use scripted questions and responses to objections, but it’s a completely different matter when a live subject is loudly objecting, throwing out differing “facts”, and challenging an interviewer’s credibility. A seasoned investigator knows exactly how and how not to manage these tense moments and how to move the conversation back to the intended task, an admission.

Most often, an outside internal investigator is a better choice to interview an internal fraud suspect. Personal relationship and/or conflicts can muddy up an already difficult situation. A confident professional investigator can immediately lend a sense of credibility to the interview to both the suspect and employee base. Having a supervisor or Human Resource professional to do an admission seeking interview sends the wrong message – a supervisor interviewing a suspect adds a dynamic to the interview where the suspect is more concerned about appeasing his/her boss rather than discussing the matter at hand, and the human resource manager is often seen as an ally and support to an employee; turning that perception around to be seen as an authority on a fraud related matter is very difficult and cannot be done in a short period of time. Others who are not involved in the investigation will then change their perception of human resources to be more adversarial, and not feel comfortable asking for help in traditional HR matters.

What A Poorly Executed Internal Investigation Produces

Legal Liability

Poorly executed internal investigations can open an array of legal liability for an organization. Three areas that are specifically vulnerable to legal liability include whistleblower protection, violations of Fair Employment Practices, and document retention.

Whistleblower protection is a vital component of an internal investigation. Aside from the lengthy legal liability, failure to protect whistleblowers damages the company’s credibility and in turn, the credibility of the investigation. In a similar sense, following fair employment practices is paramount; Internal investigations related to employee misconduct should be conducted fairly and impartially. Discrimination or bias in the investigation process could lead to legal challenges such as wrongful termination or discrimination claims. Lastly, document retention is essential for organizations to properly preserve, and document evidence collected during an internal investigation. Failure to do so could result in spoliation of evidence claims, which may have serious legal consequences.

Damage to Employee Morale and Trust

Employees may lose trust in the organization’s commitment to fairness and integrity if they perceive internal investigations as biased or unfair. Morale can suffer as employees fear reprisals or retaliation for reporting misconduct, leading to decreased productivity and engagement. Having an outside, impartial professional conduct investigations can protect the company from this problematic situation. Doing so shows that the company is invested in ensuring that fair, unbiased internal investigations are conducted, and employees can trust that results and actions come about through fair, fact driven scrutiny, not personal preferences, biases, and conflicts.

Reputational Fallout

The names Volkswagen, Wells Fargo, WorldCom and Cisco all have one thing in common, industry giants who were significantly impacted by a poorly received mishandled investigation. Negative publicity stemming from mishandled investigations can tarnish the organization’s reputation, eroding consumer trust and investor confidence. Stakeholders, including customers, partners, and shareholders, may distance themselves from the organization, impacting revenue and market share. Reputational damage can have long-term consequences, affecting the organization’s ability to attract top talent and secure business opportunities.

In today’s business world, there’s so much at stake when conducting an internal investigation. Professional investigators have the skill, knowledge, and experience to make sure an internal investigation is completed properly- it is never worth it to risk an investigation with amateur mistakes. The costs are simply too high. NAFA can help you by performing quality internal investigations. Call us today at an office closest to you.