A solid speaking up culture, which is vital in any organization, typically gives rise to allegations of potential misconduct. Organizations must be prepared to handle these allegations with robust investigation policies and procedures as a crucial pillar of a strong Ethics & Compliance program which, in turn, to creates trust in the system. Trust is built on the principles of honesty, fairness, and respect that must govern the investigation process based on strict confidentiality and the respect for the people involved. We can’t overemphasize the importance of getting the investigation process right: missteps can seriously undermine confidence in the Ethics and Compliance program, thereby elevating the risk of serious and damaging misconduct.
Here we cover the key elements that any organization should consider in the three phases of an investigation: preparation, conduct and post-investigation
Preparation - Pre-investigation
The investigation policies and procedures must reflect a strong commitment from the Board of Directors and senior management to abide by the principles of honesty, fairness, and respect and to take allegations raised in good faith seriously. As part of this commitment, senior management must ensure that the Ethics & Compliance function is equipped with the right resources (human, financial and technological) to conduct the investigations with transparency and consistency.
The organization must put in place one or more confidential speaking up channels (such as an independently operated hotline) to receive allegations or concerns about potential misconduct. All allegations must be taken seriously and assessed to determine if the allegation is a potential compliance issue or a concern of some other kind that needs to be addressed through different channels, for example, a concern about management style that does not rise to the level of a compliance allegation.
The organization should decide whether to have in-house trained investigators who would be knowledgeable about the organizational structure, the business, and the policies and procedures or outsource the investigation, typically to experienced external counsel. This decision may be influenced by the seriousness of the allegation, in particular whether it involves potentially criminal conduct.
If an allegation is established as a potential compliance violation, the Ethics & Compliance function should assign roles in the investigation and define the involvement of other functions: e.g.: HR, Law, IT. A lead investigator will be appointed who decides the investigation strategy including: (i) document preservation; (ii) data gathering; (iii) interviews, and (iv) appropriateand timely communication to line management.
Conduct - the Investigation
Once the Compliance team has determined that the allegation received is a potential compliance violation, an investigation following a pre-established internal investigation process should begin. That policy will that includes rules about due process and the rights of the participants according to local law and the general principles of respect, fairness, and transparency. The lead investigator would be well advised to collaborate with other functions, such as HR, IT, Finance, and particularly the Legal department, to ensure compliance with local laws, particularly data privacy laws.
In a nutshell, the lead investigator should act on the strategy previously decided and start by gathering evidence through data and document collection and interviews with the different people involved: victim, reporter, subject, and witnesses.
Interviews are typically a strong tool for data gathering and fact finding. As a best practice, we recommend that two people, ideally trained investigators, conduct the interview; one leading the conversation with the interviewee and a second taking notes. The interviewers should try to build rapport and trust with the interviewee by clearly stating the interview's objective and the interviewee's role in the investigation. It is essential to communicate the importance of confidentiality of the investigation and reinforce the organization’s commitment that retaliation will not be tolerated.
Interviewers must be prepared if any of the participants request the presence of a lawyer during an interview. Robust internal investigation processes would typically provide guidance on this topic following local law and internal policies. Rigorous and accurate interview notes are very important as they become part of the internal records of the investigation.
The lead investigator finalizes the investigation with a closing report that accurately summarizes the allegations, the facts established during the investigation, and makes recommendations, including disciplinary measures and corrective actions if needed. Disciplinary measures are typically decided by management with the caveats that they need to be proportionate, in accordance with local law and be applied consistently; similar disciplinary measures apply to similar acts of misconduct, regardless of the employee’s seniority or performance.
It is essential that management take ownership of the disciplinary decision to show commitment to the organization's seriousness when handling Ethics & Compliance allegations.
Post Investigation
Once the closing report is submitted and disciplinary measures, if any, are imposed and appropriate corrective actions are implemented, there is still work to do. The aftermath of any investigation is as relevant and may benefit the organization in different ways.
Timely communication with participants is of the utmost importance. As an acknowledgment of the considerable effort made by any reporter to speak up, adequate communication is only fair; equally, those who participated as data sources or witnesses in principle should be informed about the conclusion of the investigation, subject always to respecting the confidentiality and privacy of each person involved. The lead investigator may use this communication as an opportunity to reinforce senior management’s commitment to conducting a serious investigation and the organization’s zero-tolerance policy to retaliation, which is even more important when the investigation is concluded.
The findings of an investigation may help to analyze the root causes of any violation of policy or misconduct and identify trends that may prevent similar behaviors from repeating in the future. The Ethics & Compliance department, together with line management and other risk control functions, may use the findings to recommend changes in policies and procedures to ensure that controls in place are adequate and effective to prevent future misconduct.
The investigation may uncover a need to reinforce training, either general awareness of the Code of Conduct and most relevant policies and procedures or targeted to specific audiences within the organization; the latter has proven to be a very effective tool to intervene when a serious knowledge gap is detected. The organization may also consider using anonymized investigation findings and key learnings to illustrate the principles covered in training.
Having a state-of-the-art investigation process helps organizations not only to identify and address misconduct but also to reinforce a compliance culture of doing the right thing.
Trust and loyalty are built and enhanced when employees observe that senior management takes all allegations raised in good faith very seriously; that the investigation is conducted with fairness, transparency, and respect for the people involved; that the organization uses the investigation findings as learnings to engage constructively with employees. Where feasible and appropriate, leaders should seek out opportunities to publicize these aspects to reinforce organizational confidence in the compliance program. All these are contributing factors to any organization’s objective to pursue long-term sustainable growth.
We believe this summary can serve as a quick reference guide for any organization to effectively approach compliance investigations with seriousness and utmost respect for the people involved.
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