Turn Employee Misconduct into Knowledge

When bad things are good for your business

Posted by Meric Craig Bloch in on September 14th, 2015

What happens in your company when someone reports an incident of actual or potential employee misconduct? Does your company respond to the report to investigate the situation, remedy it or learn from it? Or does your company treat it as little more than a disposal problem which arises from time to time only to delegate the report ad hoc to a human resources manager or in-house attorney to handle (in addition to their regular duties)? Does the outcome, even assuming the investigation gets completed, even matter?  How serious is the company about learning what may have happened?

A successful company assesses risks all the time. Checks are run on new customers to determine if they are credit-worthy.  Aging reports are prepared for accounts receivable to determine if the risk of non-payment has reached an unacceptable level. Before a new branch office is opened, decisions are made whether the risk that it will be unprofitable is less than the possibility of financial success.

But what about the business risk from employee misconduct? What about the vulnerabilities of company systems – not to process inefficiency or mediocre operations – but to fraud and abuse? Is anyone looking into those areas of risk besides you? These risks affect shareholder value too. If protecting the investments of your owners is a primary duty of each company employee, identifying and addressing those risks with a thorough investigation places our function squarely within the business’ fundamental purpose.

Too Much Trouble to Investigate?

There is a world of difference when you use the investigation process as a way to improve business processes and as a risk-management tool than if you think small and use it only as a way to prove that a discrete act of misconduct occurred.
All of this sounds fairly straightforward, so why doesn’t every company’s management adopt such an enlightened approach to using investigations this way? It may be that management believes the company does not have the time, personnel or resources to conduct investigations efficiently. Executive management may think that the value of a workplace investigation is intended only to substantiate the misconduct of a single employee, and that the business leaders are already certain of his guilt.

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It may also be to “let sleeping dogs lie,” and ignore problems that are known to exist but seem too disruptive and costly to fix. It may be a lack of imagination to see the business value of a thorough inquiry. It may be that your managers are too confident in their own high-minded ethics message to consider that a robust investigation might be a way to confirm that the message is as effective as they hoped it would be.

Whatever got your managers to this point is irrelevant. What matters is that both your effectiveness and professional success as a compliance officer depends on broadening their perspectives. And it’s not like they haven’t been conducting investigations until now. Even before compliance departments existed, companies assigned corporate-security departments, human resources people or retained lawyers to look into allegations of wrongdoing. But the goals there were not the examination of business processes and corporate counseling. (Their purposes are, respectfully, threats to company assets, personnel management, evaluation and advocacy of applicable legal interests.) There is a world of difference when you use the investigation process as a way to improve business processes and as a risk-management tool than if you think small and use it only as a way to prove that a discrete act of misconduct occurred.

Raise the Bar for Investigation Quality

Don’t be complacent and accept your company’s – probably default – position on limited inquiries.
Let’s be even more practical. Substantiating employee misconduct is comparatively easy. With at-will employees, little is needed to justify their termination. This sets the bar fairly low for investigation quality. Consequently, almost anyone can conduct an investigation. As a compliance officer, however, you should push the bar higher. You can do that by using the allegation as an opportunity also to identify process and management failures, and other areas of unacceptable business risk.

Think big and share your thoughts. Don’t be complacent and accept your company’s – probably default – position on limited inquiries.  Act like the corporate fiduciary you are, and squeeze more value from your work. Help your company turn misconduct into knowledge.

So help your company by helping yourself. It’s a win-win situation.


Meric Craig Bloch
Meric Craig Bloch

Principal, Winter Compliance LLC

Meric Craig Bloch is the Principal of Winter Compliance LLC, a consulting practice helping organizations create effective internal investigations programs through investigation process design, investigator training, and investigations management. He has designed, implemented and managed the workplace-investigations processes for multinational Fortune 500 companies, trained thousands of HR and compliance professionals to conduct investigations and has conducted more than 400 internal investigations of fraud and serious workplace misconduct in the US and internationally.

Meric is an attorney, a Certified Compliance and Ethics Professional – Fellow, a Certified Fraud Examiner, a Professional Certified Investigator and has written two books on investigations as well as chapters in industry publications. He is on the faculty of the Society of Corporate Compliance and Ethics’ Basic Compliance and Ethics Academy.