Why most workplace investigations are costly, damaging and futile

Not because it cured patients. Quite the opposite. It often weakened them.

Yet doctors persisted because failing to bleed a patient exposed them to criticism if the patient died. Better to follow accepted practice than risk being accused of doing too little.

Most workplace investigations now serve a similar function.

Boards and senior management often commission them not because they are the best path to the truth, but because failing to do so invites criticism if matters worsen.

That should concern every board and C-Suite team. Workplace investigations remain essential in cases involving very serious allegations of harassment, discrimination, violence, fraud and abuse of authority.

But what began as a useful tool has become a thriving industry.

Today, investigations are conducted by lawyers, retired judges and arbitrators, consultants, specialized firms and a growing network of professional organizations.

Many investigators are conscientious professionals performing their work fairly.

That is not the issue.

The issue is that industries develop incentives that support their own growth.

As a result, organizations increasingly and unnecessarily use investigations not only for serious misconduct but also for personality conflicts, management disputes, governance disagreements and interpersonal tensions that leaders once handled directly and could easily be resolved or investigated by trained HR staff.

The costs are substantial. Investigations involving senior executives can and regularly do consume hundreds of thousands of dollars, preoccupy boards for months, sideline key leaders and divide or even immobilize organizations.

Yet the conclusions often mirror what a competent board or executive team could have determined much earlier without the expense and corporate immobilization.

One director recently described the process as paying six figures to postpone a difficult decision.

The financial cost is often the least significant impact. Careers are interrupted. Reputations suffer. Departments divide. Strategic initiatives stall. Productivity declines. Relationships dramatically deteriorate.

Meanwhile, a more troubling question receives little attention. How independent is the modern workplace investigation industry?

Investigators are selected and paid by one side and often retained repeatedly by the same organizations.

Some would strongly reject any suggestion that they consciously tailor findings to satisfy clients.

But the concern is not merely dishonesty — although that is sometimes a concern. It is human nature.

A professional who reaches conclusions unwelcome to those controlling future mandates may receive fewer assignments. The influence is not necessarily conscious, which is precisely what makes it difficult to detect.

Every sophisticated governance system recognizes this risk. Judges do not depend on repeat business from litigants. Auditors are subject to extensive independence requirements. Compensation consultants are expected to remain independent from the executives whose remuneration they assess. Public companies devote enormous attention to avoiding even the appearance of compromised judgment.

Yet many organizations seem comfortable with investigative structures that would raise extremely serious concerns elsewhere.

A system need not be corrupt to produce distorted outcomes. The risk is subtle bias operating within a system that purports to be objective.

Another concern receives even less attention. Organizations retain investigators because they want answers.

But by the time an investigation begins, key decision-makers have generally already formed preliminary views about who is right and wrong.

The danger is that those involved gradually becomes invested in a particular narrative, and that is what gets reported to the investigator.

The investigation becomes less an exercise in discovery than one of confirmation.

Evidence supporting the prevailing narrative tends to receive more attention, while contrary evidence receives less. Witness credibility can be filtered through existing perceptions of the people involved.

Again, this is not necessarily misconduct. It is one of the most common cognitive errors in decision-making.

The psychological profession calls it confirmation bias. Psychologists point to the halo effect — and its darker counterpart, the horn effect. Human beings rarely assess conduct in isolation. They assess people.

The admired executive often receives the benefit of the doubt, while the abrasive or unpopular executive does not. Identical conduct can be interpreted differently depending on who engaged in it.

Investigators are not immune to such biased thinking. Neither are judges, juries or boards.

In many investigations, objective evidence is limited and outcomes depend heavily on credibility assessments and subjective impressions. Under those circumstances, the question is not simply whether misconduct occurred. It is whether the decision-maker likes, admires, fears, resents, trusts or distrusts the person being assessed.

No amount of training eliminates that risk. Yet organizations often treat investigation findings as though they carry the certainty of judicial rulings. They do not. There is no formal discovery. No cross-examination. No rules of evidence. No appeal.

There is simply an investigator attempting to reconstruct disputed events after the fact.

Reasonable investigators can and do reach different conclusions based on the same evidence. The confidence organizations place in their reports generally exceeds the reliability of the process.

One of the more curious developments in modern governance is the tendency to treat an investigation report as though it were as authoritative as a court judgment, despite being produced through a process with dramatically fewer procedural protections.

The courts understand this. After spending hundreds of thousands of dollars on an investigation, many employers are surprised to learn that the courts will not even look at the report and the investigator is not permitted to be a witness. Their report and their findings are excluded as hearsay. Judges must see the relevant witnesses testify under oath and draw their own conclusions.

Perhaps the most significant consequence of the industry's growth is cultural. Leadership is increasingly replaced by process. Boards fear criticism for acting too quickly. They fear criticism for acting too slowly. Most of all, they fear criticism for exercising judgment. The same applies to CEOs.

An external investigation offers relief. Responsibility is transferred. The board can point to process. The optics improve. The decision becomes easier to defend. But leadership is ultimately the exercise of judgment, not the outsourcing of it.

Not every workplace dispute is a legal problem. Many are management problems. Some require discipline. Some require coaching. Some require mediation. Most require courage.

Workplace investigations remain indispensable in serious cases (although they are generally best conducted quickly and internally by trained employees already familiar with the company's culture, policies and personnel). But somewhere along the way, a tool became an industry. And an industry developed incentives of its own.

Boards and CEOs should respond by using investigations more selectively and deliberately.

First, reserve formal external investigations for allegations that could expose the organization to significant legal, regulatory, reputational or safety risks. Personality conflicts, performance concerns and ordinary management disputes should be addressed through leadership, coaching, mediation or internal resolution processes.

Second, before commissioning an investigation, require a written board-level assessment explaining why it is necessary, what question it is intended to answer and why alternatives are insufficient. If the objective is simply to avoid criticism, that should be recognized rather than disguised as fact-finding.

Third, treat investigation reports as important inputs, not substitutes for governance judgment. Boards should evaluate findings critically, consider competing interpretations of the evidence and remain accountable for the final decision rather than deferring reflexively to process.

If these questions were asked, the use of outside investigators would be reduced by more than 75 per cent and the organizations — and the relationships within them — would be much better for it.

Directors should ask a simple question.

Are we commissioning this investigation because it is the best path to the truth? Or because it is the safest path for us?

Those are not the same thing.

And when organizations treat process as a substitute for judgment, they risk losing both.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practises employment law in all provinces and is the author of six books, including the Law of Dismissal in Canada.