Corporations must always be ready to investigate people and situations that may lead to reputational damage or financial harm. Employees, from the rank-and-file to the C-suite, seem to constantly find new ways to cause problems, including interpersonal issues such as harassment, theft of intellectual property, and mismanagement of finances.

Then there are the ever-present possibilities of illegal conduct or regulatory noncompliance, from discriminatory hiring practices to environmental violations. And investigations aren’t always reactive; companies must also be prepared to proactively investigate new high-level hires and complete thorough due diligence in the event of a merger or acquisition.

Investigations may be on the rise again this year. According to the NAVEX 2022 Hotline & Incident Management Benchmark Report, the overall volume of internal reports held steady in 2021, at 1.3 reports per 100 employees. However, there was a steady upward trend from April 2021 through the end of the year, indicating that we may be in for an uptick as employees return to the office after working remotely for the previous year. In particular, reports about financial concerns, including accounting and audits, rose substantially, from 3% in 2020 to 5% in 2021.

Many businesses are hiring new investigators to keep up with the workload. But what are the core skills and traits of a successful corporate investigator? That’s the question we’ll consider in this blog, both in general and for specific types of internal investigations. First, though, let’s take a step back to review the basics of internal investigations.

Contents:

What is an internal investigation?

What are the different types of internal investigations?

What skills does a corporate investigator need for each type of investigations?

• General traits of corporate investigators
• Specific skills needed for research investigations
• Skills for interpersonal and HR investigations
• Skills needed to investigate financial misconduct
• Skills for legal and regulatory compliance investigations

Internal investigators without digital expert knowledge

Using eDiscovery technology to support corporate investigators

What is an internal investigation?

Broadly speaking, it’s a fact-finding mission that a company carries out when it needs to know more about a complaint, allegation, individual, company, or situation.

In many cases, internal investigations occur in response to a complaint or allegation of misconduct. The originating claim may come from within the organization, as in a hotline report of a manager’s misconduct, or from the outside, as in a regulatory agency inquiry. These investigations seek to determine whether an employee or officer of the company violated any laws, regulations, or policies or caused harm to the company or its employees, shareholders, or customers. If the investigation reveals that some wrongdoing occurred, the company will likely also take some form of corrective action.

Not all investigations are reactive, though. Companies will also conduct investigations to gather information for their own purposes. In these cases, the company may want to learn more about an individual, such as a potential hire for a high-profile position, or about another business, as in the case of a merger or acquisition.

Investigations are highly variable and often considerably complex. For more background information, please check out our comprehensive beginner’s guide. Part one explains the risks and benefits of conducting internal investigations, while part two sets out five steps to completing an internal investigation, along with best practices.

What are the different types of internal investigations?

Internal investigations cover a wide range of inquiries. As such, they can be categorized in several different ways. For example, a company might prefer to divide investigations into those that are proactive, such as background checks and due diligence reports, versus those that are reactive, such as responses to regulatory inquiries and hotline complaints. Investigations could also be sorted based on whether they concern a violation of internal company policy or an external rule, regulation, or law.

For this blog, we’ve divided investigations based on the demands that each presents so that we can focus on the skills that investigators need to successfully manage each type of investigation. The four categories we’ll refer to are:

• Research investigations that involve digging into the background of an individual, as in an employee background check, or a company, as in a due diligence inquiry during a merger or acquisition;
• Interpersonal investigations that involve weighing two (or more) different versions of facts against one another, such as HR complaints alleging harassment or partiality;
• Financial investigations that involve careful analysis of financial records for evidence of misconduct such as fraud, theft, or misappropriation of funds; and
• Legal and regulatory compliance investigations that involve knowledge of external rules, regulations, and laws to determine whether the conduct of the company or an individual within the company has violated those standards.

While these categories don’t cover every potential investigation, they make a good starting point for a company seeking to determine whether it has the depth of talent needed to manage common inquiries.

What skills does a corporate investigator need for each type of investigations?

Before we turn to different types of investigations, let’s take a moment to catalog the general skills and traits that all corporate investigators should have (or learn).

General traits of corporate investigators

To be successful in finding the truth, investigators should possess these five traits:

• Impartiality. If an investigator is accused of favoritism—or even gives the appearance of preferential treatment toward any individual or group—every investigation in which they’re involved will be suspect. Investigators must be neutral and unbiased.
• Discretion. Investigations must often be kept quiet until they’re resolved, to protect both the accused and the accuser. Investigators should be comfortable keeping confidential information under wraps for as long as necessary. Gossips need not apply!
• Curiosity and skepticism. Investigators may need to dig deep to find the truth of a matter. Those who are driven by an innate curiosity will find this easier than those who are satisfied with surface-level answers. At the same time, investigators shouldn’t necessarily trust everything that they hear. Common sense and the willingness to question everything are important traits.
• Diligence. Every investigation involves a balance between thoroughness—getting to the heart of an inquiry—and the need for an expeditious conclusion so the investigation doesn’t drag on for too long. The best investigators will have the diligence to dig as deeply as necessary to find answers while also working as quickly as possible.
• Strong communication skills. Investigations generally conclude with a written or oral report—or both—describing the findings. Investigators must be skilled communicators who can summarize complicated information in a forthright, easily understood format.

Now let’s consider what additional skills and traits investigators should bring to different types of investigations.

Specific skills needed for research investigations

Research investigations, especially in the context of due diligence, often involve sifting meticulously through staggering volumes of information. These investigators need three additional strengths:

• Proficiency with technology. While it helps for investigators to be patient and thorough when faced with boxes upon boxes of records, they’ll be better off if they know how to use technology to find the needles hidden within that haystack. Today’s eDiscovery technology can digest reams of documents in short order and highlight potential areas of concern for internal investigations—but only if investigators are willing and able to use that technology.
• Familiarity with corporate risk factors. For investigators to determine whether something poses a risk to the company, they must have a solid base of knowledge around what creates and what mitigates risk. That may include knowledge about insurance, business operations, regulatory requirements, procurement, and real estate, among other aspects of the organization.
• An understanding of contracts. Contracts are often critical to determining corporate risk, so investigators must understand how they work and know what they should generally cover.

Skills for interpersonal and HR investigations

These investigations include many “he said-she said” scenarios, from workplace harassment to chronic underperformance. Outstanding investigators for these types of situations should also possess:

• The ability to establish rapport. Getting to the bottom of an interpersonal complaint usually requires interviewing all involved parties, sometimes more than once. Investigators who can quickly establish a comfortable working relationship with a wide variety of people will be at an advantage.
• An internal “lie detector.” Let’s be honest: most of the time, people accused of inappropriate behavior aren’t going to admit that they’re in the wrong. That’s why HR investigators need the ability to assess credibility and discern which of several different stories is closest to the truth.
• An understanding of HR policies and best practices. While an investigator without a background in HR could certainly learn what they need to know, it’s easiest to hit the ground running if an investigator already understands how HR functions.

Skills needed to investigate financial misconduct

Financial misdeeds can be extremely difficult to untangle. To investigate these allegations, corporate investigators should have:

• Specialized financial training or experience. While on-the-job learning is always possible, it’s easiest if an investigator in this area starts with some in-depth financial knowledge. Training as a forensic accountant or experience working as an auditor or financial analyst will give these investigators a tremendous head start.
• Attention to detail. Depending on the context, there could be a massive difference between 1.83 and 1.38—and an investigator needs to be able to stay focused enough to spot such a discrepancy after hours of staring at pages of numbers and calculations. Attention to detail is important for all investigators, but it’s crucial for financial investigators.
• Creativity. As one forensic accountant explains, “Good fraud investigators combine technical expertise with creativity and a knack for finding key pieces of evidence. The creativity component becomes crucial when you are trying to devise ways of verifying information or finding new evidence. The fraud investigator has to have multiple ways to find information.”

Skills for legal and regulatory compliance investigations

In addition to the above traits and skills, investigators who conduct legal and regulatory compliance investigations must also have several additional characteristics, including:

• Specific legal and regulatory knowledge. In order to weigh an individual or organization’s behavior against a specific law, regulation, rule, or corporate policy, an investigator must have a solid base of knowledge about statutes, state and federal codes, and more—or at least the ability to decipher them.
• Tact. When a regulatory agency comes knocking, corporate investigators need to respond quickly with thorough and responsive information. Investigators who specialize in these matters should have the diplomacy to work effectively with external officials and represent the company well.
• Grace under pressure. Regulatory and legal inquiries are among the highest-stakes—and highest-pressure—investigations there are. A regulatory compliance matter could rapidly spiral into a public relations disaster. Investigators in these types of cases must have cool heads and the ability to act decisively under substantial pressure.

Internal investigations without digital expert knowledge

Nowadays, subject matter experts are confronted with increasing volumes of data when sifting through digital evidence to identify relevant facts. While the work of digital forensic experts is key to safeguarding data integrity and acquiring data from complex data sources, it is ultimately the job of investigators as subject matter experts to study the documents' contents and find all the relevant evidence.

The core challenge of subject matter experts comes down to identifying all the facts they are looking for. In some cases, teams of digital experts and investigators work together to maximize the output. Nevertheless, in 2022, intuitive and user-friendly technology can help make subject matter investigators' and digital forensics experts' lives easier by performing important tasks automatically for them.

Using eDiscovery technology to support corporate investigators

Internal investigations are challenging, and companies need investigators with a wide variety of specialized skills and characteristics to manage them. But beyond hiring investigators with the traits and abilities we’ve discussed here, there’s another way companies can streamline their internal investigations: through the application of modern eDiscovery technology. Such technology is capable of processing all the data automatically for you and assists you with keyword searches through its powerful AI capabilities.

[View source.]