When an Internal Investigation Makes Things Worse: The Case for Objectivity

A badly run investigation can be worse than no investigation at all. That's not a scare tactic, it's a documented outcome. Courts have thrown out internal investigations, and the businesses that relied on them, because the person running the investigation wasn't objective.

Here's what that looks like in practice, why it happens more than most companies realize, and what to do about it.

The Investigation That Got Thrown Out

In Castelluccio v. IBM, a 61-year-old IBM manager complained to leadership that his termination was age discrimination. IBM's HR team ran an "open door" investigation and concluded he'd been treated fairly.

When the case reached federal court in Connecticut, the judge excluded that investigation from evidence. The report, while "purporting to make objective findings," left out the employee's own account of his firing and left out his performance reviews. The judge said as much: the investigation looked built to exonerate IBM, not to find out what actually happened.

Without that report to lean on, IBM lost. The jury found the company had acted with reckless disregard for whether the termination was discriminatory, and awarded the former manager just under $1.5 million.

The lesson isn't that IBM's investigator was incompetent. It's that an investigator with a stake in the outcome, even an unconscious one, produces an investigation that can't survive scrutiny. And once a court decides your investigation isn't credible, you don't just lose the investigation. You lose your best evidence that you handled the complaint correctly at all.

Why "Internal" Often Means "Not Objective"

Most companies default to having HR, or a manager, or general counsel investigate complaints internally. The problem isn't competence. It's proximity.

The person doing the investigation usually knows the accused. Reports to the same leadership. Has a working relationship with witnesses who also report to that leadership. Every one of those relationships is a reason, conscious or not, to lean toward the answer that causes the least disruption.

That's exactly what happened in the IBM case: an HR investigator working for the company investigated a complaint about the company, and the outcome favored the company. A judge didn't need proof of bad intent to throw it out. The appearance of bias was enough.

What Police Internal Affairs Gets Right (Eventually)

Police departments ran into this same problem decades ago. Internal affairs units investigating complaints against their own officers faced a credibility gap: the public didn't trust an agency to objectively investigate itself, and often, they were right not to. That's a large part of why so many jurisdictions built independent civilian oversight boards and brought in outside investigators for the most serious complaints. Not because internal affairs officers were dishonest, but because an investigator can't be objective and self-interested at the same time, and everyone watching knows it.

The same logic applies to a workplace harassment complaint, a discrimination claim, or an allegation against an executive. If the person investigating has a relationship with the parties involved, or reports to someone who does, the investigation carries the same built-in credibility problem IBM's did. It doesn't matter how thorough the interviews are if the process itself looks compromised.

What an Objective Investigation Actually Requires

A defensible investigation needs an investigator with no reporting relationship to either party, no stake in the business outcome, and no incentive to protect anyone's reputation but the truth's. It means interviewing every relevant witness, not just the ones who support a preferred conclusion. It means documenting the process as it happens, not reconstructing it after the fact. And it means being willing to reach a conclusion that's inconvenient for the company, because that's the only kind of conclusion that will hold up if it's ever tested in court.

That's a hard bar for an internal investigator to clear, especially in a smaller organization where everyone knows everyone. It's not a hard bar for someone with no relationship to your company at all.

Where This Leaves You

If a complaint comes in and nobody in your organization can investigate it without a personal or professional stake in the outcome, don't force it. Bring in someone from outside who can. It protects the employee's right to a fair process, and it protects the company's ability to defend its decision later, in exactly the way IBM couldn't.

That's the role an outside HR consultant plays: no relationships to protect, no incentive but getting it right, and a process built to hold up if someone asks hard questions about how you got there.