Department of Building and Housing chief executive Katrina Bach has been warned after an inquiry found she "manhandled" and swore at a staff member.
An independent inquiry by State Services Commissioner Iain Rennie found Ms Bach breached the department's code of conduct in the way she treated junior employee Jaime Rawlings.
"I have found that the department failed to deal adequately with the matter once it was bought to the attention of relevant staff. I understand the department has reviewed its policies and practices for handling staff complaints," said Mr Rennie.
In a rare move the commissioner released a summary of events in the matter.
Ms Rawlings raised a personal grievance last May about the way the chief executive had treated her in the previous two months.
She alleged two specific incidents.
The report states the first occurred when the chief executive spoke harshly and swore at her.
The second occurred when "the chief executive put her hands on the staff member's head and said 'what is going on in that head of yours?'."
Mr Rawlings took her complaint to the State Services Commission but was told she needed to talk to the chief executive and the department first.
Ms Bach appointed independent lawyer Stephanie Dyhrberg to investigate the matter and the decision making was delegated to the former Secretary for Education Karen Sewell.
Ms Sewell found the chief executive's conduct towards Ms Rawlings had been inappropriate and breached the code of conduct. However, it would not have caused harm or distress, and was not bullying.
Ms Sewell said the events were compounded by the immense pressure and tight deadlines in responding to the National Emergency in Christchurch following the 22 February earthquake.
Settlement was reached after mediation between Ms Rawlings and the department.