Council chief executive Doug McKay has refused to explain why Mr Dragicevich kept his job, except to say strong processes and practices have been put in place for him and the IES department, which has about 400 staff.
"John has some changes to make in his style and in his approach and he has committed to work hard to improve those aspects of his leadership," Mr McKay said.
The council's harassment policy says bullying "will not be tolerated".
Mr McKay said the policy meant exactly that - bullying will not be tolerated - but refused to say how the policy was applied to Mr Dragicevich.
Mr Olsen, an author of two books on workplace bullying, said for Mr Dragicevich to stay in his job, the council would have to provide him with coaching and regular monitoring.
Equal Employment Opportunity Trust chairman Michael Barnett said questions had to be asked about the employment process for Mr Dragicevich.
Many people with good technical skills were elevated to senior roles but their managerial and people skills were very low, which employers had to accept responsibility for, he said.
Dr Bevan Catley, director of Massey University's healthy work group, said he hoped the situation at the council would prompt senior management to reflect on how they wanted the organisation to be known and how they wanted staff to treat one another at work.
He said workplace bullying needed to be taken more seriously in New Zealand.
"The issues of cyber bullying and bullying at school get a lot of attention, but bullying in the workplace goes under the radar. It's completely unacceptable, but until we give both employers and the courts the tools to deal with it more effectively, the problem will continue to grow."
Who does it? Usually manager against employee.
Target: 70 per cent of victims are women.
Effect: Stress and health costs for victim, culture of fear in organisation.
Result: Organisations usually take word of bullies, who lie and charm to tell opposite story.
Source: Hayden Olsen & Andrea Needham
