The probe into alleged policy violations was conducted by third-party firm Richardson & Davis Investigative Consulting Group.
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Martin and Hardy had been placed on non-disciplinary administrative leave March 10.
City Manager Kelly Traynham made the final personnel decision.
The City said Martin and Hardy were given an opportunity to review and respond to the investigative report prior to a final disciplinary decision being made.
Hardy declined to exercise an option for a name-clearing hearing. Martin's decision is pending.
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Effective Friday, Capt. Gorton Williams has been appointed interim chief and Sgt. Morgan Worrell has been appointed interim captain of the investigative division.
The City will begin to advertise for a new police chief and the investigative division captain position next week.
City officials have not disclosed what the allegations entailed.
NOTE: Video is from a previous report and will be updated.