Loyal Employees Can Make Unethical Choices

Overzealous employees passionate about company success may act unethically to protect firm. Learn to spot unethical behaviour — and nip it in the bud.

Your company’s strong organizational identity helps improve group cohesion, increase job performance, and decrease turnover. But are there dangers to a strong identity? Could employees who identify passionately with your firm act unethically?

Recent research by Dr. Elizabeth Umphress (Texas A&M University), Dr. John Bingham (Brigham Young University’s Marriott School), and Dr. Marie Mitchell (University of Georgia’s Terry College of Business) explored this question in two separate studies.

Employee Loyalty Gone Too Far

The researchers found employees who identify strongly with their organizations and feel indebted to the organization — for paycheques, years of employment, or a friendly work environment — may make a number of unethical choices, in the name of employee loyalty. In other words, staff who feel obliged to repay their employers may ignore environmental regulations in order to improve financial performance, withhold information about the downsides of a new software package from a customer, destroy incriminating documents, or “cook” numbers in order to improve stock price.

In the situations studied, employees who committed unethical behaviour were not ordered to do so by their superiors. Instead, employees independently acted unethically because they identified strongly with their workplace and felt obligated to help. Ironically, this unethical behaviour is likely to harm the company in the long run; misleading customers, for example, to increase short-term sales can drive them away, and ignoring environmental regulations can lead to criminal investigations and hefty penalties.

How to Keep Zealous Employees in Check

What can a manager do to prevent unethical behaviour that such a strong organizational identity can produce? By following these simple guidelines, managers can ensure their organization stays ethical and effective.

• Make ethics a central point of organizational governance and identity. Managers must create a culture that emphasizes ethical behaviour. When ethical standards underscore organizational identity, employees are less likely to act unethically, benefiting the company.

• Pay special attention to employees who feel they owe something to the organization. These employees are most likely to act unethically inside organizations with a strong culture. So, managers should look out for employees who say they “owe something to the company” or “just want to return the favour after all the benefits I’ve gotten.”

• Act promptly to stop any instances of unethical pro-organizational behaviour. Finally, managers need to act promptly when they see unethical pro-organizational behaviour happening. Sweeping unethical behaviour under the rug sends the message that the behaviour is acceptable. Instead, managers must reiterate to employees that ethical standards are in place for a reason, and that even though it may seem beneficial to ignore them today, the company will ultimately suffer if ethical standards are allowed to slide.

Stand by Your Corporate Code of Ethics

Having a clearly defined corporate code and governance structure that underpins your firm’s mission, vision and values can help bake business ethics into the fabric of the company. Passionate employees wishing to identify with and contribute to the company will gravitate towards compliance with your code.

Future research can investigate the causes of unethical employee behaviours. Ultimately, understanding these motivations better will allow managers to more effectively avoid the unintended pitfalls of unethical behaviour meant to benefit the company.

Umphress, E.E., Bingham, J.B., and Mitchell, M.S. 2010. “Unethical Behavior in the Name of the Company: The Moderating Effect of Organizational Identification and Positive Reciprocity Beliefs on Unethical Pro-Organizational Behavior.” Journal of Applied Psychology.95.4: 769-780.