Good Citizens: The Organizational Benefits of Rule Breaking

Wiley Wakeman, assistant professor at the department of management and organization at SSE, about deviants, whistleblowers, rule breaking in organizations and unethical employees who advance in their careers.

Why does it seem like others find it so difficult to do the right thing? As armchair generals, our vison is untrammeled. We plainly understand that we should forgo selfish short-run profits, instead selecting a more sustainable option that provides a greater benefit to everyone in the long run. As we clearly are not idiots (at least most of the time), then why does it seem like our colleagues, neighbors, and friends often are? The widespread negative implications of bad behavior are so costly that, as part of their goal to promote just, peaceful, and inclusive societies (SDG 16), the UN has focused on tackling the various forms of corruption that cost the economies of developing world alone roughly $1.26 trillion (USD). One explanation for this crippling amount of corruption is that others are simply greedy, selfish, or even psychopathic, focusing on their own gains despite the costs to others. However, a less considered, but potentially more fruitful explanation is simply this: People are loyal.

The news seems full of stories of corruption where bankers manipulate markets, create fictional clients to permit unauthorized trading, or launder money. And while clearly there are massive financial incentives that often blind employees from doing the right thing, it may be that reason certain individual consistently fail to do the right thing because they are simply being loyal to their colleagues. For instance, in 2012 when the Swiss bank UBS agreed to settle an investigation into the unauthorized trades of trader Kweku Adoboli who lost the bank roughly $2.3 billon, one might think that such transgressions were simply the result of one bad apple. However, a closer look at the internal culture at UBS suggests that Adoboli was not vilified. In fact, colleagues referred to Aboboli as a “legend.” Because Aboboli was initially breaking the rules in ways that helped others, ultimately contributing to the common good (at least at UBS), he was championed: rewarded both financially and socially for his unethical contributions to the group.

In my research, I explore how groups socialize this unethical loyalty, ultimately rewarding deviants for their actions, even if they violate commonly held ethical principles or existing laws. In a working paper “Rewarding Deviants” with Philip Yang, at University of Tubingen, and Celia Moore, at Bocconi University, we find that individuals who break the rules but contribute to groups receive greater rewards than those who behave ethically. We argue that this is the case because unethical behavior may ultimately serve as a signal to others of one’s underlying dedication and value to the group. For instance, on sports teams, we find that even after controlling for performance, that deviance predicts higher salaries and more playing time, suggesting that teams do in fact reward players for breaking the rules. In fact, it may be precisely because this sort of behavior is a costly (i.e., leading to penalties, fines) that team members take it as signal of one’s value to the group. In a controlled experiment, we replicate this preference for deviants, finding in a die rolling game that players who break the rules by rolling statistically improbable scores - such as fifteen “5s” in a row - are more likely to be selected as a future partner in a subsequent game when compared to honest players.

Why do people prefer deviants? It turns out that they see them as better contributors, not because they are being honest, but because they demonstrate greater loyalty through their illegitimate actions, indicating a willingness to do just about anything to support their group members. Our findings help explain why whistleblowers, those who value honesty above loyalty to the group, are punished by the groups they inhabit; or the fact that police forces have been shown to enforce a “blue wall of silence” where they will beat suspects or perjure themselves in order to support their fellow officers; even though these are the very people who are entrusted with upholding the laws.

What is perhaps more worrying is that this preference to reward deviants may contribute to emotional reactions that hasten the adoption of bad behaviors and corrupt cultures. In another working paper “Unethical Gratitude,” I ironically find that feelings of gratitude, emotions we usually equate with ethical behaviors, may contribute to the development of cultures of corruption in organizations. In a diverse sample of supervisors across twenty-three different countries and nineteen different industries, I find that supervisors not only feel gratitude for the unethical behavior of subordinates, but that these feelings of gratitude motivate positive reciprocity, where supervisors believe that their unethical employees should advance in their careers.

Though we may believe (or hope) that deviants are punished or even ostracized from groups for engaging in various forms of corruption (rule breaking, bribery, lying), the findings from my research suggest that this is not always the case. Instead, deviants often receive greater rewards from their peers than do honest group members. It turns out why it may be so hard to do the right thing is because close others (e.g., the teams we play on, groups we compete with, the superiors we try to impress) may not penalize us if we break the rules. Instead, those around us want us to be loyal contributors, even if that means we might engage various forms of corruption as a result.