How the Best Leaders Respond to Rule Breaking

When a rule gets broken at work, a leader’s first instinct is to act fast. The business response feels obvious: punish the offender and move on. But it’s rarely that simple.

In a new paper that reviews and synthesizes more than 250 studies across four decades, Michael J. Gill, an associate professor of organization studies at the University of Oxford’s Saïd Business School, shows that people break rules for very different reasons. Some do it for personal gain; others to help customers or colleagues. And sometimes the environment pushes people over the line.

The Ethics & Compliance Initiative’s “2023 Global Business Ethics Survey” reported that 65% of employees around the world said they had observed misconduct at work, up from 60% in 2020.

Gill started studying the topic after hearing the same question from companies: Why does this keep happening? His work divides misconduct into four types: self-interested, or meant to help oneself; prosocial, or meant to help others; corrupted, or driven by pressure; and edified, or encouraged in the name of doing the right thing. Most organizations treat all of them the same way, which is a problem because breaking rules can be beneficial.

Before punishing rule breakers, leaders should ask two critical questions: Was the behavior constructive or destructive? Was it driven by individual choice or the situation? “If your first move is to punish someone, you may be solving the immediate issue but missing the real cause. And that can hurt the business in the long term,” Gill says. “A better approach is to be less reactive and more curious.” He recommends several best practices for resolving rule breaking at work: 

Understand what happened.  Before jumping to conclusions, talk to the people involved. Ask why the policy was violated—and do so in a way that isn’t confrontational and that gets to the reality of the situation.  That’s why tone matters.

Separate intent from impact.  Not all misconduct is created equal. Yet when people believe their intent doesn’t matter, they either stop using judgment or start hiding what they’re doing. And when every misstep is treated as self-interest or corruption, they learn to play it safe or stay quiet. The result is less initiative, less transparency, and fewer opportunities to fix problems early.  But if employees see that good intentions are recognized—even when outcomes fall short—they are more likely to take smart risks and speak up when something feels off.

Pay attention to patterns.  One-off incidents can be misleading; patterns are where the insights are. If a rule keeps getting broken, that usually points to something bigger, such as a policy that is unrealistic, unclear, or in conflict with what employees are rewarded for doing. Repeated violations can be a form of feedback about where the system doesn’t line up with the work.

Uncover what you’re not being told.  Many instances of observed misconduct never make it up the chain. People may not report it, and managers may not escalate it. That’s why leaders need other ways to understand what’s happening, such as establishing anonymous reporting channels, spending more time seeing how work gets done, or simply asking broader questions about the company’s policies and how restrictive they are.

Fix the causes of rule breaking.  If you execute the earlier steps well, you’ll identify root causes that may be driving misconduct, including bad incentives, unclear rules, or pressure that’s pushing people in the wrong direction. Now it’s time to find a systemic fix for the problem. Focusing only on the individual might fix the behavior in the short term but won’t always solve what’s driving it.

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