Organisations are typically encouraged to take a hard stand against employees’ unethical behaviours. After all, previous scandals have shown that unethical behaviours can tarnish an organisation’s reputation, lead to monetary losses, and result in legal prosecutions and corporate shutdowns.

So we’re told to make sure codes of conduct are actionable. The swift discipline of employees who violate ethical standards is recommended.

But unethical behaviour can be hard to detect and isn't always formally reported to higher-ups.

Yet our recent research identifies a common phenomenon that might help dampen unethical behaviour before it even needs reporting: employees who engage in unethical conduct are more likely to be socially rejected by their peers. By ignoring the unethical employee, coworkers signal that someone’s unethical behaviours are not acceptable.

That is, unless the unethical employee is a high performer. Despite the tendency to reject those who are unethical, we uncovered a double standard based on a person’s contributions to the bottom line.

Specifically, we show that unethical high-performing employees are less likely to be socially rejected by their peers, which implies that unethical behaviour can be tolerated.

This is not the case for unethical low-performing employees.

Why? In general, the low performers do little to contribute to an organisation’s vitality. In turn, these employees tend to frustrate their coworkers. Unethical high performers, however, may be doing something wrong, but they get the job done, and enhance the organisation’s short-term profitability.

Highly ethical

This is the case even in organisations that are considered highly ethical.

In our study, we took into account the organisation’s ethical environment and still got the same results. Regardless of the extent to which the organisation prioritises ethics, unethical high-performing employees still had better working relationships with their peers than their unethical low-performing counterparts.

There’s something about being a high performer that appears to mask concerns related to immorality.

So what does this mean? Organisations can take some comfort in knowing that unreported unethical behaviours are often nixed by coworkers. Unethical employees who experience social rejection should be motivated to assimilate by behaving well.

Yet coworkers won’t be very helpful for reining in high-performing employees. Without formal reprimands or social sanctions, these people are likely to continue ignoring ethical standards. This is problematic because research has shown that when bad behaviour goes unchecked, it can become progressively worse.

In order to address unethical behaviour, our research suggests, companies need to look at how they prioritise performance over ethics. Yes, profitability is important, but at what cost?

Managers should push employees to adopt a long-term mindset so that they might be less likely to ignore a high-performing employee’s misdeeds. Employees should also be rewarded for correcting ethical issues, without fear of retaliation. An organisational commitment to long-term performance could be the difference between stability and scandal.

– Copyright Harvard Business Review 2016

Rebecca Greenbaum is an associate management professor at the Spears School of Business at Oklahoma State University. Matthew Quade is an assistant management professor at the Hankamer School of Business, Baylor University.