There have been many positive stories during the pandemic of people and organisations supporting the cause, from frontline health and key workers to Captain Sir Tom Moore’s fundraising heroics, to firms pivoting their business to producing ventilator machines, alcohol sanitiser and personal protective equipment.

Unfortunately, the economic reality of the pandemic is starting to show its ugly face, with businesses starting to fail and people being made redundant at an alarming rate. Sadly, this is only the start of the economic difficulties as the UK’s furlough scheme draws to a close at the end of October.

As the school and summer holidays start, many people will take a much-needed break, although spare a thought for those key workers who continue to provide us with core services and those working in certain sectors such as tourism and hospitality where they will be working at breakneck speed to catch up on lost revenue.

Professional misconduct

With businesses of all sizes under severe strain, an area of significant risk is professional misconduct. Leaders, managers and employees are facing severe strain to maintain prior performance targets, shifting into new modes of operation or even survival.

With people juggling multiple commitments at work, home and in their communities, alongside feeling physically and emotionally drained over the events of the past four months, the risk of lapses in our moral and ethical standards is high.

We have been analysing interview data from 70 inmates in a federal prison in the US. All of these inmates were previously successful managers and leaders from all kinds of sectors, from financial and professional services to healthcare, pharmaceuticals, property and government.

While there is the temptation to explain professional misconduct as a function of a bad apple or a rogue employee, this is too simplistic an explanation. Our research suggests that professional misconduct could occur to any of us, particularly when there is a toxic combination of the following three factors:

• At the individual level, often people make decisions that are too far removed from the people who are affected by their behaviours, leading to them sleepwalking into professional misconduct.
• At the organisational level, cultures that are excessively target focused breed perverse behaviours where ethical decisions are subsumed under business transactions.
• At the regulatory level, paradoxically while increased regulation aims to reduce malpractice, excessive regulation within tight timeframes can lead to people and organisations increasing their efforts to circumvent rules.

The warning signs are already surfacing. For instance, the insurance sector is reporting an increase in fraudulent claims, a trend that is most virulent during economic downturns. The chaos and uncertainty of the pandemic is likely to motivate individuals and businesses to rationalise their nefarious activities.

Internet search queries for “How to set fire” spiked to 125% in the last week of March, worker compensation claims increased by 159% from Q1 to Q2, and there have been rising cases of fraudsters targeting pensioners to sell counterfeit personal protective equipment and Covid-19 drugs in the US.

Contributing factors

While there are no easy fixes because human behaviour is difficult to predict, it is important to recognise that people do not exist in silos. Our behaviours are influenced by experiences at home, work and in our communities.

Many of the people that we interviewed in the prison had experienced personal trauma, including divorce and bereavement. Experiencing trauma does not mean people will subsequently act unethically, but it can increase the risk profile, which HR departments and individuals should be aware of.

During the pandemic, organisations are understandably focused on ensuring their business models are sustainable and resilient to ensure survival. However, an unintended consequence of only focusing on the bottom line in a context of people already feeling under pressure and fatigued is an increased risk of turning a blind eye to misconduct. Ethical data-driven monitoring of key contributing factors of professional misconduct and root cause analysis can provide a heat-map of potential risks and mitigating actions.

Finally, governments need to strike the right balance of regulation to ensure fairness and to protect different groups. While too little regulation can create opportunistic behaviour, too much regulation can impose excessive burden on business, leading to higher levels of professional misconduct. Finding the optimal level of regulation is therefore important for reducing misconduct.

Will Harvey is professor of management and associate dean at the University of Exeter Business School.

Navdeep Arora is a former senior partner at McKinsey and partner at KPMG. He is currently a PhD candidate at the University of Exeter Business School.