Organizational Wellness

Navigating Employee Misconduct: An HR Leader's Playbook

Last Updated Dec 9, 2024

Time to read: 11 minutes

Employee misconduct unfortunately common. As of 2023, one in 10 job candidates had a history of misconduct issues, according to Fama's 2023 State of Misconduct at Work report.

This is a major issue for HR leaders, as managing employee misconduct is one of an HR department's most important tasks. Widespread problematic behavior can damage morale and a company's bottom line, particularly if employees lack confidence that leadership will handle the issue appropriately.

With a comprehensive and proactive approach, you can establish a culture of accountability and reduce risk to the organization.

What Is Employee Misconduct?

Employee misconduct is behavior that doesn’t adhere to the standards of conduct outlined in an organization’s policies and procedures. These standards can be found in a company’s employee handbook, among other places. In its lightest form, employee misconduct can be a minor policy violation that impacts performance or productivity. At worst, it involves behavior that is illegal, unethical, or causes harm to the company.

Sometimes, employees misbehave because they don't understand the rules or policies. They might be new to the job or industry, and still getting familiar with workplace norms. That might be the case for a team member who's late once or twice or isn't quite following your business-casual office dress code.

But in more severe instances, misconduct can involve illegal activities such as sexual harassment, discrimination, or workplace violence. Most people understand the moral implications of stealing or physically harming another person, and these instances of gross misconduct need to be addressed swiftly and succinctly.

Employee misconduct is a serious issue for companies, because employees might start to feel like the workplace isn't safe or fair. This can spark issues with employee morale, engagement, productivity, and turnover. It even costs businesses financially — the total bill for U.S. companies dealing with the effects of misconduct was estimated to be about $20.2 billion, according to Vault Platform.

Types of Employee Misconduct

There are many types of employee misconduct, and the severity can range between minor infractions to major policy violations. Some common cases of employee misconduct include:

Disregard for Safety Standards

Employees who repeatedly ignore these protocols put their own — and their coworkers’ — health and safety at risk. This type of misconduct becomes more serious depending on the type of work environment. Employees who are around heavy machinery or toxic chemicals, for example, likely have stricter safety protocols to follow (for good reason) than office workers.

Harassment of Any Kind

This includes sexual harassment, racial slurs, and even cyberbullying over company email or social media accounts. Workplace bullying can cause a toxic company culture and have long-term repercussions on both individuals and teams.

Inappropriate Use of Company Property or Resources

Many companies prefer for employees to use company computers and equipment strictly for work purposes, but this can also vary in severity depending on industry. For example, employees who deal in confidential info might not be permitted to work remotely in public places because of privacy and cybersecurity risks.

Excessive Tardiness or Absenteeism

This is a less severe type of misconduct but it can still have an effect on team performance. Some workers might be late to work or take too many unexcused absences periodically, and if the behavior becomes excessive, it could damage their job performance and create a drain on productivity.

Making Rude Comments or "Jokes"

While this could be considered harmless in certain situations, employers should still tread lightly when it comes to off-color jokes or comments at work. Even if the comments are not directed at any particular person, they could still create an uncomfortable atmosphere for others in the workplace.

Theft

Stealing or damaging property that belongs to the company or a coworker is a serious offense and could even lead to criminal charges.

Fraud

This can include falsifying documents, lying to coworkers or customers, or even skimming from company funds. In some industries, such as finance and banking, fraud is tightly regulated, so this is a severe offense that teams should work to proactively detect and prevent.

Violating the Terms of a Contract or Agreement

Employees who don't follow the rules or regulations outlined in a contract can be reprimanded and even fired for breaking company policy. One common example is a Non-Disclosure Agreement (NDA), which outlines the confidential information that an employee is not allowed to share.

Violating the Employee Code of Conduct

This is another type of policy violation that can encompass any employee behavior that goes against a company’s standards, from inappropriate language to unprofessional attire.

Prevention Strategies

Approaches to misconduct prevention range from the hands off to the highly proactive. A proactive approach doesn't necessarily mean you think your people will test the boundaries — it means you're serious about minimizing those incidents.

These misconduct prevention strategies can build on your existing workplace policies. As you learn about each one, consider whether it aligns with your corporate culture and how you might implement it.

Understand Behavioral Drivers

Organizations typically have some form of employee conduct guide or code of ethics. Many describe the consequences of misconduct. However, without understanding why employees go against policy, organizations often struggle to deter misbehavior, a Harvard study suggested.

When employees' desire to avoid punishment or get ahead is stronger than their commitment to a behavior policy, they are likely to act against that policy. This pattern occurred at one financial services firm the researchers in the above study worked with.

The company responded to poor outcomes by severely blaming the individual. To avoid public humiliation, employees would hide mistakes and violate ethical codes. Consultants worked with the company's managers to break this pattern and reduce the culture of fear so employees didn't feel the need to act out.

Make Training Hands On

Employees are less likely to engage in misconduct when they take ethical guidelines personally, a report in the Harvard Business Review suggests. Consider a real-world Lockheed Martin ethics training program, where employees discuss ethical dilemmas they might encounter at work. Teams discussed the moral issues at play, brainstormed possible responses, and worked together to develop processes for reporting violations.

This approach allows employees to take ownership of the company's code of ethics. Each team member can consider how ethical workplace behavior aligns with their moral code. By connecting policy to personal belief, employees can avoid misconduct more successfully.

Provide Ongoing Ethics Education

More than half of employees say their companies only discuss ethics when something goes wrong, according to research from the Ethics and Compliance Initiative (ECI). That's more than twice the percentage who see ethics as a common workplace discussion.

Keeping ethics and proper conduct top of mind can help employees make better decisions. You might distribute links to relevant news articles, highlight select aspects of company policy, or even hold lunch-and-learns focused on key issues.

Create an Anti-Retaliation Policy

Employee reporting is critical to identifying employee misconduct. Unfortunately, 15% of professionals feel unable to speak up without fear of retaliation, ECI data shows. Developing an anti-retaliation policy can help employees feel safer bringing compliance concerns to management.

There are five components to an effective anti-retaliation policy, according to the Occupational Safety and Health Administration (OSHA):

Commitment and accountability among management: Leaders respond to reports proactively and protect workers who speak up.
Established systems for addressing misconduct concerns: Employers create, publish, and enforce policies for receiving and responding to employees' reports.
Effective channels for reporting retaliation: Employees know where and how they can report retaliation without retribution.
Anti-retaliation training for all team members: Employees and managers learn about how the law protects them from retaliation and what to do if they hear of or experience it.
High-level anti-retaliation program oversight: HR and company leaders oversee anti-retaliation initiatives and regularly review the program's success.

A strong anti-retaliation program can lead to better reporting, which can deter misconduct.

How to Handle Employee Misconduct

Employee misconduct is a common HR complaint, and team members notice how their supervisors respond. An effective misconduct response workflow gives people confidence in their leaders and helps the company resolve issues successfully.

Reporting

Creating a transparent misconduct reporting system can make it easier for team members to raise red flags. If employees know they can alert leadership to a potential issue safely and anonymously, they have more reason to speak up.

The first step is establishing a reporting chain. Supervisors are the most likely personnel to receive these reports, ECI data reveals. Almost 45% of employees report these incidents to supervisors, while 27% report to higher-level managers.

Most supervisors and managers need training on how to receive these reports appropriately. They should understand how to document the issue and what next steps to take. A standard form or automated reporting system may simplify the process, especially if anonymity is a concern.

Investigation

A just and fair investigation process is the foundation of any misconduct policy. Employees should know that the organization takes all reports seriously and will act based on the evidence.

The investigation process needs to be consistent. You don't want employees to think HR favors one complainant over another or takes any issue less seriously than another. Plus, failure to investigate a problem may make your company vulnerable to legal action.

Following a standardized process is generally the safest way to protect the company's interests and ensure all employees get fair treatment. The process should include the following basic steps:

Identifying an investigation lead: The person in charge should be impartial and have experience with the issue. Consider having documented selection guidelines with characteristics that qualify or disqualify an investigator.
Gathering data: To come to a fair resolution, the HR team needs to learn as much as possible about what happened. It may help to list all available resources, including interviews with involved personnel. Expect employees to need assurance that their contributions are confidential.
Making a decision: The investigation team's primary duty is to determine two things: 1) Whether misconduct occurred, and 2) What type of corrective action to take.

It is especially important to document the final decision and communicate it to the appropriate personnel. You can share your determination with stakeholders before sending a written report.

Some decisions affect multiple team members outside those directly involved. In those cases, you can diffuse rumors by sending an appropriately worded email or meeting with the team.

Disciplinary Process

Disciplinary action may not be your favorite task as an HR professional, but it tells employees that your department takes misconduct seriously.

If your workplace has a standing disciplinary process, you can use it to determine consequences for various types of misconduct. The choice of disciplinary action should be fair and match the seriousness of the violation. Possibilities may include:

Verbal warning: A face-to-face conversation about the violation and why it is unacceptable
Written reprimand: A detailed document that describes what happened and what may happen if the behavior continues
Suspension: A mandatory leave of absence, which employers will sometimes require during an investigation or before they make a final disciplinary decision
Termination: A final decision to end the person's employment, usually for a severe violation with safety or legal implications

Consider consulting with your legal department before firing an employee. Federal, state, and local laws regulate employee termination, particularly when discrimination, harassment, or assault are involved.

You can notify the employee in a private meeting and provide them with a termination letter for their records. Whether the meeting is one-on-one or involves other team members is a judgment call. In cases of employee misconduct, it can be wise to have another person present.

Resolution and Remediation

Resolving an employee misconduct incident is only partially about taking disciplinary action. Addressing the effect on the affected team is just as important.

Depending on the type of violation, the resolution process may include additional ethics or policy training. The company may also need to create new policies or procedures to prevent recurrence.

The final step is remediation, which addresses any lingering effects on the workplace. Misconduct and the resulting investigation can stress a team, and some people may feel uncomfortable at work.

Having a conversation about what happened can help people feel at ease. You can:

Debrief the investigation and results as appropriate
Detail the company's plan to maintain a safe environment
Review company policy and procedures and how they apply
Describe any upcoming training or team-building initiatives that the organization has planned to help the team heal

Employees need to know that the company takes what happened seriously and cares about how it affects their work.

Sidestep Employee Misconduct With Wellness

While employer policies can make a difference, misconduct is ultimately an employee's choice. You can guide those choices with ethics and conduct training. Effective responses and anti-retaliation policies minimize the damage if someone makes a poor choice.

Ultimately, however, the best way to prevent employee misconduct is to foster a positive work environment.

A wellness program is a proven effective way to address employee needs. More than 85% of HR leaders say their wellbeing program is very or extremely important to employee satisfaction and increases people's resilience to work-related challenges, according to Wellhub's 2024 Return on Wellbeing Study. With more wellbeing resources, employees can cultivate resilience and make better choices.

Wellhub can help your department nurture employee wellbeing. Talk to a wellbeing specialist today about how we can help build a thriving workforce!

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[*] Based on proprietary research comparing healthcare costs of active Wellhub users to non-users.