Why do good people do bad things? When we know someone to be a fine and moral person in other respects, we are flabbergasted when they get caught for dodging their taxes, fiddling their expenses, or abusing their positions of power.

Social psychologist Daniel Effron says traditional assumptions about why good people transgress are “naive”.

We may think they go through a logical progression of weighing the costs and benefits. Can they get away with it? How much can they gain from cheating? How severe is the punishment?

“This is not nuanced enough”, counters Effron.

 “In fact, the average person cares a lot about feeling – and appearing – virtuous.”

Rather than asking themselves if they can get away with it, they instead ask if they can do it without feeling like a bad person, says Effron, Associate Professor of Organisational Behaviour at the London Business School.

Effron’s research examines how people act in ethically questionable ways without feeling unethical. He was speaking an Ethics Alliance panel on Embedding Values & Principles in June.

People cheat less than they can get away with

Experiments which involve people rolling a die in private, where no one can see them, find that people cheat (but only a little bit) when they are told the higher the number they roll, the more money they will get.

“They want to get something good for themselves, even if it means being dishonest, but they don’t want to feel like a terrible human being, so they don’t cheat as much as they could”, says Effron.

This finding implies that monitoring an organisation to ensure no one is dishonest can be a very costly and impractical exercise. Netflix, instead, decided to stop policing its expense reports.

Former Netflix chief talent officer Patty McCord explains, “In talking that through with employees, we said we expected them to spend company money frugally, as if it were their own. Eliminating a formal policy and forgoing expense account police shifted responsibility to frontline managers, where it belongs.

“It also reduced costs: Many large companies still use travel agents (and pay their fees) to book trips, as a way to enforce travel policies. They could save money by letting employees book their own trips online”, McCord writes in the Harvard Business Review.

People cheat more if they can maintain a positive self view

Effron says his research shows people look to their moral track records, to spot evidence they are a good person.

If they can point to some good deeds, they feel they have some “moral credentials”, or moral licence, when they engage in “ambiguous behaviours”.

For instance, a study shows that when people express a preference to buy environmentally friendly products (which makes them feel more ethical) they are also more likely to lie, cheat, and steal money from the experimenter.

Effron says this implies it may be effective for organisations to remind people of their ethical commitments. “When people make public commitments, they feel obligated to follow through with them”, he says.

It does not work so well just to emphasise the good things people have done. “If you emphasise ethical achievements, people feel they have ticked the box and they may be more likely to relax their striving for ethical goals.”

People cheat less when ethics are top of mind

People may know where the ethical “line in the sand is” but, as they edge closer, the line fades and, whoops, before they know it, they find themselves on the other side.

“What can we do to stop this ethical fading? Keep ethics top of mind” – Daniel Effron

A study at the London Business School finds people are more honest in filling out forms if they have to sign at the top that everything they are about to say is true, rather than signing at the bottom that everything they just said is true.

This is because they have been prompted to think about ethics before they give their answers, rather than afterwards.

This suggests organisations should routinely discuss ethics in decision making, with reminders in the workplace to keep ethics top of mind.

People may admit the deed, but not the motivation

The executive director of Corruption Prevention at the Independent Commission Against Corruption (ICAC) Lewis Rangott, says people rarely see themselves as immoral.

Very few people will admit they have been “the bad guy”, says Rangott, speaking at the Ethics Alliance event in Sydney.

“We will put them in the box, they will have to swear on the Bible and we will show them the evidence of them engaging in criminal behaviour – like a film or video – and eventually, they will admit to the deed, but very rarely will they admit to the corrupt intent. They always have a little excuse for themselves”, says Rangott.

“Giving yourself this little mental permission slip, even for the very serious stuff, seems to have something in common with regular dishonesty and also very serious misconduct and white collar crime.”

Rangott says that while the threat of an ICAC investigation may be a useful tactic to keep people honest, fear is the wrong motivation for the right behaviour. People should be intrinsically motivated to do the right thing.

Organisations can use workplace stories to encourage honesty and integrity. When someone gets fired for bullying, or the CEO thanks a whistleblower in public, that gives people the right role-modelling.

“A nice cheap and easy way to get ethics in your organisation is, without faking it, get some of these stories going in your organisation. Something people will talk about in the pub is where the real embedding happens”, says Rangott.

However, all the time, money and effort spent on embedding values gets sucked down the drain as soon as a “jerk” gets promoted. “You have to be careful who you promote. People are so good at spotting the tiniest bit of hypocrisy.”

This article was originally written for The Ethics Alliance. Find out more about this corporate membership program. Already a member? Log in to the membership portal for more content and tools here.