$Surreal digital illustration of a fractured ethical compass amidst a cityscape, representing the complexities of workplace ethics.$

Cracking the Code: How Workplace Dynamics Impact Your Ethics at Work

Soraya Malik in Business & Economy June 2025 • 4 min read.

"Navigate the tricky terrain of peer influence and performance pressures to foster a culture of compliance and integrity."

Ever felt that subtle nudge to bend the rules at work? Maybe it was the pressure to keep up with high-performing colleagues or the temptation to cut corners to meet a deadline. You are not alone. The workplace is a complex web of influences, where our decisions are constantly shaped by the actions and information around us. Understanding these dynamics is key to making ethical choices and fostering a culture of integrity.

A revealing study investigates the impact of relative performance information (RPI)—how we stack up against our peers—and the noncompliant behavior of coworkers on our own tendency to follow the rules. The findings shed light on the hidden forces that can drive us to compromise our values, offering practical insights for both employees and organizations.

In today's fast-paced and competitive work environments, it's more important than ever to understand the factors that influence our ethical choices. By understanding the social dynamics at play, we can equip ourselves to navigate these challenges with greater awareness and resilience.

The Peer Pressure Effect: How Others' Actions Sway Our Choices

Surreal digital illustration of a fractured ethical compass amidst a cityscape, representing the complexities of workplace ethics.

The study reveals a fascinating phenomenon: when individuals perceive high levels of noncompliance among their colleagues, their own tendency to bend the rules actually decreases. This seemingly counterintuitive reaction stems from a desire to distance oneself from those perceived as unethical. It's as if we instinctively try to safeguard our own reputation by steering clear of questionable behavior.

However, this effect is heavily influenced by the presence of relative performance information (RPI). When employees are aware of how their performance compares to their peers, the impact of others' actions takes a dramatic turn. The study found that when employees perceive high levels of noncompliance and are also aware of their relative performance, their own noncompliance tends to increase.

Here's why this happens:

RPI creates a sense of group identity, making individuals more susceptible to peer influence.
It fosters a competitive environment, where employees may feel pressured to cut corners to keep up.
Transparency exposes negative externalities.

The study emphasizes a key point: when employees have a clear picture of how their performance stacks up against their peers, the actions of those around them carry even greater weight. If those peers are seen bending the rules, the temptation to follow suit becomes stronger.

Creating a Culture of Compliance: Key Takeaways for Organizations

The findings of this study offer valuable insights for organizations seeking to foster a culture of compliance and ethical behavior. Firstly, it's essential to be mindful of the messages being conveyed by performance metrics. While RPI can be a powerful motivator, it can also inadvertently incentivize unethical behavior if not managed carefully. Secondly, organizations should strive to minimize the perception of noncompliance among employees. By promoting transparency, accountability, and ethical leadership, companies can create an environment where employees feel empowered to do the right thing, even when faced with pressure to cut corners. By taking proactive steps to cultivate a culture of compliance, organizations can safeguard their reputation, build trust with stakeholders, and create a more sustainable and ethical workplace for all.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.2139/ssrn.2696613, Alternate LINK

Title: The Effect Of Relative Performance Information And Other Employee Behavior On Noncompliance

Journal: SSRN Electronic Journal

Publisher: Elsevier BV

Authors: Corinna Ewelt-Knauer, Thorsten Knauer, David J. Sharp

Published: 2015-01-01

Everything You Need To Know

What is Relative Performance Information (RPI) and how does it impact ethical choices in the workplace?

Relative Performance Information (RPI) refers to the awareness employees have regarding how their performance compares to that of their peers. This awareness can significantly influence behavior. While RPI can motivate employees, it may also create pressure to cut corners to keep up, potentially leading to unethical actions. Managing RPI effectively involves being mindful of the messages conveyed by performance metrics. Without careful management RPI may create negative externalities.

How does observing noncompliance in colleagues affect an individual's own ethical behavior, and how is this influenced by Relative Performance Information (RPI)?

The study indicates that when employees perceive high levels of noncompliance among their colleagues, their own inclination to bend the rules initially decreases. This stems from a desire to distance themselves from unethical behavior and safeguard their own reputation. However, this effect changes when Relative Performance Information (RPI) is introduced. Awareness of peer performance can alter the impact of others' actions, potentially increasing noncompliance.

What key strategies can organizations implement to foster a culture of compliance and ethical behavior, especially considering the impact of Relative Performance Information (RPI)?

To cultivate a culture of compliance, organizations should prioritize ethical leadership, transparency, and accountability. Minimizing the perception of noncompliance is crucial, as high levels of perceived noncompliance, especially when coupled with Relative Performance Information (RPI), can increase unethical behavior. Promoting an environment where employees feel empowered to make ethical choices, even under pressure, is essential for long-term success and sustainability.

In what specific ways does peer influence affect an individual's ethics at work, and what role does Relative Performance Information (RPI) play in this dynamic?

Peer influence impacts individual ethics at work through both direct and indirect mechanisms. Observing noncompliant behavior can normalize rule-breaking, especially when individuals are aware of their Relative Performance Information (RPI) compared to their peers. The desire to keep up with high performers or the fear of falling behind can lead to cutting corners. Understanding these social dynamics is crucial for promoting ethical decision-making and preventing a race to the bottom in terms of compliance.

How does the combination of Relative Performance Information (RPI) and perceived noncompliance among peers influence an employee's ethical behavior?

When employees are aware of Relative Performance Information (RPI) and also perceive high levels of noncompliance, it creates a competitive environment. The combination can increase an individual's own noncompliance. The sense of group identity fostered by RPI makes employees more susceptible to peer influence and more likely to bend the rules to maintain their standing within the group. This highlights the need for organizations to carefully manage performance metrics and promote a culture of integrity.