glass sided office building with one broken window

“Broken Windows” and Employee Misconduct

The broken windows theory proposed by James Q. Wilson and George Kelling links disorder to subsequent occurrences of serious crime. Michael Volkov suggests it can be applied in a corporate setting as well. Anytime employee misconduct goes unpunished, more bad behavior is likely to spring up.

Criminologists have debated for years the efficacy of the law enforcement strategy of “broken windows.” In simple terms, the theory suggests that minor infractions or petty crimes should be vigorously prosecuted in order to deter more serious crime. In addition, the theory suggests that a deteriorating environment (e.g., where broken windows are not repaired and are allowed to increase) creates an environment where serious misconduct is likely to occur.

Supporters of the “broken windows” strategy often cite New York City as an example of its efficacy.  Through the 1990s, law enforcement aggressively pursued petty and serious crimes with the result of a lower crime rate and improved neighborhood conditions. Whether the broken windows strategy was the reason for this improvement is debatable.

If you assume a corporation is its own community with social trends and influences, the question is whether a “broken windows” disciplinary strategy inside a company would reduce employee misconduct. The “broken windows” theory has never been applied to the white collar context.

There is no question that a company has to adhere to tough disciplinary standards to deter employee misconduct.  Whether a company needs to adopt a “broken windows” strategy is another question.  If a company decides to try such an approach, the company has to recognize that such a strategy requires transparency and communication of disciplinary actions while protecting employee privacy rights.

In order to implement such a strategy, there has to be commitment by leadership, human resources, compliance and legal functions to (1) identify “petty” offenses, (2) develop investigation and enforcement strategies, (3) ensure consistency in handling investigations and discipline and (4) communicate results and promote enforcement strategy.

The determination of “petty” offenses should include a range of minor offenses relating to expense reimbursement, theft, unauthorized use of resources and less serious conflicts of interest. It should not be hard to investigate and punish these types of minor offenses.

The challenge, however, occurs in even-handed justice. We have seen too many cases where a strong performer or important sales representative is given a slap on the wrist rather than the same punishment that a lower-level or less important employee receives for the same offense. Such disparate treatment erodes a company’s culture and undermines any claims of integrity and trust.

It can be argued, however, that ignoring “minor” employee offenses creates a slippery slope where rates of misconduct and seriousness of offenses will increase. Such a trend appears to be well-founded. It is easy to imagine an employee who observes another employee engaging in theft against the company and fails to report the offense when minimal or no punishment against the offending employee occurs.

As this attitude expands, there is a real danger to the company’s culture – if reported misconduct is not punished, the fear of detection and punishment will decline, leading to increased misconduct. Employees who operate in this environment may feel emboldened to commit repeated and more serious offenses.

A company’s culture depends on organizational justice. An effective justice system can deter individual employees from engaging in misconduct and encourage nonoffending employees to report observed misconduct. When these two trends are maximized – deterrence and reporting of misconduct – a company has accomplished an important objective: an organization committed to justice to promote trust and integrity with its employees.

This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.


Michael Volkov

Michael Volkov

Michael-Volkov-leclairryanMichael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services.  He can be reached at mvolkov@volkovlaw.com.  His practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters. He is a former federal prosecutor with almost 30 years of experience in a variety of government positions and private practice.

Michael maintains a well-known blog: Corruption Crime & Compliance which is frequently cited by anti-corruption professionals and professionals in the compliance industry.Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues.

Michael has assisted clients with design and implementation of compliance programs to reduce risk and respond to global and US enforcement programs.

Michael has built a strong reputation for his practical and comprehensive compliance strategies.Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for 5 years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice.

Michael also has extensive trial experience and has been lead attorney in more than 75 jury trials, including some lasting more than six months. His clients have included corporations, officers, directors and professionals in, internal investigations and criminal and civil trials. He has handled a number of high-profile criminal cases involving a wide‐range of issues, including the FCPA and compliance matters, environmental crimes, and antitrust cartel investigations in countries all around the world.

Representative Engagements

  • Successfully represented three officers of a multinational company in two separate criminal antitrust investigations involving a criminal antitrust investigation in the District of Columbia and the Southern District of New York.
  • Defended pharmaceutical company before the Food and Drug Administration and Senate Finance Committee relating to application for approval of generic drug.
  • Conducted internal investigation which exonerated company against allegations of false statements in submissions to the FDA and against improper conduct alleged by Senate Finance Committee.
  • Represented company before the US State Department on alleged violations of ITAR which lead to voluntary disclosure and imposition of no civil or criminal penalties.
  • Advised several multinational companies on compliance with anti‐corruption laws, and design and implementation of anti‐corruption and anti‐money laundering compliance programs.
  • Advised hospitals, pharmaceutical companies and medical device companies on compliance issues relating to Stark law and Anti‐Kickback law and regulations.
  • Conducted due diligence investigations for large multinational companies for anti‐corruption compliance of: potential third party agents, joint venture partners and acquisition targets in Europe, Africa, Asia and Latin America.
  • Represented individual in white collar fraud case in Alexandria, Virginia and secured dismissal of criminal charges and expungement of criminal record.
  • Represented company before Congress and Executive Branch in effort to modify Justice Department regulations concerning use of federal funds.
  • Advised and assisted World Bank in review of global corruption policies, enforcement programs and corruption investigations and prosecutions.

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