Are Employees Truly More Ethical in the Office? A Behavioral Economist Debunks This Deeply Rooted Belief. Many leaders claim that employees are more ethical in the office, where they can see them — conversely, they're less ethical when working from the home office. Well, that conventional wisdom has been busted.

When it comes to conventional wisdom, most business professionals harbor a deeply-rooted belief: in-office work is where honesty and ethical behavior flourish and work from home is the den of iniquity. We imagine offices as sanctuaries of corporate integrity, bustling with industrious individuals diligently toeing the line of right conduct and work from home as allowing flouting of business ethics and norms. But what if this picture-perfect vision of the office is more of a mirage and less of an oasis?

Let's briefly escape the buzz of the open-plan office and delve into an alternative perspective. Are offices truly the guardians of morality they're often made out to be? Or do they perhaps resemble a wild office holiday party— complete with raucous laughter, liberally shared secrets and ethically questionable behavior — that thrives under the stark glare of fluorescent lights?

A recent peer-reviewed study forthcoming in the European Financial Management journal serves as the needle poised to puncture this inflated balloon of traditional belief. Here's a twist in the tale: bankers working from home, while brewing their morning coffees in pajamas, have been setting a higher ethical standard than their well-heeled office counterparts.

That certainly puts a different twist on the demands by JP Morgan and Goldman Sachs demanding that their bankers work from the office five days a week! They are — perhaps unwittingly — opening the door for greater financial misconduct by forcing in-office work.

Related: How to Maintain Your Integrity While Keeping Up With a Rapidly Changing Environment

Busting the myth: Financial conduct in a remote world

Imagine a trader, comfortably ensconced in a cozy home office, engaging in remarkably fewer instances of financial misconduct than their counterparts on the tumultuous trading floor. It's a plot twist that could give a Hollywood scriptwriter a run for their money.

This dramatic revelation was born from the meticulous analysis of data from one of the top five UK banks. During the year-long period of lockdown, researchers scrutinized misconduct reports relating to 162 traders. The resulting data unveiled a startling truth: traders working from home had a modest 7.3% chance of sparking a misconduct alert, while their office-going brethren had a spine-chilling 37.6% probability.

In other words, the hallowed office often hailed as a paragon of professionalism and integrity, was home to over five times more instances of misconduct than the remote workplace.

The catch: Unethical behavior is contagious

Unethical conduct, it seems, is as contagious as a yawn during a monotonous Monday morning office meeting. Like a bad typo turning a crucial report into a laugh riot, one wayward trader can lead to an avalanche of similar behavior.

This trend is not dissimilar to a classic high school scenario where the temptation to "fit in" can lead to a spiral of poor choices. Even within the hallowed halls of finance, no one is immune to the infectious nature of unethical behavior.

The researchers assert that removing a trader from an office environment riddled with unprofessional conduct significantly reduces their likelihood of engaging in similar indiscretions. The analogy is akin to moving a box of doughnuts away from a group of dieting colleagues — when temptation is out of sight, it's also out of mind.

The surprising strengths of remote work

The phenomenon of remote work, once considered a novelty limited to Silicon Valley and independent freelancers, has revealed itself to be a mighty fortress against unethical behavior.

One key reason lies in the diminished access to inside information and market rumors — both potent catalysts for financial misconduct. Office environments often provide ample opportunities for such information to be exchanged, like over a clandestine chat during a smoke break or a whispered conversation in the corner of the canteen. In contrast, a home office makes such under-the-table information exchange as elusive as a parking space during the holiday shopping frenzy.

Related: The Importance Of Honesty And Integrity In Business

The hidden enemies: Cognitive biases at work

Before we go any further, let's pause and consider the silent saboteurs of ethical behavior: cognitive biases. These deeply ingrained mental shortcuts often shape our behavior in ways we don't recognize. Like invisible puppeteers, they subtly pull our strings, guiding our actions, often leading us astray in thinking about hybrid work, as I tell my clients.

In this case, let's focus on two specific cognitive biases that provide valuable insight into our discussion: the confirmation bias and the status quo bias.

Confirmation bias, a classic villain in the plot of rational thinking, involves favoring information that confirms our pre-existing beliefs or values. Picture this: a trader firmly believes that bending the rules is a norm (albeit unspoken) in the high-stakes financial industry. When they hear snippets of chatter about a colleague who manipulated market rumors for gain without facing consequences, this reinforces their belief. This reinforcement might nudge them further down the unethical path.

In an office environment, where information (and misinformation) flows freely, the confirmation bias has a ripe playground to reinforce harmful beliefs. On the contrary, the isolation of remote work might shield traders from such damaging confirmations, leading to a decrease in misconduct.

Status quo bias, another deceptive mastermind, is our preference for keeping things the same, especially when faced with change or uncertainty. Imagine a trader who's grown accustomed to the cutthroat office culture, where bending rules is sometimes deemed a necessary evil to stay ahead.

In such a scenario, the status quo bias might make the trader reluctant to alter their behavior, even in the face of clear ethical guidelines. They might perceive a change in ethical conduct as a risky shift, threatening their standing or success. In a home setting, away from the immediate pressures and ingrained norms of the office, this bias loses much of its persuasive power.

When cognitive biases are at play, achieving a culture of integrity can be akin to climbing a greased pole. However, recognizing these biases is the first step in combating them. In a remote work setup, confirmation bias and status quo bias have fewer chances to interfere, which could explain the surprising upswing in ethical behavior observed among remote workers.

The future of ethics is hybrid

If the future of work is, indeed, a hybrid model, we find ourselves on the cusp of a unique opportunity to reshape the norms of ethical conduct. It's a strange yet thrilling thought that a domestic environment — often punctuated with errant kids, barking dogs and overflowing laundry baskets — could be the secret weapon in the battle against financial misconduct.

So, as we embark on the journey to redefine work, it's high time we discarded the antiquated, office-centric playbook. The next time you think of honesty and ethics, don't visualize gleaming office towers filled with well-dressed professionals. Instead, imagine the humble home office — unpretentious yet powerful, an unassuming beacon of financial integrity. In the end, let's remember: Good behavior isn't dictated by where you sit, but by the ethical stand you take. No matter where we choose to log in from, let's make sure integrity is always on our agenda.