Does it pay to be a rule breaker in business?

One of the first lessons we learn in life is not to break the rules – but new research from Imperial College Business School reveals there might actually be perks to being a rebel in the business world.   

Though organisations and nations alike set rules in an effort to constrain our worst human tendencies, for as long as there have been rules, individuals have been breaking them. And it doesn’t take more than a cursory look at the news to see how self-proclaimed rule breakers can succeed: take, for example, the belief of Elon Musk, one of the world’s richest inhabitants, that “the only rules are the ones dictated by the laws of physics. Everything else is a recommendation”.

Once behaviour deemed "dodgy" is normalised, it’s extremely hard to get rid of it

Indeed, rule breaking can appear to be a mandatory part of business. Yet there has been almost no research on the benefits of breaking rules – perhaps because social science has a conscience, and has preferred focusing on the penalties it elicits rather than its rewards. For rule breaking to be as normative as it is, individual rule breakers need positive feedback. So, we conducted a study to look at whether managers reward and promote employees who flout rules – and how far that encouragement might stretch.

What we discovered is perhaps sadder than it is surprising: managers do give rule breakers preferential treatment over their rule-abiding peers, providing they don’t overdo it.

Rule breaking in sports

Given the difficulty of identifying rule breaking with certainty in real-world contexts, we looked at how coaches reward rule breaking in ice hockey. Sports data are detailed and precise – unlike in the corporate world where there is evidence that some try to hush up transgressions. Why ice hockey? Players frequently infringe sporting rules – we looked at nearly 214,000 incidents – and referees penalise players immediately. Culprits are removed from play for a while, with knock-on effects on their short-handed team’s performance.

Our research found no evidence that team performance improved as a result of rule breaking

Using detailed data gathered over six seasons from the National Hockey League, and conducting an additional experiment to confirm our findings, we discovered that those who break the rules are rewarded by their coaches with extra playing time over the season. This is despite the fact that taking penalties risks losses for their teams.

The one silver lining is that coaches have a tipping point: the most rampant offenders – those whose rule breaking forces them to sit out for significant periods – are rewarded less. Largely, this preferential treatment is most obvious in the games with relatively low stakes, rather than during games that were pivotal to their team’s fortunes. And it was the minor, rather than major, rule infringements that brought rewards.

Fostering a rule-breaking culture

Another experiment we conducted backed up our findings and gave more insight into managers’ motivations for this risky and potentially counterproductive behaviour. Moderate rule breaking appears to elicit attributions of a player’s grit and commitment. But extreme rule breakers – while also perceived as demonstrating commitment – were also considered more of a liability, and thus less likely to be rewarded.

For rule breaking to be as normative as it is, individual rule breakers need positive feedback

Our findings are both troublesome and reassuring. What is concerning is that they imply that organisations foster cultures of rule breaking – such that it becomes normalised in daily business. A cynic might conclude that managers condone rule breaking because they believe it will bring benefits for themselves. In our work, no managers were required to explain why they were rewarding rule breaking.

They had discretion to make the call without the need for justification. Research has already shown that once behaviour deemed "dodgy" is normalised, it’s extremely hard to get rid of it.

The results of bad behaviour 

There are a few reasons to take heart. Our research found no evidence that team performance improved as a result of rule breaking – if anything, it declined in the teams we looked at, although we didn’t identify any causal link for this association. Organisations should also be wary when their performance is in decline: when a team in our sample is performing badly, managers become more likely to reward their rule breakers than when they are on a winning streak.

This fits with previous research that finds people are more likely to take risks and break rules in competitive environments. In these circumstances, managers might interpret a willingness to push boundaries as a sign of commitment to a company or campaign.

For as long as there have been rules, individuals have been breaking them

Our work asks as many questions as it answers. We’ve only looked at situations governed by clearly defined rules – but what if these are hazy or open to interpretation in less regulated environments? What about rule breaking that is only observed by a few – rather than being clear for all to see on the ice? What is clear is that rule breaking does seem to be enabled by the people in charge. We need to know more.

This article draws on findings from "A (Bounded) Preference for Rule Breakers" by S. Wiley Wakeman (Stockholm School of Economics), Philip Yang (Paderborn University Business School) and Celia Moore (Imperial College London).