Work From Anywhere Trend Intensifying Ethics, And Compliance Issues

The COVID-19 pandemic has forced organizations to operate with a physically dispersed workforce. Employees are involuntarily working from remote locations. Many individuals are working under lonely unmonitored stressful conditions that diminish focus and motivation. The interminable Work From Anywhere (WFA) trend may have broad uncertain net effects on productivity, ethics, and compliance. 

A webinar panel hosted by the University of Maryland Alumni Association discussed the COVID-19 economic shutdown and how the fiscal uncertainty is expected to lead to a surge in white-collar crimes. Bridget Rohde, a former Acting United States Attorney, stated," You're going to see accounting fraud, you're going to see insider trading, you're going to see all sorts of misrepresentations." The panel discussed how economic pressures could result in misconduct among businesses who might not have otherwise slipped into such ethical missteps in more stable times. Bruce Dubinsky, a forensic accountant and Managing Director at Duff & Phelps, stated that FINRA is very concerned about people having inside information relating to the impact of the COVID-19 pandemic on a company's financial health and stock price. He also stated that while some white-collar criminals carefully perpetrate their nefarious acts, others may venture into making unethical decisions when suddenly facing a crisis.

The COVID-19 pandemic has further exposed and amplified economic disparity and inequality. This phenomenon may create more anxiety in society, possibly leading to more cheating. The Cheating Culture book by David Callahan highlights that Americans are cheating more and feeling less guilty. He states that the "anxious class" believes that not cheating could cancel its only shot at success in the winners take all world. Professor Sreedhari Desai, at UNC Kenan-Flagler Business School, states, "It is only natural for housebound workers to experience a sense of isolation, stress, and anxiety. Based on my research, anxious people are likely to cut corners, bend the rules, and make unethical decisions." Research report by Professor Desai and Professor Maryam Kouchaki states that "people experiencing anxiety are likely to behave selfishly and possibly even engage in self-interested unethical acts to restore the threatened self. Specifically, we expect individuals experiencing anxiety to focus inward and acquire resources (e.g., money) as a means of mitigating feelings of anxiety." They further write, "in threatening situations, the brain shifts into a state that facilitates the development of rapid defense mechanisms. During such episodes, stress hormones such as noradrenaline are released that enable people to focus their energies to respond to the situation. In other words, people's cognitive resources are temporarily diverted to restore themselves and facilitate a quick response to the situation. In brief, self-protective impulses are unleashed by threatening experiences." They conclude that this self-protective mode causes people to focus narrowly on their own basic needs and self-interest, which can cause them to be less mindful of principles that guide ethical and moral reasoning, thus leading them to behave unethically. 

Companies with knowledge workers, supported by the internet, broadband connectivity, cloud computing, powerful personal computers, smartphones, videotelephony, and other emerging technologies are particularly well suited for the WFA model. Such companies usually have a vast treasure trove of intellectual property, consisting of patents, trademarks, copyrights, and trade secrets, which are vulnerable to theft. WFA employees are accessing the proprietary intellectual property information from unsecured remote locations, which are outside of the confines of the perimeter-based security – IT secured monitored office environments. These unsecured remote work environments can lead to significantly more inadvertent and nefarious unauthorized sensitive data leaks. WFA employees accessing sensitive data from outside the "perimeter-based security" can get lured into temptations and opportunities, i.e., taking photographs of product designs or client data and selling them to competitors. The feeling of being a "victim" in these uncertain times can lead to ethical fading and dissipating corporate loyalty. Vulnerable employees can fall prey to temptations of financial gains by leaking and selling sensitive information. The loss of job security, stressful work environment, loneliness, and remote work away from the corporate office environment's watchfulness may trigger many ethical lapses and pose new challenges and risks to the work-product misuse, and concomitant breach of legally binding "Non-Disclosure and Non-Use Agreements" between employees and companies.

In 2020, day trading has replaced sports betting as America's pastime. A full-blown retail mania has taken hold in buying and selling small lots of stocks and options, says Jim Bianco, head of the eponymous Bianco Research. This hyper engagement by millions of new investors, including individuals misplaced/displaced by the pandemic, has enhanced the risks of tripping the insider trading laws. With a large percentage of corporate employees working remotely, many publicly traded companies face higher risks of illegal use of financial data by insiders for monetary benefits and insider trading. For investment management firms, policing the use of material nonpublic information by teleworking money managers and analysts can pose substantial compliance challenges. Compliance managers' ability to have impromptu face-to-face discussions with analysts and portfolio managers to clarify and reinforce compliance procedures has been removed by remote working. 

Leadership stress has also been found to nudge decision-makers into cutting corners on quality control, cover up work-incidents, abuse/lie about sick days, and deceive customers. Corporate leaders have confessed that workplace pressures caused them to give minimal consideration towards unethical or illegal behavior. Blind Spots, a book by Ann E. Tenbrunsel and Max H. Bazerman, highlights that organizations with uncertainty, time pressure, short-term horizons, and isolation are sources for unethical behaviors. These environments can be ethical sinkholes that deplete the cognitive resources and are catalysts for the “ethical fading” process - the tendency to forget about our moral values and consequent implications of our actions. 

The standard approach to curbing dishonesty relies on enforcement and deterrence, i.e., increasing both the punishments and the likelihood of being caught. This approach, however, instead of encouraging people to be honest, teaches them to avoid punishment or to become better cheaters. External punishments can also crowd out internal motivation and further separate people from their moral compass. In a Wall Street Journal article,  Professor Dan Ariely, at Duke University, states that very few people steal to a maximal degree, but many good people cheat just a little here and there. While it is important to police egregious intentional misbehaviors, it is imperative to discourage the small and more ubiquitous forms of dishonesty. A research report by Professor Ariely and et al. has formulated an alternate 3-principle framework that can guide intervention policies to deter unethical behaviors.

While the COVID-19 pandemic has accelerated the trend towards Work From Anywhere, much more needs to be accomplished to address the ethics and compliance issues endemic in this new environment. While companies and individuals have made large fixed cost investments associated with moving from office to remote-working, the next steps require investments in technology, employee training, and adjustments to organizational structure to mitigate the ethics and compliance lapses.