Dealing with gray zones - When is organizational rule-breaking useful?

In safety management, strict adherence to rules is generally seen as a hallmark of integrity, professionalism, and operational stability. Yet, the truth is more nuanced, as illustrated by Stefan Kühl’s term useful illegality — rule-breaking that, paradoxically, often helps the organization meet complex demands. Organizations occasionally experience what can be called the “Prince of Homburg effect” (Heinrich von Kleist) where rule deviations, if beneficial, are not only tolerated but sometimes even celebrated.

 

Useful Illegality and achieving organizational goals

Organizations, by nature, are pressured to balance a lot of different demands—from stakeholders to regulatory bodies to their own internal goals. In this balancing act, formal rules can sometimes feel restrictive, and this prompts employees to bend or break them to meet performance expectations. These acts of useful illegality range from minor breaches, like extending regulated work hours, to procedural shortcuts that improve efficiency but technically break the rules. Such actions are often encouraged indirectly by the organizational environment itself, where informal norms provide leeway in areas that formal rules may overlook.

This rule-bending doesn’t just apply to for-profit corporations; government agencies and non-governmental organizations also operate in gray zones and are influenced by the same internal and external pressures. Often, these informal practices become unwritten laws within the organization; they create a practical, if technically deviant, informal structure that accommodates the complexity of day-to-day demands.

 

Public perception and the Scandal effect on rule deviance

Public perception of organizational rule-breaking tends to be positive or indifferent as long as the organization succeeds. But when rule deviations lead to failure or scandal—think emissions scandals or corporate fraud—the reaction changes from tolerance to outrage. This selective exposure creates a skewed understanding of rule-breaking in organizations. It encourages a view that fails to recognize when deviations serve broader goals. Thus, while useful illegality may contribute to organizational adaptability, it becomes socially unacceptable when it visibly fails, and leads to crisis and blame.

 

Systems theory - Understanding rule deviance in organizational contexts

Systems theory suggests that organizations naturally create gray areas where rules are not so much broken as they are adjusted in response to competing demands. This approach focuses on how organizations depend on both formal structures and informal practices. Different systems (like legal, family, or political) impose unique pressures, and rule-breaking within each context varies accordingly. So, rule deviance isn’t simply a byproduct of individual misconduct but often a structural necessity within complex organizational systems.

 

Rule deviance - Not a capitalist phenomenon

Contrary to the belief that rule-breaking is primarily a capitalist tendency, evidence suggests it’s common across all sectors, economic systems, and organizational types. Bureaucracy, unpredictability, and organizational complexity all contribute to environments where strict rule adherence isn’t feasible. The result is deviance that arises from structural conflicts rather than individual failings. The rule-breaking that emerges in this context is less about personal moral lapses and more about the necessary flexibility to achieve shared goals.

 

The thin line between corporate and occupational crimes

Organizations also face the dilemma of distinguishing between rule-breaking that benefits the organization and that which serves individual interests. Corporate crimes (those that benefit the organization) and occupational crimes (those that benefit the individual) both contribute to organizational complexity. Some violations, such as unauthorized use of company resources, may provide indirect benefits to the organization, even if they’re motivated by personal interest. This fine line between useful illegality and personal gain illustrates the difficulty of policing minor infractions without disrupting functional deviance that serves the organization.

 

The erosion of formal norms and emergence of informal practices

Over time, informal practices develop as employees learn to deal with the gray zones. New members absorb these behaviors through socialization rather than formal training; they internalize a norm that subtly undermines official rules but provides pragmatic solutions to organizational needs. Therefore, rules and deviance coexist in a symbiotic relationship that creates resilience. When rule deviance becomes widespread and no longer serves organizational goals, the risk of unbounded illegality grows, challenges the organization’s integrity and leads to public mistrust.

 

The paradox of over-compliance and the rise of moralization

In reaction to scandals, organizations often attempt to restore public trust by implementing stricter compliance measures and ethical guidelines. But this moralization of compliance can lead to unexpected consequences, such as a culture of hypocrisy and self-censorship, where employees feel pressured to present a façade of integrity that doesn’t reflect the organization’s reality. This pressure often results in a conspiracy of silence around rule-bending behaviors, which continue to occur but remain hidden. Ironically, the pursuit of public transparency may cultivate a more opaque organizational culture where authentic communication is stifled.

 

Practical implications for leaders and managers

Leaders and managers can take valuable insights from understanding useful illegality. Rather than rigidly enforcing all rules or moralizing deviance, leaders can cultivate a more balanced approach that recognizes the flexibility needed in complex environments. A key takeaway is to acknowledge the role of informal practices in maintaining organizational agility and to carefully distinguish between functional rule-breaking that supports organizational goals and harmful practices that erode trust and effectiveness.

Organizations might benefit more from creating safe, informal channels for discussing rule deviance without moral judgment, which allows managers to understand and address the gray zones before they become unmanageable.

Dealing with these complexities is not about eliminating rule-breaking but finding ways to balance formality and flexibility for long-term sustainability.

 

Conclusion

Organizations today operate within an complex landscape of rules, informal practices, and competing demands. A certain degree of rule-breaking is not only inevitable but, in many cases, essential for adapting to complex and rapidly changing environments. By acknowledging and thoughtfully managing these gray zones, organizations can balance integrity and practicality, and align both formal and informal practices with their overarching goals.

 

Source

Kühl, S. (2022), Useful Illegality - The Benefits of Breaking the Rules in Organizations, Princeton: Organizational Dialogue Press.