51. Addressing Disloyalty & Broken Trust
How to rebuild relationships when employees betray your business.
Imagine this - A trusted senior employee shares confidential business strategies with a competitor. Or perhaps a key team member secretly undermines leadership decisions, stirring resentment among colleagues. The impact?
A breakdown in trust between management and employees.
Damage to company reputation, revenue, or competitive advantage.
Team morale suffers as employees feel deceived or manipulated.
Leadership struggles to determine how to respond—should they confront, forgive, or take legal action?
Disloyalty and betrayal in the workplace can take many forms—from an employee badmouthing the company to clients, to a business partner secretly working with a competitor. These actions not only impact immediate relationships but can have long-term consequences on company culture and employee retention.
HR psychology tells us that employees are less likely to betray an organisation when they feel valued, involved, and aligned with company values. However, when they feel overlooked, mistreated, or unappreciated, they may justify acts of disloyalty as “getting even.”
The challenge? How do you respond to betrayal in a way that protects the business while maintaining workplace integrity?
The Solution – A Three-Part Approach - Investigate, Respond, and Prevent
Effectively managing disloyalty requires a thorough investigation, a proportionate response, and proactive measures to prevent future breaches of trust. Here’s how to restore stability and safeguard workplace relationships.
1. Investigate the Nature and Extent of the Betrayal
Before reacting emotionally, gather facts to understand the situation fully.
A. Identify the Type of Disloyalty
Workplace betrayal can range from minor breaches of trust to serious ethical violations. Common types include -
Confidentiality breaches – Sharing company secrets or sensitive information.
Workplace sabotage – Intentionally delaying or disrupting operations.
Discrediting leadership – Undermining leaders to gain influence or cause division.
Client poaching – Redirecting customers to a competitor.
Conflicts of interest – Secretly working for or benefiting from a rival company.
Red Flag - If the betrayal involves theft, fraud, or legal violations, leadership must act immediately to mitigate damage and seek legal counsel.
B. Gather Evidence and Speak to Those Involved
Interview employees who may have witnessed or been impacted by the betrayal.
Review emails, reports, or communication records that confirm or disprove suspicions.
Determine if the disloyalty was intentional or due to misunderstanding or negligence.
HR Best Practice - Emotionally charged decisions can backfire—gathering objective evidence prevents knee-jerk reactions.
C. Assess the Impact on the Business and Team Morale
Consider -
Has this betrayal damaged the company’s reputation, financial standing, or employee trust?
Will disciplinary action resolve the issue, or has trust been permanently broken?
How will other employees react based on leadership’s response?
Red Flag - If the betrayal has created division within the team, leaders must address concerns publicly to prevent workplace toxicity.
2. Respond to the Betrayal with Professionalism and Authority
Once the facts are clear, leaders must take decisive but measured action.
A. Confront the Individual with Evidence and Professionalism
Hold a private meeting to discuss the breach of trust.
Remain professional—avoid personal accusations or emotional outbursts.
Allow the employee to explain their actions.
Example - “We’ve gathered evidence showing that confidential company data was shared externally. Can you help us understand why this happened?”
HR Psychology Insight - Employees are more likely to admit mistakes when approached with a solution-focused rather than punitive mindset.
B. Determine an Appropriate Consequence
The response should match the severity of the betrayal -
Verbal or written warning – For minor disloyalty, such as spreading negativity or resisting leadership.
Formal disciplinary action – If the act damaged team morale or business operations.
Termination – If the betrayal was severe, such as sharing trade secrets or engaging in sabotage.
Legal action – If the betrayal involved fraud, intellectual property theft, or contract violations.
Red Flag - If no action is taken, employees may perceive betrayal as acceptable, leading to further disloyalty.
C. Communicate With the Broader Team to Restore Trust
If the situation has impacted multiple employees, address concerns openly.
Reaffirm company values and leadership’s commitment to integrity.
Encourage employees to report unethical behaviour without fear of retaliation.
HR Best Practice - Transparency builds trust—silence breeds speculation and fear.
3. Prevent Future Disloyalty Through Stronger Workplace Engagement
To minimise future betrayals, leaders must foster an environment where employees feel valued, heard, and aligned with company goals.
A. Strengthen Employee Engagement to Reduce Disloyalty
Ensure employees feel respected and recognised for their contributions.
Create clear career growth opportunities to prevent resentment.
Involve employees in decision-making to foster loyalty and commitment.
HR Psychology Insight - Employees who feel connected to the company’s success are far less likely to betray it.
B. Establish Clear Ethical Guidelines and Non-Disclosure Agreements (NDAs)
Ensure employees understand confidentiality expectations from day one.
Use legally binding NDAs for employees with access to sensitive information.
Regularly reinforce company policies on ethical behaviour and loyalty.
Red Flag - If employees see leadership breaking ethical guidelines, they will rationalise their own acts of disloyalty.
C. Monitor and Address Toxic Workplace Behaviour
Disloyalty often stems from deeper workplace issues—leaders must address -
Office politics and favouritism.
Workplace bullying or exclusion.
Leadership behaviours that create resentment or disengagement.
HR Best Practice - An engaged, respected workforce is a loyal workforce—building trust prevents future betrayals.
Reflective Scenario – What Would You Do?
A highly valued employee resigns unexpectedly and, within weeks, joins a direct competitor, taking several clients with them. Other employees begin questioning leadership’s ability to protect company interests.
Using the strategies above, you might -
Investigate whether the employee violated any agreements.
Confront the individual professionally, ensuring fair due process.
Implement stronger contractual protections for remaining employees.
Reinforce company culture to prevent future poaching or defections.
By responding swiftly and reinforcing company values, you rebuild trust and minimise further losses.
Golden Nugget - "Loyalty isn’t demanded—it’s cultivated through respect, engagement, and strong leadership."
By identifying disloyalty early, responding with professionalism, and creating a culture of trust and engagement, SME leaders can prevent betrayal and foster long-term employee commitment.