My views are different from Cite Contribution's. Performance and integrity are two separate things, and one cannot compensate for another. Any integrity issue has to be dealt with sternly. Therefore, I recommend you conduct an inquiry, and if the culpability of the offender is established, then take the strictest action, possibly including termination.
If you do this, it will send a signal to everyone about what your management values. If you give leeway now, it will set a wrong precedent, and such issues will continue to occur.
Issues of Integrity
Issues of integrity must be addressed seriously. It is easy for a lame-duck Prime Minister to turn a blind eye to the corrupt practices of his ministers under the pretext of coalition politics. However, let me remind you that a business cannot be run like a politician.
Today, we discuss corruption. But ask a middle-aged person, and he/she will tell you that the seeds of corruption were sown during the days of Pt. Jawaharlal Nehru. The seed was nurtured by his daughter, and later his grandson acknowledged that corruption is a fait accompli. Now, his great-grandson has no clue how to solve the issue of corruption because it is weakening the very fabric of the nation.
Examples from Experience
During my HR days, I encountered a situation where security personnel caught a fresher with a few office pencils. My VP immediately terminated her services. I also knew of a second instance where a very senior software professional working in an MNC was terminated as security caught him trying to remove a printer cartridge.
Organizational Culture
Don't we learn about organizational culture during our MBA? This culture is shaped by organizational communication, which is the interpretation of the actions that senior management or top management officials take.
So, how to handle this situation is the decision of your top management.
Thanks,
Dinesh V Divekar