Many organizations make bold claims about how they value honesty above all else. But deceit has its merits too. Telling the naked truth to your employees can result in panic, stress, or spite.

According to new research by Wharton professor Maurice Schweitzer and Wharton doctoral student Emma E. Levine, lying in the right circumstances can be ethical, helps to breed trust in difficult times, and can help boost morale.

Most humans are taught from a young age that honesty is the best policy. Yet you're also taught, Schweitzer and Levine tell Wharton's blog Knowledge@Wharton, to tell your grandmother that you love the sweater she bought you--even though you hate it and know you'll never wear it.

"We typically think about deception as selfish deception: I lie to gain some advantage at the expense of somebody else. And we typically think of honesty as something that might be costly to me, but helpful to others," Schweitzer says. "We find that the aversion to lying, when people say, 'Don't lie to me,' what they really mean is, 'Don't be really selfish.'"

The results of Schweitzer and Levine's research flip conventional notions of honesty and deceit on their heads--deception can help other people and telling the truth may be costly to somebody else.

Below, check out the situations in which you should take a break from being totally honest.

Lie to improve trust

Schweitzer and Levine say there are some times when honesty could harm your employees and deception may increase bonds of trust. "Managers often have to balance this tension between benevolence--giving kind, supportive feedback--and honesty--giving critical, harsh feedback. We might suggest that managers actually err on the side of benevolence, if their goal is really to promote trust and relationships," Levine says.

In one of the duo's experiments, participants were told that they could lie about the outcome of a coin flip or a die roll to make their partner money, in essence giving the participant a chance to help their partner by lying or hurt them by telling the truth.

"We found that when participants are lied to in a way that helps them, they actually really appreciate that dishonesty. It boosts trust, and it causes them to think that their counterpart is moral," Levine says. "Also, when they simply observe somebody who is lying to help someone else, to earn someone else more money, they also trust this person more, and think this person is more moral than someone who is always honest."

Benevolence trumps honesty

In many circumstances, being kind and showing that you care about a customer, employee, or business partner is more important to the relationship and the business than it is to be fully honest. "When we, for example, tell a client that we're going to go with a different vendor, sometimes we want to phrase things in a way that is different from the complete unvarnished truth," Schweitzer says. "We find that we often really care about the benevolence that people signal through their communication and that's often more important than the harsh and complete truth." 

Schweitzer suggests changing your code of conduct to reflect these values. If you stress how important honesty is, but then either lie for selfish reasons or tell the truth and affect people in a negative way, that doesn't produce the results a successful company needs. Hypocrisy breeds resentment and rebellion, while benevolence begets trust.

"I think instead of saying we should always be honest with others, we should think about always treating others the way we'd want to be treated. We should think about creating a caring community," he says. "And we should think about this tension. That is, as managers, as executives, we want to think about balancing this in our training programs and the way we deal with other people, and explicitly acknowledge that we're making trade-offs between honesty and care for others. That's the key idea."

Published on: Sep 19, 2014