This is another question that seeks to understand how you would handle a management or supervisory position. Your answer may vary based upon whether you have actually handled this type of situation in the past in your management experience or whether you are new to the idea of management. Once again, the best way to handle this question is to stay as close to the middle of the road as possible. This is particularly important when framing a response to this question because you have now way of knowing what the disciplinary policy is for that particular company and how the company would advocate that type of situation to be handled.
The safest way to respond to this question is to stick to the situational response. You should indicate that you would respond based on the situation as every situation can be different. Also, your response to the situation could very well depend upon whether this is the first time an employee has experienced an infraction or whether there have been prior problems with that particular employee. As you can see, the situational response gives you quite a bit of leeway in determining how you would respond and allows you to avoid committing to a particular response which might be deemed as either too lenient or too harsh by the interviewer.
If you do have prior management experience, this may be a good time to relate a particular incident in the past in which you experienced a similar situation and relate how you responded in that particular situation. You should keep your response brief and avoid going into a lot of details. Also, make sure that you do not mention any specific names when relating your experience in this type of situation. The idea is to indicate your experience in handling this situation and demonstrate how you were able to effectively respond to the situation for the benefit of everyone, including the company. Remember, the interviewer is looking for an indication that you are able to handle a situation in which you are faced with insubordinates and that you have the skills and wisdom to effectively handle this type of situation. Keeping your answer situational and relating back to a prior experience will help you to provide the information the interviewer is seeking without venturing into dangerous ground.