Conflicts of interest at work can pose serious ethical and operational challenges for any organization. These situations occur when an employee could benefit personally from a scenario that also has the potential to negatively impact the company.

They can lead to a loss of trust, damage to a company’s reputation, and potentially even legal issues. In this article, we delve into the concept of workplace conflicts of interest, presenting some common examples and providing strategies for prevention.

What is a Conflict of Interest?

A conflict of interest at work arises when a situation that benefits an employee also affects your company. And employees are bound through your company’s code of conduct to act in the interests of their employer and not for their own personal gain.

It’s best for employees not to enter into a situation where their actions might create a conflict, whether it’s actual, potential, or perceived, without disclosing the information.

So what are some examples of situations your employees might find themselves in?

Examples of Conflicts of Interest At Work

1. Hiring an unqualified relative to provide services your company needs
2. Starting a company that provides services similar to your full-time employer
3. Failing to disclose that you’re related to a job candidate the company is considering hiring
4. Making arrangements to work for a vendor or client at a future date while continuing to do business with them
5. Posting to social media about your company’s weaknesses
6. Offering paid services on your time off to a company customer or supplier
7. Working part-time at a company that sells a competing product or service as your full-time employer
8. Accepting payment from another company for information about your employer
9. Failing to investigate a subordinate or coworker’s wrongdoing because they are a friend
10. Sharing confidential information about your employer with a competitor
11. Dating or having a romantic relationship with a supervisor or subordinate
12. Making a purchase or business choice to boost a business that you have a stake in
13. Accepting a favor or a gift from a client above the amount specified as acceptable by the company
14. Owning part of a business that sells goods or services to your employer
15. Reporting to a supervisor who is also a close friend or family member
16. Doing business or work for a competitor
17. Accepting consulting fees and providing advice to another company for personal gain
18. Sharing information in an interview about your employer’s activities or plans
19. Taking advantage of confidential information learned on the job for your own benefit
20. Cashing in on a business opportunity that your company might have pursued

Strategies to Prevent Conflicts of Interest At Work

Unfortunately, employees aren’t always able to recognize or know how to deal with conflicts of interest at work. Many times, the situation seems innocent or they don’t realize what’s happening is against the code of conduct.

To provide employees with sufficient conflict of interest policy examples and teach them what to do when a situation arises, there are several different strategies you can use:

Develop Business Standards

Your company should have a code of conduct or employee handbook conflict of interest policy that addresses ethical situations an employee might come across. For example, it can address how employees should respond to issues concerning bribery, data protection, confidential information, and social media.

Business Ethics Training

Properly defining conflict of interest in business ethics training reiterates your code of conduct in a way that helps employees retain the information. With training, you can provide scenarios to guide employees in making the right choice when a conflict of interest arises.

Formal Reporting Procedures

Even if an employee is aware of a conflict of interest, they still need to be encouraged to disclose it to your company. Creating formal reporting policies allows employees to have an open channel of communication where they are able to ask questions.

When does a conflict of interest occur?

In the workplace, a conflict of interest can arise in various situations. A common scenario is when personal interests or relationships might influence an employee’s professional decisions. For instance, financial conflicts could involve having a stake in a business that stands to benefit from an employee’s professional actions.

However, it’s not just about monetary gains. Non-financial conflicts, where personal relationships could challenge an individual’s impartiality, are equally significant.

What’s more, a conflict of interest isn’t confined to actual conflicts. Even the mere perception of a conflict can harm reputational credibility, irrespective of whether any misconduct has occurred.

How to handle conflicts of interest when they occur

Addressing conflicts of interest begins with disclosure. The individual who is potentially conflicted should openly report it to their supervisor or an appropriate authority.

Once a conflict is reported, an objective assessment of the situation is required. The appropriate course of action can then be determined, which may involve the individual recusing themselves from certain decisions or even reassignment of duties.

In some instances, the resolution could require divesting from the conflicting interests. Therefore, it’s crucial for organizations to have clear policies outlining how to report and manage conflicts of interest.

Periodic training sessions can help employees prevent potential conflicts and equip them with the skills to handle these complex situations when they arise.

Key Takeaways

Employees don’t always recognize conflicts of interest in the workplace. It’s your job to help them identify ethical dilemmas and make the correct decisions. There are several strategies you can use, including business standards, business ethics training, and formal reporting procedures.