Some individuals openly display a bias toward their interests in the workplace. Such actions lead to a conflict of interest, which impacts performance.
Conflicts of interest arise when a person’s interests, such as those related to their family, friends, finances, or social standing, potentially impair their judgment, choices, or actions at work.
Whether you’re an ambitious employee or the leader of an organization, it would be in your best interest to put the company’s priorities first.
Sharing company’s confidential information, nepotism, self-dealing, and competing with the employer are some of the things to watch out for people who have their interest in mind, not the company. Conflicts of interest mostly result from friendships, family, money, and self-serving interests. Understanding why you have a conflict is the first step toward solving it.
A keen eye can spot someone out to serve their interests. This article will explain in detail how to be on the lookout for people with self-interests which, in most cases, lead to a conflict of interest.
How Conflict of Interest Occurs
The following are scenarios that bring conflicts of interest to the fore in the workplace.
Romantic Relationships and Nepotism
Office romance is not new. But when it gets in the way of your judgment or leads to favors, it becomes a problem. Nepotism happens when a powerful person abuses their position to gain the favor of friends and family.
Both situations have the potential for special consideration, be it unjustified hiring, promotions, or favorable treatment when not meeting expectations. Additionally, the circumstances may make it uncomfortable for co-workers and managers to provide an honest evaluation.
Sharing Company’s Confidential Information
Conflicts may arise if an employee consults for another business and divulges sensitive data. An employee cannot, even unintentionally, take advantage of corporate information or trade secrets to secure a favor.
Competing with Your Employer
When an employee stands to gain financially from the misfortune of their employer, it is asking a lot of them to give it their all. Therefore, it is a conflict of interest for an employee to invest in or find a business that offers comparable goods or services to their employer.
It becomes a problem when employees work on their businesses or develop their clientele while using corporate time, resources, or skills acquired on the job.
Self-dealing occurs when a representative appointed to act on someone’s behalf acts in their interests rather than that of their client. An example of self-dealing is insider trading.
Types of Conflict of Interest
There are four main types of conflicts of interest in the workplace. Let’s have a look at them.
Task conflict – Co-workers who are experiencing a task conflict differ on what has to be done or don’t share the same goals for the project.
Status conflict – When you argue over who is in authority, you have a status conflict. This may occur when there is ambiguity regarding organizational hierarchy or a turf war between individuals over who should have authority.
Relationship conflict – The involvement of personal feelings causes a relationship conflict. This can include yelling at your co-worker and experiencing a feeling of disdain.
Process Conflict – This involves disagreements about how to carry out a project or work. For instance, team members can differ on who should make crucial company decisions.
How to Avoid Conflict of Interest in the Workplace
The following are ways in which you can avoid conflict of interest.
Take the Initiative to Lower Risks
You’re less likely to make mistakes when familiar with the rules and regulations. Try to keep up with important topics that affect your area of responsibility to reduce risk. Additionally, make an effort to comprehend the rationale behind any decisions that affect you.
Avoid Direct Involvement
If you are uncertain whether a certain action presents a conflict of interest, don’t participate. This is not to say that you shouldn’t engage in worthwhile activities; rather, it only implies that, if you do, you should be transparent about all pertinent information.
Report Perceived Conflicts of Interest
You should immediately disclose any perceived conflict of interest to senior management. The first two steps are recognizing a problem and deciding whether a disclosure is necessary. If so, follow the relevant procedures for informing the proper authorities.
Follow Ethical Principles
The best method to avoid conflicts of interest is to uphold moral principles. Honesty, fairness, responsibility, objectivity, and confidentiality are all components of ethical behavior that can also boost your professional development.
A precise set of guidelines that regulate interactions between individuals, groups, and organizations is necessary for the ethical application of principles. Following ethical principles entails ensuring fairness and transparency in all decision-making procedures.
Conflict of Interest Examples
Here are some examples to help you further understand the concept of conflict of interest.
- A manager decides to hire their relative for a supervisory position even though the relative lacks experience and there are other qualified applicants for the post.
- An employee works a second job for a company that produces goods or renders services that are directly competitive with their first employer.
- A vendor offers a vacation package to an employee in exchange for their business, and as a thank you, the employee decides to buy more from the vendor than is required.
- An employee of a marketing firm manages a personal customer list using particular tools and programs on their work account.
- Financial advisors steer clients toward stocks, bonds, or other investments that offer higher commission rates but may not be the greatest choice for the client to increase their compensation.
- A sales rep from a certain company sets up their website and then promotes the same products or services provided by their employer without disclosing their affiliation with the business or obtaining permission from management.
A conflict of interest arises when a business or individual has a vested interest, such as money, position, knowledge, connections, or reputation. This calls into doubt their ability to act, judge, or make decisions objectively. They may also result from having exclusive access to knowledge, opportunities, or resources.
These conflicts can negatively affect a company’s performance and lead to unethical behaviors like fraud. Therefore, it is crucial to manage them efficiently and be on the lookout for people with such behaviors.