Conflict of Interest in the Workplace

Conflict of interest in the workplace refers to when a staff member takes part in an activity or relationship that benefits them and not their employer. In other words, each party’s personal gains are at odds with each other.

If an employee has a conflict of interest, it usually affects their decision-making at work, their ability to complete job duties, and their loyalty to their employer.

The workplace is one of the most common places where conflicts of interest can occur.

Examples of Workplace Conflicts of Interest

Relationships

Romantic: When two parties are romantically involved and the relationship conflicts with the workplace, employer, or another employee’s interests.

If an employee is dating his or her supervisor and is receiving special treatment, this would be a romantic conflict of interest. The special treatment is not because of professional qualifications, but because of personal interest. Likely, it goes against company policy to grant special privileges that are not fairly earned.

Another example would be an employee dating a company client. As a result of the relationship, the employee’s judgement could be affected. They may offer the client deals that other clients would not normally receive—which conflicts with the employer’s interests.

Relational: When a business owner or manager hires a family member for a job and the interests of non-relational employees are at risk. They may give their family member bonuses or play favorites in other ways. This dynamic can also occur when an employee hires a relative’s company to do work for a business.

Financial

There are many situations where an employee could find themselves in a financial conflict of interest. In these circumstances, a worker would financially benefit from their actions. Some examples include:

• When an employee owns a portion of a business that their employer does business with.
• When an employee refers their employer’s customer to another business where they have financial interests.
• When an employee provides consulting services on the side to an employer’s client.
• When an employee accepts a gift from a customer in exchange for something, such as discount on the employer’s goods or services.
• Exercising decision-making power about a purchase or business choice that will affect a business that the employee has a stake in.
• Any use of a company’s resources for personal profit, such as information, technology, supplies, goods, etc.

Competition & Confidentiality

Serious conflicts of interest in the workplace involve working with a competitor or revealing information, such as trade secrets, to a third party.

It could constitute as a direct clash of interests if an employee starts a business that competes with their employer. If an employee uses skills that they have learned at their job to start a competing business, this could also qualify as a conflict of interests.

These are just a few examples of the various types of workplace conflicts of interest. There are several other questionable scenarios that would call for investigation.

Usually an employee will sign an Employment Contract that contains a non-compete or a confidentiality clause to deter employees from directly competing with past employers.

A Non-Compete Agreement or Confidentiality Agreement may also be created if a company works on a project with another company. The company may want to prevent sensitive information from being released to the other company.

Is There Ever an Innocent Conflict of Interest?

An employee could be unaware that their behavior conflicts with their employer’s. However, innocent or not, it is an employee’s responsibility to determine if their actions are ever at odds with their employer’s interests. And if so, to disclose it fully to their employer.

A Question of Ethics

When an employee is knowingly taking part in conflicting scenarios for personal benefit, it can be cause for disciplinary action or termination.

To prevent involvement in any type of ethical conflict, employees should inform themselves about the types of conflicts that exist. If they are ever unsure about whether their actions qualify as a conflict, they should ask someone they trust to provide them with an objective opinion.

If you find yourself involved in conflicting interests, it’s best to remove yourself from the situation or disclose it to your manager immediately.

Policies and Disclosure

Many businesses have a code of ethics in their employment guidelines. In the guidelines, employers can clearly present information about conflicts of interest to employees. Employers can communicate how conflicting interests should be handled. 

Additionally, there might be a human resource manager appointed to oversee these issues.

The best time for employers to make these policies known is at the beginning of any staff member’s employment with the business.

Asking new employees to disclose potential conflicts during the hiring process can prevent future problems and misunderstandings. Also, it can be beneficial to have a system in place for existing employees to report conflicts of interest. Catching conflicts of interest and eliminating them can be essential to a company’s success..