How to Navigate a Workplace Conflict of Interest
A common workplace concern for employees and employers alike is the dreaded “conflict of interest”. With the vital role networking plays in the recruiting space, it might be hard to tell the difference between a professional networking relationship and a personal relationship that could spark a conflict of interest. Conflicts of interest are tricky because they are often hard to identify and happen incidentally, no matter how much work you put in to avoid it. In this article, we’ll explore what a workplace conflict of interest is, and how to manage it as an employee and employer.
What is a Conflict of Interest?
A workplace conflict of interest is a clash between one’s personal interests versus their professional job duties. A conflict of interest indicates a bias in one’s decision-making, which begins to affect their judgements in the workplace. Sometimes, this will lead to an employee making decisions that negatively affect the company for their own personal gain.
How to Identify a Conflict of Interest?
If you’re an employee wondering if you have a conflict of interest, take the time to consider your reasoning before making decisions in the workplace.
For example, imagine you’re in a managerial position assigning different tasks to different employees. Think about how you assign each task and if it’s fair. You may find that you repeatedly give an employee you are close to easier tasks although they are qualified to take on more challenging tasks. The remaining employees who get the challenging tasks may struggle to complete these tasks effectively. Consequently, you’ve made a decision that has negatively affected the company while positively affecting your personal relationships. This is a very straightforward example of a conflict of interest.
If you’re an employer, identifying conflicts of interest is very difficult. Conflicts of interest aren’t always obvious. Many employees will hide a conflict of interest, or not even be aware they have one. The most you can do to identify undeclared conflicts of interest is carefully monitor your employees’ behaviour and relationships between each other. Some employers create and distribute disclosure forms which prompt their team to disclose any outside business activities, investments, or relationships that could affect their work.
Common Examples of a Workplace Conflict of Interest
An employee’s job responsibility is to source, communicate with, and purchase from vendors on behalf of the company. One of the vendors you choose to purchase from is a relative, partner, or close friend.
An employee works for a massage therapy clinic but owns their own massage therapy business on the side. This leads the employee to divide their loyalties between the two companies and abuse company resources for their own business gain.
An employee is hired at a company but has previously invested money in one of the company’s competitors. This could cause the employee to make decisions that hinder the company but lead to investment gains for themselves.
An employee whose job responsibility is to source, communicate with, and purchase from vendors accepts gifts from a specific vendor. This influences their vendor purchasing decisions.
An employee in a managerial position hires close relatives, partners, and friends without going through the official hiring process. This leads to hires that may not be as qualified as other candidates and potential favoritism on the job.
An employee works for two companies within the same industry that are competitors to each other. This employee could share confidential information between the two companies. They may also make choices for one company that indirectly benefits the competitor company.
An employee receives payments from a vendor, client, candidate, or other employees who are seeking certain benefits as a result (e.g. contracts, promotions, raises.etc). This leads to personal financial gain at the company’s expense.
An employee with access to confidential, sensitive company information uses this information to make certain investments or business decisions that lead to personal gain.
An employee in a managerial position begins a romantic relationship with a subordinate. This relationship causes the employee to hold bias when giving out raises, promotions, day-to-day job duties, and when assessing employee performance.
Instances of favoritism in the workplace results in discontentment among employees and low team morale, affecting the company and its staff long-term.
Can you Fire an Employee Over a Workplace Conflict of Interest?
Yes, you can fire an employee over a workplace conflict of interest, especially if they have already willfully engaged in the conflict of interest at the company’s expense. However, there are some initial disciplinary actions you should take before firing an employee over a conflict of interest.
Before firing an employee due to a conflict of interest, do one or all of the following:
Ask the employee to disclose any potential conflict of interest
Tell the employee to stop engaging in activities which cause a conflict of interest
In a conflict of interest between employees, ensure that the team is reorganized so that the employees work separately and on separate teams.
To remove conflict of interest from a manager-subordinate relationship, reassign the subordinate to work under a different manager.
If, after implementing these precautionary measures, the employee still fails to eliminate a conflict of interest, there is grounds for dismissal.
How to Avoid and Mitigate a Conflict of Interest at Work
Avoiding and Mitigating a Conflict of Interest as an Employer
Set up official guidelines and protocols that obligate employees to disclose conflicts of interests and how to report one. These guidelines should also advise against certain behaviours, such as accepting gifts from clients or vendors, or having relationships with competitors.
Regularly review conflict of interest protocols with employees and educate them about the consequences of a conflict of interest and how to recognize that there is one.
Encourage transparency and openness by prompting employees to report potential conflicts of interest. They should know that they won’t face punishment for identifying a conflict of interest, as this will deter them from being honest. Regular check-ins can help foster a culture of honesty and open-communication. Additionally, anonymous reporting channels may help employees feel more comfortable being honest and disclosing conflicts of interest.
Inform employees that they must disclose a conflict of interest upon being hired as well as any conflicts of interest that arise during their employment.
If an employee does have a conflict of interest, remove them from any decision-making that involves that conflict of interest. When it comes to personal relationships in the workplace, it is best to ensure both parties work separately from each other.
Make the company’s code of ethics align with the company’s conflict of interest policy.
Inform employees about the consequences of knowingly failing to report a conflict of interest, up to and including termination.
Reinforce fair hiring practices, fair promotions, and fair compensations that are solely based on the person’s merit. People who have conflicts of interest with a candidate should not be involved in the hiring process.
Avoiding and Mitigating a Conflict of Interest as an Employee
Gain a clear understanding of what is defined as a conflict of interest and whether you yourself may be affected by a conflict of interest. This requires you to reflect on your actions within the company and what, if anything, influences your decision-making.
Disclose any and all potential conflicts of interest to your supervisor or HR. They will manage the situation and ensure that your conflicts of interest do not impact the work you do.
If, while making a decision, you believe you may be influenced by a conflict of interest, take a step back from decision-making. Consult your supervisor and let them know that you can’t make an unbiased decision.
Follow company policy when it comes to gifts and entertainment, report any unsolicited gifts to your manager or HR. Best practice is to always decline gifts and entertainment no matter what.
Don’t start a business or take on freelance work that directly competes with your employer’s business. If you plan to take on outside work, check your company's policies to verify that there are no conflicts. Inform your employer before taking outside employment opportunities just to be safe.
Only use company resources and confidential information to fulfill your job responsibilities within the workplace, avoid using it for personal projects or any personal gain.
When Termination is the Only Option
While termination can be avoided by following certain workplace conflict of interest protocols, there will be instances in which you have no choice but to dismiss an employee due to a conflict of interest.
Termination might be your only option in a conflict of interest situation when:
The employee did not disclose the conflict of interest initially or upon request.
The employee willingly engaged in decision-making while being aware of their conflict of interest.
The employee attempted to hide the conflict of interest from the company.
The employee’s conflict of interest has had a proven negative impact on the company (e.g. hired a relative who wasn’t qualified for the job, shared confidential information.etc)
The employee was asked to eliminate this conflict of interest, but has yet to take action or refuses to.
Although termination is disheartening, it’s vital that the conflict of interest be removed at all cost. If the employee has failed to take action against their conflict of interest, then the employer can no longer trust them to make unbiased decisions.
Start fresh with Campbell Morden. Our executive search services allow you to find high-quality candidates without falling into the trap of conflict of interest hiring. Our hiring process is thorough, reliable, and highly-confidential. We take the proper preliminary steps to ensure you meet candidates who are professional, experienced, and highly-skilled. We source candidates from our extensive database, industry associations, industry conferences, and platforms like Linkedin to foster a diverse candidate pool.
