CONFLICT OF INTERESTS
A conflict of interests happens when an employee exploits an advantage through the official position they hold in the company for their personal benefit instead of acting objectively for the company's interests. Conflicts arise from pursuing personal financial interests, professional advancement, close relationships, outside employment or activities, personal use of company's property & assets, having ownership in a competitor's stock, etc.
Under certain circumstances, some conflicts are unavoidable - & not all such conflicts are wrong. But some inappropriate conflicts, ie. soliciting or receiving bribes or misappropriating company funds for personal interest, can & will implicate the company resulting in regulatory, legal or ethical challenges.
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For this reason, employees must refrain themselves from conducts which are forbidden in the company's business code.
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How should an employer reasonably set out boundaries for its employees to know, understand and act accordingly to avoid conflicts of interest between them?
Three common classifications of conflicts of interests
Potential Conflict
This is a conflict that could happen in the foreseeable future if it is known & not neutralised from the start
Perceived Conflict
This conflict gives the appearance that the employee's actions may have undermined the organisation's interests
Real Conflict
This conflict is identified as having actually compromised the interests of the organisation
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 Use of company propertyFrom time to time, your Marketing Manager who runs a home-based business would use the company's printer & other office assets to produce their business portfolio. |  Outside businessDuring office hours, two Sales Executives are more motivated to sell highly-trendy products online, then of selling your company's products. |  Close relationshipsYour Office Manager secretly purchases stationeries & pantry items from the mini-market owned by their parents-in-law. The mini-market would mark up those supplies higher than usual. |
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 Personal advantageA logistics service provider who wants a long-term contractual exclusivity with your company would offer commissions to your Senior Supply Chain Manager who in turn ensures that the company contract be awarded to the logistics service provider. |  Self-dealingYour COO sits on the Board of a company that competes for business with your company. |  Use of confidential informationA manager has been divulging confidential information of the company's latest M&A target to a competing purchaser who would be paying them for up-to-date information from time to time. |
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Defining COI
Setting out a COI Policy that highlights the types & also the management of COI helps employees see the big picture. Once employees recognise that some conducts cannot be reasonably tolerated at the workplace, they know not to unnecessarily expose themselves & their organisation to risks.
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Execution
Owner
The Leadership Team has ownership of the COI Policy. For the Policy to be effective, they will depend on their management team staff to handle the policy routines.
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Guardian
People managers must consistently engage with & remind their staff to observe the Policy whenever performing official duties. Equally, they should be available to staff who come forward with concerns relating to situations of COI or disclosing a COI.
Custodian
Documentation of the Policy, procedures, disclosures, reports & other confidential records lies with the Human Resources personnel.
Communicator
On a regular basis, the Ethics personnel will train & provide guidance & information of the Policy to the workforce, thus reinforcing the company's stand for ethics in all its business practices. Occasionally, they can be relied upon to review or resolve a COI that is escalated.
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Assessing, Monitoring, Taking Actions
An organisation may want to set up a Committee to independently review, assess & monitor serious COI that are escalated. Where a COI has been deliberately conducted by an employee & caused significant harm to the company, consider appropriate disciplinary actions. Meanwhile, COI will evolve - this means staying abreast on ethics practices will be key to updating processes & remedies.
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Non-Retaliation
Although COI can create serious consequences, an organisation should never punish any employee without first evaluating the impact of COI & referring to the Policy guideines. Any decision having been approved, needs to be impartial so as to preserve the rights of both the organisation & its employees.
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Conflicts must be mitigated.
As such, all potential, perceived or real conflicts should be disclosed by employees who are afflicted.
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Once a conflict is disclosed, its immediate & future potential problems must be addressed with plans to manage anticipated regulatory, ethical, statutory, disciplinary or other issues & also to prevent the conflict from recurring.
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