A conflict of interest at the workplace is a situation where an employee has a personal interest that may interfere with their objectivity while carrying out duties for the company they work for. No matter their rank or office, employees are remunerated for their skills to fulfil a professional obligation responsibly to their employers. To put this into perspective in a way, individuals who are entrusted with the official capacity to act on behalf of their employer instead intercept for themselves the opportunities meant for their company.
There are many situations that can compel individuals to take precedence of their own desires whenever the opportunity presents. Some are led by a financial interest. Some would harbour an unfair preference towards personal relations. And others welcome patronage by virtue of being in position of power. Oftentimes, integrity of the outcome under such actions, judgment or decisions is questionable. Consider this most of all - is it because the environments they are in have enabled them?
“Humpty Dumpty sat on a wall. Humpty Dumpty had a great fall. All the king’s horses & all the king’s men - couldn’t put Humpty Dumpty together again.” Companies need to be woke to the potentially negative impact that employees’ conflicts of interest can present - risking liabilities, reputation damage & declining bottom lines.
Drawn by pecuniary interests
The senior procurement director of a trusted beauty product company had 20 years of seniority and was well-respected by her peers in the industry. Due to a recent surge in e-commerce activities, the beauty industry enjoyed a continuous boom in business. This also means competition was rive amongst logistics companies that invested in upgrading their platform to enhance distribution activities. For the procurement director, to get the best possible deal from logistics companies would be crucial to keep tabs on product margins and retail pricing. For the logistics companies, securing a long-term contract with these industry players will be a seal of their presence into the marketplace as a trusted service provider. The director had also started to finance a property acquired in Melbourne and so negotiated with a logistics company for a kickback that commensurate with the contract period. The logistics company was more than happy to carve out an automatic renewal clause for the contract.
Nepotism
After a recent family feud at ABZ Company, the entire board of directors was changed overnight. This time, there was the opportunity for newly created top positions to be held by individuals being appointed by a newly minted board of directors without due consideration to their qualification or known capabilities. As gratitude, the close contacts who supported the new Board’s agenda `to restructure ABZ Company’ were appointed as senior executives at ABZ Company. On top of a lucrative monthly remuneration, the senior executives will be in position to steer projects towards their own companies that directly derive business opportunities from ABZ Company.
Having outside affiliations
Having a flair for addressing an audience made this company Marketing Director a much sought-after `celebrity spokesperson’ for branding activities. However, his expanding engagements outside seem to tear him away from his duties at the company. Furthermore, the company found out that he had endorsed many of the industry’s products, including its competitor’s. He would assert that as the company did not have a formal policy that prohibits earning supplementary income outside of work, it was fair for him to pursue compensations for his professional service.
What if employees never acted on their interest but the optics tell otherwise? What if some interests do not add up to a conflict of interests? In rare circumstances, employees have opposing opinions on ethics, causing friction & serious implications for the company.
The general public’s rights compromised
A social media company has monopolised the internet when it developed breakthrough AI for collecting & leveraging personal data to curate content for users. Several employees discovered its content development had resulted in advancing fake news, fueling terrorism messages & instigating hate speeches. They had escalated concerns on the serious negativity to the management. 7 months into urging the management to tweak the algorhythm, no resolutions were reached, instead they were told not to pursue the matter further. The employees decided to call out on the company publicly, as they felt a moral obligation to protect the public at large.
Perceived bribery
A banker has invited the Managing Partner of a law firm that specialised in exclusive practices, to a dinner party of the banker’s high-value client on a private yacht. Even at dinner, conversations gravitated towards business & impressions would be made. At the end of dinner, the client presented a Rolex watch to the Partner, who, well-known for his steadfast integrity, had graciously declined to accept. Socialites invited to the yacht enjoyed publicising what a great time they had. Their photos & captions on social media showed guests being bestowed with exclusive door gifts. The Partner had not thought to inform the partners of the watch. In the following week, the banker on behalf of the client & the Partner would pursue a transaction together. At this point, it is easy to suspect that the Partner had been bribed, as the transaction was not even viable for the firm.
Companies other than publicly traded corporations, are starting to look to environmental, social & governance fundamentals for sustainable future growth. These companies are taking ownership on accountability & transparency in the way they approach business dealings. Having in place strong management leadership, policy systems, communication mechanisms & employees of strong ethics are the essentials for self-governance.
How do you treat conflicts of interest? Seriously. Judiciously. With priority. Companies can curb workplace behaviours that could potentially contravene company objectives. Educate employees to understand & accept that their employer’s interests usually cannot be undermined while the rights of employees to the extent that laws permit are respected by the company, so that removing any underlying COI between them is not mutually exclusive. By implementing preventive measures, adjudicating disciplinary reprimands for infringement of such preventive measures, companies can better manage conflicts when they do occur.
Get you Guide to Identifying & Managing Conflict of Interests here.
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