March 1, 2022

Potential conflicts of interest in the workplace are common and can occur in any industry or work setting. That’s because everyone has a network of friends, family members and business relationships that could affect their ability to make impartial workplace decisions. And while conflicts of interest don’t always have legal implications, they do have consequences that can undermine an organization’s culture and reputation.

Providing all employees and managers with ongoing conflicts of interest training and communication strengthens an organization’s ethics and compliance program by increasing awareness of the different types of conflicts of interest and the why, when and how to disclose any potential or actual risks.

What is a conflict of interest?

Conflicts of interest arise when employees have competing loyalties or interests that could affect their judgment, decisions or actions. These are situations that force individuals to choose between doing what is best for themselves and doing what is best for their organizations. Having a conflict of interest doesn’t necessarily mean wrongdoing. It does mean that employees need to recognize circumstances or factors that pose a risk and know how to address it in an ethical way.  

Common types of conflicts of interest

Most conflicts of interest fall into two categories: relationships and personal or self-interest. Encouraging the organization to buy computer equipment from a family friend is an example of a relationship conflict of interest. Having a side business that interferes with an employee’s job performance or involves them using internal information and resources falls into the self-interest category.

There are gray areas, too, in which a conflict of interest isn’t clear cut or may be unintentional. When in doubt, it’s helpful to pause and ask two questions:

  • Could this situation create a conflict of interest or the appearance of one?
  • Could this situation violate some other organizational policy?

Understanding the importance of the disclosure process

Employees and managers need to understand that there’s nothing inherently wrong with having a conflict of interest. The important thing to know is how to respond when you have one and that starts with disclosure. Disclosing and talking through a conflict of interest allows leaders to take steps to ensure that everyone feels confident about taking the right decisions and actions. And importantly, disclosure dispels the notion that anyone is doing something that’s inappropriate or unethical.

Traliant Insight

Conflicts of interest are part of the world of work and can arise whenever employees have competing interests or loyalties. The good news is that by reinforcing the organization’s code of conduct and ethics and compliance program with ongoing training and communication most conflicts of interest can be addressed and often easily resolved before becoming a problem.