Preventing Conflict of Interest in an Organization

e Ravindran S Virasingam  |   4 mins read October 18, 2021 | 2 | 290 eye icon

A conflict of interest arises when an individual’s best interest is not in the best interest of another individual or company to which that individual owes loyalty. 
 
Susan Heathfield, in an article “Conflict of Interest in the Workplace” dated March 1,2021 on balancecareers.com mentions that conflict of interest arises when a situation benefits an employee and also affects the company.  An example would be hiring an unqualified relative to provide services in a company where you are the recruiting manager.  
 
A conflict of interest causes an employee to experience a struggle between diverging interests, point of view or allegiances. 
 
Businesses need to establish a policy to ensure that there are no conflict of interests. Proper policies in an organisation are the key to successful management of conflict of interest. 
 
When implementing the policy, it must be made clear the kind of act that constitutes a conflict of interest and also what actions should be taken when such a conflict of interest arises.  These policies are normally formulated by the HR committee, the HR Director and the Chief Executive Officer. 
 
All possible scenarios which could result in a conflict of interest must be listed so that staff are aware and would avoid these actions.
 
The policy must be applied consistently so that the employees and the public are aware of the seriousness of the organisation’s commitment to prevent conflict of interest. 
 
Employee handbooks can also make it compulsory for staff to disclose conflict of interest.  For example, a university staff working in the Admissions Department must disclose and avoid processing applications for admissions which are received from their family members or relatives.   
 
Professional development training is important to educate staff to understand what constitutes conflict of interest, why they matter to a company and how employees should react and what measures to be taken when they discover conflict of interest in a situation.
 
Organisations must have an efficient tracking and reporting system in place which would help to manage the conflict of interest disclosure process.  It is important to have a non-intimidating process so that staff will be encouraged to report and disclose information pertaining to any conflict of interest. Establishing a conflict of interest workflow emphasising on confidentiality of persons reporting it remain anonymous is important to encourage staff to come forward. This will in the long run reduce conflict of interest in an organisation.  
 
It is important that at least two separate chairs of reporting are available to report a conflict of interest, so that parties can come forward without fear. For example, if it is clear that a manager is acting in conflict of interest, then perhaps the individual with the information could approach the Manager’s supervisor. 
 
Policies must provide procedures for the matter to be investigated by a designated person and it must be specified what actions should be taken when it is established that there is a conflict of interest. 
 
The best way to minimise conflict of interest is by educating staff to avoid conflict. Staff should avoid accepting roles and responsibilities that are incompatible with their existing interests.  For example, a lecturer who teaches Human Resource Management in a college must disclose to his supervisors that he will not want to teach that unit if his son is taking the unit that semester.  
 
It is important for proper training to be given to staff on relevant laws on corruption. This will prevent all staff including board members to avoid favouritism and encourage them to treat all clients fairly without expecting any kind of gifts or cash to impart preferential treatment.  Staff should be warned through education about the criminal offence of corruption and its penalties.  
 
Companies could prevent their employees accepting inappropriate gifts or cash by providing guidance, usually in the company code of ethics. The code will outline the company’s position on staff receiving gifts and formulate good employee practices 
 
If there is an expectation that the business relationship will be influenced then this is a bribe, not a gift and is covered under Section 1 of the UK Bribery Act (2010) as ‘intent to induce improper conduct’ (https://www.ibe.org.uk/resource/the-ethics-of-gifts-hospitality.html). 
 
It is therefore important for an organisation to manage conflict of interest as the company’s decision-making process may be seen to be at risk by the public and most importantly by potential investors.  Therefore, companies must show to the public their seriousness in fighting conflict of interest.
 

Ravindran S Virasingam
Former Administrative Executive

Malaysia
Postgraduate Certificate in International Human Resource Management
Batch 2021

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Tera   1 month ago

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Athena   1 month ago

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