COI stands for Conflicts Of Interest. They can exist inside any business no matter the size, the industry or the country where it is located. They arise when people’s personal interests (financial, family, friendship or other social elements) may interfere with or influence a judgment, a decision or actions they make in the workplace.
Individuals, whether from private or public sector, can create situations where conflicts are hidden, perceived, potential or actual.
Identifying Conflicts Of Interest
Did you know that COI can be classified into different categories? And here are some very common examples that take place in the businesses’ environment:
Direct – Personal self-interest:
making arrangements to work for a vendor or client at a future date while continuing to do business with them; or,
accepting a favor or a gift from a client above the amount specified as acceptable by the company.
Indirect – Giving favors:
hiring an unqualified relative to provide services your company needs; or,
failing to investigate a subordinate or coworker’s wrongdoing because they are a friend.
Financial – Insider trading:
when a legislator attempts to profit from knowledge; or,
accepting consulting fees and providing advice to private organization for personal gain; or,
telling a person your employer’s non-public information – and that person (or yourself) then buys or sells a financial asset using that information.
Non-Financial – Other situations that produce biased results:
posting to social media about your company’s weaknesses; or,
sharing confidential information about your employer with a competitor; or,
starting a company that provides services similar to your full-time employer.
Scenarios may take place quickly or without warning, consciously or not, but always connected to personal gain, which may be illegal, unethical or at least unfair.
The Power of Transparency
When it comes to COI, appearance is as important as reality. Identifying, communicating and resolving conflicts of interest situations is crucial to good governance, transparency and trust in private and public organizations.
Consider the employee who accepts an interview at a company that is in direct competition with the business they currently work at. During the interview, the potential employer asks the candidate about current initiatives they are working on. Because the candidate may have very strong personal reasons for wanting the job, they may feel compelled to answer and possibly give away privileged information. In this scenario, the candidate may be doing something unethical or even illegal by giving a competitor information that was supposed to stay within the company.
Also considered illegal is a politician or a government officer putting his or her personal or financial interest ahead of the public interest.
Yet not all conflicts of interest will cause legal action. Think about the manager who is friends with one of the employees. What happens when the employee misses a deadline, arrives late to work, or does something that harms the company? If that employee is not disciplined appropriately, the other employees may perceive that the employee is receiving special treatment, which is unfair.
Get ahead of these by being transparent. It may happen to you or to someone else, it doesn’t matter: when you identify a situation that may be a conflict, or could be perceived as a conflict, notify the fact immediately. Don’t allow people to assume something that you can address personally.
The Appropriate Response
Whether you are an employer or an employee, you should know how to recognize a conflict of interest and what to do when one surfaces. Companies must have and employees must be committed to a code of conduct and ethics that outline appropriate business behavior.
Even if each employee has a copy of the company’s code of ethics, they should also know who they should go to when they have questions. If an employee discovers that a co-worker is using company resources to create another business, who can they tell? There should be a clear understanding of how this information needs to be shared. The company’s policies and procedures should identify who in the company can field these concerns.
Businesses should also incorporate training sessions with their employees regarding conflicts of interest. These will explain to the employee what the appropriate response should be, but it also reinforces that the company takes these issues seriously.
Conflicts of interest undermine trust and make people lose faith in the integrity of any organization. Prae Venire provides content for corporate compliance training presentations and workshops. Our compliance programs and training sessions cover conflicts of interest and business ethics. For additional information about how Prae Venire can assist your company, get in touch with us to schedule a consultation.