Conflict of Interest: What It Means at Work and More

Conflicts of interest can harm your credibility at work and professional reputation and even put your job in jeopardy. That is why it is important to make sure you are up to date on what constitutes a violation of a conflict of interest and what your employer’s policy is regarding disclosure, transparency, and what actions you should take to make sure you’re following the rules.

A conflict of interest occurs at work when an employee acts in a way or participates in an activity that is at odds with the interests of the company that employs her. The employee, in other words, receives benefits that compete with the needs of the organization.

How do you protect your work and professional reputation, and what else should you know about conflicts of interests? Read on to find out.

What Is Considered a Conflict of Interest at Work?

There are many types of conflicts of interest in the workplace. Some of the broad categories include:

• Nepotism

Nepotism refers to hiring or otherwise displaying favoritism toward relatives or friends in business dealings. 

• Romantic relationships

Employees who engage in romantic relationships in the workplace may be involved in a conflict of interest, especially if one is higher up in the same chain of command and can make decisions that affect the other, such as promotions, bonuses, and firings. Dating business clients may also present a problem.

• Financial interests

Financial conflicts of interest occur when an employee stands to profit from a business decision outside of the interests of the organization she is representing, such as owning shares of a company with which the employee’s organization is conducting business or receiving gifts or payments from the outside organization in exchange for a contract.

• Self-dealing

This is a general term describing the behavior of an officer of the company acting in her own interests as opposed to those of the organization she represents. 

Examples of a Conflict of Interest

Conflicts of interest can occur in almost industry. Some are specific to particular occupations, while others are common across a wide range of fields. Below are some examples of conflicts of interest that can occur within industries, as well as those that may happen in a variety of roles and areas of business.

General

• An employee of one organization reveals secrets or information to a third party or competitor.

• A manager in a position of authority over an employee begins dating that employee.

• An employee hires a sibling or close friend as a contractor for the organization.

• A worker gripes about her employer on Facebook.

• An employee provides paid services to a client she knows through the organization as a side hustle.

Business

• A current or former employee uses information and knowledge learned from one organization to start a competing business that offers similar products.

• One organization’s employee consults with a competing business in an advisory capacity.

Law

• An attorney represents a client who is suing an individual her firm has previously represented.

Medicine

• A physician or researcher accepts gifts or payments from a drug manufacturer, which sways her opinion or research regarding the efficacy of the medication.

Human resources

• An HR manager personally investigates a complaint against a colleague with whom she is friends.

Academia

• A faculty member shares unpublished research conducted through her home institution with another institution in exchange for payment or the promise of work.

What Is an Ethical Conflict of Interest?

A conflict of interest is an ethical violation, particularly when an employee knowingly acts in a way that is contrary to the interests of her employer. See below to learn how to proceed if you are engaging or could be engaging in a conflict of interest.

How Do You Handle a Conflict of Interest?

An employee may be fully aware that she is participating in a conflict of interest, but oftentimes, people don’t know that their actions are violating company rules and guidelines. Here’s how to ensure you’re not violating the terms of your employment.

• Review the organization’s code of ethics.

Many organizations will ask you to read and sign a code of ethics are part of your hiring package. Usually, it will detail what constitutes a conflict of interest, including relationships in the workplace, freelance work you conduct with outside businesses, nepotism, and more. Make sure you read this document thoroughly before you sign it and save a copy to consult if any potential issues arise. 

If you have questions, be sure to ask your HR representative or the hiring manager before you sign the code of ethics. For example, if you’re not sure if the work you do with another organization violates the terms of the code of ethics, ask now rather than later.

• Disclose any potential conflicts.

Along the same lines, you should disclose any potential conflicts at the beginning of your working relationship with the employer. Be completely upfront, so nothing will come back to haunt you later. If the employer tells you the arrangements are acceptable, get something in writing that says so. 

• Review non-compete clauses thoroughly.

As part of the hiring process, your employer may ask you to sign a non-compete agreement. Make sure you understand the terms before you sign this contract. If you have questions or are uncomfortable with the terms of the arrangement, voice your concerns prior to formalizing the agreement.

• Follow the procedures outlined by your organization.

Your employer probably has procedures for reporting conflicts of interest. They are most likely outlined in the code of ethics, so make sure you understand them and follow them if anything occurs during your employment. You may, for instance, be required to disclose conflicts in writing to your HR representative.

• Ask questions.

If at any point in your employment with an organization you are concerned that you may be engaging in or are about to enter into a conflict of interest, ask your hiring manager or an HR representative about whether you are violating rules or guidelines. 

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