A conflict of interest is when the personal interests of an employee conflict with your business’s interests.

For example:

  • an employee accepts a gift from a supplier that your business is considering for a major contract
  • a manager’s family member applies for a job in your company
  • an employee wants to start a part-time business offering similar services to yours.

Even the perception of a conflict of interest can damage your business’s reputation. For example, you choose a new IT supplier and later discover the owner is married to one of your employees. Even though this didn’t influence your decision, someone outside the business could think the supplier only got the contract because of their personal relationship.

Managing conflicts of interest

Once you’ve identified a potential conflict of interest, you need to work out the best way to manage it.

If an employee’s conflict has a low risk for your business, simply declaring it and recording it may be enough.

Other conflicts can be resolved with actions or restrictions. For example:

  • if an employee has accepted a gift from a supplier, they could return the gift
  • if a manager’s family member applies for a job in your business, the manager could remove themselves from the recruitment process and be careful not to influence the decision
  • if an employee wants to start a similar part-time business, there might not be a conflict if they serve a different geographical area to your business.

Create a conflict of interest policy

A clear conflict of interest policy helps your employees understand what sort of things could be a conflict and how to declare them.

Your policy should include:

  • a definition and some examples of conflicts of interest
  • when and how employees need to declare a potential conflict
  • how you record actual and perceived conflicts of interest
  • strategies to manage common conflicts.

Train your employees in the policy and make sure they feel safe reporting potential conflicts of interests.

You can also include a clause about conflicts of interests in your employment contracts.

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