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Conflict of Interest in the Workplace

What You Need to Know About a Conflict of Interest in the Workplace

Many different issues can come up in business. At some point, there might be a conflict of interest in the workplace. To ensure business operations run smoothly, you have to take action and do what’s best for your company.  

What is an employee conflict of interest?

A conflict of interest in the workplace is when an individual can personally benefit from their professional position.

Rather than making decisions for the betterment of your business, the employee might make decisions based on their own personal gain. It can lead to unethical behavior, ruined reputations, and lost business.

An employee conflict of interest can be categorized in one of the following ways:

  • Relational (family): When family members are hired and favored over other candidates or workers
  • Relational (romantic): If an employee has a relationship with someone affiliated with the business (e.g., co-worker, client, etc.) and gains from it
  • Financial: If an employee personally gains additional money (e.g., offers customers discounts to your business in exchange for gift cards)
  • Confidential: When a worker has access to confidential information at your business and uses it inappropriately (e.g., reveals it to competitors or uses it for a business of their own)

Conflict of interest in the workplace

Examples of conflict of interest at work

A conflict of interest in business can occur for many reasons. Take a look at some of these examples of employment conflict of interest.

Relational (family) example

Let’s say you have an employee, Jan, who is in charge of hiring new employees on your behalf. Jan’s nephew applies for a position. Because Jan is the head of hiring, this would be a conflict of interest. She could choose to hire her nephew because he is family instead of another qualified candidate.

Or, let’s say your sister works at your company. You give your sister a bonus instead of another qualified employee simply because she is family. This is also a conflict of interest.

Relational (romantic) example

One of your employees starts a romantic relationship with their manager. Because the manager has control over things like performance reviews, it is a conflict of interest. The employee could receive special treatment because of their relationship.

Financial example

An employee has stocks in a nearby company. They refer your customers to that company because they would financially profit from their business.

Confidential example

A salesman at your company decides to open a competing business. They use the knowledge they gained from their current job to help their new business.

How to deal with conflict of interest at work

As an employer, you must work towards avoiding conflicts of interest from the get go. This can help save you from wasted time and unnecessary headaches.

Sometimes, you can’t avoid a conflict of interest in the workplace, so you need to know how to address it. Take a look at some ways you can deal with conflicts of interest in the workplace.

Establish clear company policies

Before you start hiring employees, create company policies. Then, explain them when you hire employees. Your employees shouldn’t have questions as to whether their actions go against business policies or not.

Collect handbook acknowledgment forms

Put your company policies in your employee handbook, and ask employees to read through them. Then, employees sign and date these forms to indicate that they agree to your business’s policies.

Have employees sign noncompete agreements

You might consider asking employees to sign a noncompete agreement when they are hired. A noncompete is a confidentiality agreement that prevents employees from working for competing businesses.

Ask employees to disclose relationships to you

Require transparency when it comes to inter-office relationships. This can include family relationships and romantic ones. Write up a report when employees disclose information so that it is on file.

Decide if you need to take action

Action might include giving a warning to the employee, talking to a lawyer, or having a meeting with HR. In some cases, you might fire an employee as a result of breaking one of your conflict of interest policies.

Conflict of interest at work: your takeaway

Dealing with a conflict of interest at work can be uncomfortable. You might be unsure of what action you need to take.

By laying out clear policies, collecting all the information you need from employees, and having signed documents, you can help prevent conflict of interest situations.

Make sure you put your conflict of interest policies in your employee handbook. Use Patriot’s online HR Software to store your employee handbook online. That way, employees have instant access to your company policies. And, it pairs seamlessly with our online payroll software. Try both for free today!

This is not intended as legal advice; for more information, please click here.

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