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How to manage conflicts of interests when your employees have relationships with your customers

by , 13 November 2013
A conflict of interest can arise in the workplace when some of your employees have relationships with customers. Read on to find out how to manage this conflict of interest...

You need to manage conflict of interest in your workplace.


Because 'a conflict of interest can cast doubt on your integrity; it can also have a damaging effect on your firm and your profession as a whole,' says rics.org.

So when can a conflict of interest arise?

Conflict of interest with staff can happen if some of your employees have relationships with customers.

Here's what to do if your employees have relationships with some of your customers

You must be aware if any of your employees have relationships with any of your customers.

This is particularly true for government organisations where there are many examples of tenders from government being awarded to family members, who often can't do the work, says the Practical Guide to Human Resources Management.

These companies have been dubbed tenderpreneurs by the media.

You must reveal to your customers if one of your employees is related to anyone in their organisation. Youcan insist they disclose this information. If possible, make sure that employee don't doesn't work on the tender or project relating to that particular customer.

Here's an example of how you'd handle this conflict of interest

Sipho works at Zinzi Manufacturing. His cousin, Stanley, approaches Zinzi about supplying a range of materials that it buys in huge quantities from other suppliers.

It would really benefit Stanley's company to land Zinzi as a customer. He asks Sipho to give him information about the competitor's prices so he can tender against them.

They realise the competitor's price will be hard to beat, and collude to win the business. Sipho finds fault with the old supplier and actively sabotages its attempts to retain Zinzi's business.

He persuades management, who are unaware that Stanley is his cousin, to give its business to Stanley's company, even though it's more expensive.

The Guide says where there's possibility that an employee's relationship with a customer's employee may be a conflict, make sure this relationship is disclosed to the stakeholders before entering into any agreement so that later disclosure doesn't jeopardise the deal.

This can ruin the company if this fact allows the customer to cancel a contract halfway through and set up costs have been incurred.

The bottom line: If your employees have relationships with customers, they must this disclose this fact.

After all, 'steering clear of conflicts of interest helps ensure fair treatment to all stakeholders of the organization,' says Ethics.org.


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