Conflict of interest with your employees can arise when you don't make it clear what your company regards as unethical business practice in your business code of conduct. This may result in sticky labour issues like disputes if it's not addressed.
Luckily, there's a way to prevent unethical practices in your business.
But, in order to deal with conflict of interests with your employees, you must understand what causes it first.
Here's what causes conflict of interest and what steps you can take to manage it
Conflicts of interests with staff occur when the following situations arise:
Conflict situation #1: Nepotism. 'Nepotism is when a person's family member is unduly favoured by being appointed to a position,' Practical Guide to Human Resources Management. Nepotism is rife in many organisations. It causes conflicts of interest when family members in senior positions put their family's interests ahead of those of the employer.
Solution: Ensure that when you're recruiting you know if the candidate is related to anyone in your company or not. Do so by asking this question directly in the employment application form. This way any dishonesty can be acted upon by following the disciplinary process. Also consider the possible consequences before you hire them.
Conflict situation #2: Staff who have relationships with suppliers. Find out if some of your employees have relationships with staff at your key suppliers. These relationships could compromise their objectivity when dealing with suppliers.
Solution: You can insist our employees disclose this information. Be wary of employees who suddenly suggest you change a supplier. They could be doing a relative a favour and you could end up paying more for your goods. Investigate this thoroughly.
Conflict situation #3: Employees who have competing business interests. Your employees may look for ways to earn additional income. These could include buying and renting property, manufacturing or buying items for sale privately, and part-time lecturing or waitressing jobs.
Solution: Make sure these other interests don't conflict with the work they do for you. 'This doesn't just include business interests that compete directly with you, but ensure that their other interests do not compromise their work for you,' advises the Practical Guide to Human Resources Management.
Remember by understanding what constitutes conflict of interest, you can put in place a business code of conduct that makes the professional standards you expect in your business clear.