The key to rooting out conflict of interest in your business starts with knowing what causes it. This will allow you to take steps to prevent it. Remember, your employees won't know what unethical behavior is if you don't spell it out.
Here's how to manage conflict of interest in your business
According to the Practical Guide to Human Resources Management, conflict of interest occurs in two ways:
Conflict situation #1: Nepotism
Nepotism is widespread in many companies. It causes conflicts of interest when family members in senior positions put their family's interests ahead of your business. For instance, your production manager hires his less qualified nephew as a machine operator instead of a candidate with better credentials. As a result, you're your business suffers from low productivity.
Solution: When you're recruiting, make sure you know if the candidate is related to anyone in your company. Do so by asking this question directly in the employment application form. This way, you'll act on any dishonesty by following the disciplinary process.
In addition, never have a staff member reporting directly to a relative.
Conflict situation #2: Relationships at work
It's not uncommon for employees to develop romantic relationships at work. After all, it's a comfortable environment to get to know like-minded people.
But what happens to the interests of your company when your employees form intimate relationships?
It can cause three possible conflicts of interest:
#1: Confidentiality breach
If one of the partners in the couple is a senior in your company, he'll know employee salaries, future promotion plans and strategic information. He might disclose this information indiscreetly to his partner, who could be a junior staff member.
#2: Unfair advantage
The temptation to give an advantage to the partner in the relationship could arise. These could include higher salary increases, promotions and invitations on business trips they normally wouldn't go on. This was the case with minister Pule.
What happens if the relationship ends? How will this affect your company and what will the consequences be?
Break ups could result in tension in the office and this could affect productivity in your business.
Luckily, there's a way you can avoid this.
Solution: Make sure your staff is aware that forming relationships in the workplace can have consequences and encourage them to reveal such relationships if there's potential for a conflict of interest. Develop comprehensive policies dealing with these issues. Include in your letter of appointment that employees are required to reveal conflicts of interest.
Knowing the various situations that could lead to conflict of interests with staff will help you put measures in place to deal with the conflict before it affects your business.