Common Conflicts of Interest Situations 21:17, September 4, 2016

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Common Conflicts of Interest Situations

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Conflicts of interest can happen in almost every workplace. Employees and supervisors alike must balance their company’s best interest against their own. Though these situations can be common, they are serious ethical issues.

What’s tricky about conflicts of interest is that it’s sometimes difficult to pinpoint what constitutes a conflict of interest and who can have them.

Our previous conflicts of interest blog post went over how some conflicts are more overt, like secretly working for two competing companies at the same time. Other situations are more nuanced, like being on a hiring committee while simultaneously considering an applicant you know or have a relationship with.

Depending on the nature of the conflict, these situations can result in damage to company credibility, have a negative effect on business, affect employee morale, or can lead to lengthy and public investigations or litigation.

Knowing how conflicts of interest manifest in the workplace is a stepping stone in avoiding or eliminating them. Here are three common ways conflicts of interest emerge in the workplace.

Relationships, Family and Friends

For many people, the relationships we have outside of work do not intersect with our professional duties. However, there may come a time when they do, and not disclosing these conflicts can have large ramifications.

For example, Amtrak Police Chief Polly Hanson is at the center of a fraud and conflicts of interest investigation because of a million-dollar contract she helped create. The Washington Post reports that the purpose of the contract was to fund the creation of counter-terrorism training courses for officers. However, after it was awarded, it came to light that the consulting company that received it also employs her alleged boyfriend, who is senior director for homeland security support programs.

The Washington Post goes on to report that Hanson did not disclose her relationship with the director, identified as Kerry Thomas. Amtrak’s inspector general is looking to see if she “violated … the federally supported railroad’s conflict-of-interest rules.”

For many employers, conflicts of interest rules can be found in a company’s code of conduct, which typically outlines ethical behavior within the workplace.

Thomas’ consulting company is being investigated as well, to see if they “violated the federal False Claims Act and the contract’s terms.”

Is it possible that Hanson’s relationship with Thomas caused the consulting company to be awarded the contract? While it’s difficult to say for sure, investigations like the one initiated by Amtrak’s inspector general work to get to the bottom of such allegations.

Though this is an extreme example, conflicts of interest within the workplace as it relates to dealing with relationships, family members and friends can happen anywhere.

Other Jobs & Multiple Roles

Whether you work in retail and decide to pick up a second job as a cashier, or serve on a board of directors in addition to a full-time job, a conflict of interest can occur.

Working a second job can be like sailing into choppy waters, especially if you work for competing companies or hold multiple positions with intersecting interests. For the average employee, disclosure and recusal are good courses of action to eliminate or minimize conflicts of interest problems, depending on the situation.

However, as the roles and professions become more complex, so do the solutions.

In a more high profile case highlighting the complexities of inhabiting multiple professional roles, take the many hats Secretary Hillary Clinton wears. Not only is she the democratic nominee for president of the United States, she also plays a key role at the Clinton Foundation. Bloomberg Politics reports that in 2014, the foundation raked in $331.7 million. Though Clinton says she has never personally profited from the foundation, some Republicans argued that “(she has) benefited from political contributions and speech fees provided by some of its wealthy contributors.” The result: the appearance of impropriety.

As the job role becomes more complicated and affects more stakeholders, ethical standards become more convoluted. Taking this case as an example, many workplaces can benefit from clear and distinct job functions and limiting overlap in duties. And of course, those in leadership positions have to lead by example.

Gifts

Giving and accepting gifts is common in almost every workplace. Whether or not your office participates in gift exchange programs during the holidays, or you occasionally pick up a coffee in the morning for your supervisor, most people regularly participate in a “gift-giving” loop.

Where the waters can turn murky is analyzing the intent of gifts. Is it possible that a gift, entertainment or other item is meant as a bribe? Or, is its purpose intended to make you change your mind about an issue or act in a certain way?

A real case involving this significant question made it all the way to the United States Supreme Court. In late 2014, Virginia Governor Bob McDonnell was convicted on charges related to a case involving gifts that could have been interpreted as a bribe. The New York Times reported that the courts were trying to figure out if the gifts Governor McDonnell received from a 3rd party influenced his subsequent behavior that worked to benefit a private company. Though he was convicted, the Supreme Court eventually overturned it.

While most gifts exchanged within the confines of business are likely innocent, it’s sometimes difficult to prove intent in many cases on a day-to-day basis. However, the parameters of gift giving within the workplace are likely addressed within a company’s code of conduct. Provided that employees abide by it, the limits and rules the company puts around gifts can be effective in curbing the possibility of a gift becoming a conflict of interest.

In addition to cultivating comprehensive code of conduct, compliance training is one way to foster a more ethical workplace as it relates to conflicts of interest. For a great example, check out this case study on Namely.

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  • Why Avoiding Workplace Conflicts of Interest Is ImportantMarch 30, 2017 Why Avoiding Workplace Conflicts of Interest Is Important Conflicts of interest have been the ugly child of ethics and compliance programs for a while now. For most employees, it’s more of an ethical concern, not a legal one (key personnel like fiduciaries or company officers are different). While not as sexy as insider trading, popular as […] Posted in conflicts of interest
Vanessa Walker
Vanessa Walker is an instructional writer at LawRoom. She researches and writes instructional copy for LawRoom courses, and particularly enjoys developing content about issues related to ethics. Before joining LawRoom, she worked in broadcast television and radio newsrooms in the San Francisco Bay area and in rural Southeast Alaska. She earned her Master of Journalism degree from the University of California, Berkeley, where she produced documentary film and video both domestically and abroad.

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