A conflict of interest arises in the workplace when an employee has interests or loyalties that are—or at least potentially could be—at odds with each other.
For example, consider a manager who was promoted from a job where he worked with his wife. The promotion made him his wife's boss, which created a conflict of interest. The company, after discussion with the couple and HR, may decide to transfer her to another department.
A conflict of interest causes an employee to experience a struggle between diverging interests, points of view, or allegiances. Such conflicts are generally forbidden in company codes of conduct or employee handbooks.
Conflicts of interest can cause an employee to act out of interests that are at odds with those of his or her employer or co-workers. In workplaces, employees want to avoid any behavior or choices that could potentially signal a conflict of interest. They are a mark against the employee's reputation, integrity, and trustworthiness in the eyes of management.
It's difficult to define conflicts of interest without concrete examples. The following additional examples will illuminate the range of behaviors and actions that can fall within the definition of conflicts of interest. They are as diverse as the work settings in which they occur and involve employee interaction, actions, and situations in which personal benefits take precedence over what is in the best interests of the employer.
These examples should serve as a guide to behaviors that you want to avoid as a person of integrity in your workplace. It is by no means a comprehensive list.
Examples of Potential Workplace Conflicts of Interest
These are examples of situations in which an employee might experience a conflict of interest.
- An employee reports to a supervisor who is a relative or close friend and has control over their job responsibilities, salary, and promotions.
- A male manager dates a female employee who reports to him or vice versa.
- A lawyer represents a client in a civil dispute while accepting fees from litigants who hold the opposing point of view.
- A purchasing agent hires his brother-in-law to provide vending services to the company lunch areas.
- An employee starts a company that provides similar services to similar clients as those of her full-time employer. This is especially a conflict of interest if her employer has had her sign a non-compete agreement.
- An employee who is a member of a company employee selection team fails to disclose that he is related to a job candidate whom the company team is considering for a position.
- A manager provides paid consulting services on the weekend to a company customer or supplier.
- An employee works part-time in the evening for a company that makes a product that competes with the products of his full-time employer.
- A member of the company board of directors accepts fees and provides advice to a company that is in direct competition with the company on whose board of directors he sits.
- An HR director decides to investigate a formal charge of sexual harassment, using internal resources that she controls, against a fellow corporate executive whom she has known and worked with professionally for years. This would not constitute a conflict of interest if she hired an external employment law firm to conduct the investigation and recommend disciplinary measures.
- A purchasing agent accepts trips and gifts from a vendor and then selects the vendor's products for purchase by the company.
- An employee accepts free gifts and free products from a training and development company and then recommends the purchase of these products without comparing them to comparable products from other vendors.
- A CFO negotiates an agreement on his employer's behalf for a stock option plan from which he will directly benefit.
- A trainer is paid to provide training classes that teach customers how to use the company's software products. He puts up a website that offers his same training on the products as a for-profit enterprise in his spare time. Why would he ever again direct customers in need of training to his company's classes?
- The manager of a marketing department dated a co-worker who is also a manager in the same department. They part ways over time, but when he is promoted to the marketing department director role, she finds herself reporting to him. The existence of the former relationship creates a potential conflict of interest, especially in the eyes of coworkers. The company is forced to change the reporting chain of the department she managed even though the manager and director are no longer dating.
- An employee sets up a personal website on which he sells his employer's software products.
The Bottom Line
There are many more examples that could be explored, but the general idea here is clear. All of these examples describe a scenario in which an employee is torn between serving more than one person's or organization's best interests. If you're unsure whether there is a conflict of interest, look to see whether there are any competing loyalties.