Managers may encounter a number of conflicts of interest, such as self-dealing, employees promoting other organizations, and hiring a relative or family member. Here are ways to recognize and deal with these conflicts.
One conflict might be self-dealing, whereby a member of the organization uses their involvement in the organization for their own financial gain. This doesn’t mean that the individual is engaged in criminal activity, such as embezzling money from the organization or stealing supplies or equipment. But they are taking advantage of their position to reap some monetary benefit for themselves, which might be harmful for the organization. An example is where the employee provides a contract to a business or service he or she owns or is operating on the side. If the business or service does nothing in return for the funds received on the contract that is a crime. But if the business or service does provide a service, it is a conflict of interest, because the employee is benefitting from the business given to a company he owns or is part of. That conflict of interest not only would be damaging because of the appearance of impropriety, but it could be financially damaging to the organization if insider award of business results in a better provider not being given a chance to bid on the contract or being turned down even if they offer a better deal. The way to deal with this situation is to prevent any employee of the organization from being directly involved in awarding any contract or entering into any agreement for services or products from a company in which they are involved. They also have to recuse themselves from making any decision about who gets a contract, where they have an interest in the company getting the award and cannot influence anyone else in the organization to favor their company.
Another conflict of interest might occur when an employee is involved in a professional or business networking organization which they have joined originally as an employee to promote the company’s programs, services, or products. They might have initially even been encouraged to join this organization. But their participation could become a problem if they are so interested in the organization that they devote so much time to their volunteer activities at the expense of the company that employs them. Another type of conflict might be if they join to promote the company, and even have their membership fees paid by the company, such as joining a local Chamber of Commerce, but then they use their membership to promote some other business activities they are engaged in on side. To deal with this type of conflict, a manager should set some guidelines for how individuals joining on behalf of the company should conduct themselves. They should be required to limit their participation in the organization so as not to interfere with their work on the job, and they would have to agree that their work on the job comes first, so they would have to continue to attend meetings at work and meeting deadlines with the same high quality work as in the past. If it seems they are slacking off and spending too much time involved in activities for their professional organization, the manager should discuss the matter with them and require them to cut back on their outside participation in that organization. The manager should also make it clear that individuals participating in a professional organization on behalf of the organization can’t promote their other work. Should they want to do something on their own, they can pay their own membership fees and they can’t claim to be representing the organization.
A third conflict of interest might occur if a manager is making a decision about hiring an outside provider or giving an assignment to or promoting an employee who is a relative or family member. While the individual might not be directly benefiting, another person who is close to him or her would be, such as in getting a contract or being more likely to be given an assignment or promotion. To deal with such a conflict, the manager should establish a policy that an employee cannot individually assign a contract or job or arrange for a promotion for any other employee who is a relative or family member. Instead, any kind of decision would have to be up to another manager or management team who could be more neutral in their assessment. As an alternative, the manager might set up a review panel where an employee wanting to assign a contract or promote someone to whom he or she has a personal relationship can present a case for a decision on the merits. It may be that the relative or family member can do the best job; but the manager with the personal relationship shouldn’t be the one to decide. Instead, if someone else decides, this will show that the award of the contract, assignment, or promotion is being handled fairly and isn’t due to the close relationship which is a conflict of interest.