Do Conflicts of Interest Actually Matter?

October 20, 2017
Tristan McIntosh

Do conflicts of interest actually matter?

Imagine yourself in the following two scenarios. For each scenario, rate the extent to which you think you would engage in each behavior on a scale of 1 (extremely unlikely) to 5 (extremely likely):
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1. You are a product developer at a big name electronics firm. One day, you receive an email from an acquaintance who works at a startup technology firm asking if you would be interested in helping with the development of a new product. This product is similar to a product that your firm has been working on over the last year, so you know it would be easy to help create. You would receive $5,000 for your efforts. How likely are you to help with this new project?
   
   
2. Over the past five years, you have worked your way into a management role at an investment firm. When you began working for the firm, you befriended Sam who started working for the firm around the same time. Over the years, you and your families have become quite close, even vacationing together. However, Sam has not advanced in the company at the same rate as you, likely because of average job performance. In fact, Sam is one of your subordinates on the team that you manage. You were recently given the choice to promote a member in your team. You know that Taylor, another team member, is the most competent individual to fill the role but you know that you would get along better with Sam in the new role. To what extent do you think you would promote Sam over Taylor?

If you rated yourself 3 or above for either scenario, take a minute to think about how you would handle each situation. How would your actions potentially cause harm or be unfair to others (i.e., individuals, the firm)? Would you take any actions to increase the transparency or objectivity of your decision?

Both of the scenarios above represent different types of conflicts of interest that may occur in the workplace. A conflict of interest occurs when an individual has interests or commitments that compete or are at odds with one another. In many cases, people are often unaware of potential conflicts of interest lurking in the workplace. Not only do conflicts of interest remove objectivity when making decisions about the entities involved, but they also insert bias into the decision making equation.
So the question becomes, what can we do to address the negative effects of conflicts of interest? Potential approaches include:

Awareness. Establish clear policies and guidelines that make employees aware of conflicts of interest that may exist in the workplace.
 
Disclosure. By making potential conflicts of interest known to your employer, preventative measures can be put into place to avoid disastrous effects of conflicts of interest for both parties.
 
Action. Provide employees with strategies and steps to handle conflicts of interest.
Conflicts of interest are not always bad. However, going unreported, conflicts of interest have potential to cause problems for those involved. By having a candid discussion about possible conflicts of interest, steps can be taken to prevent biased decision making.