Every business has a code encouraging employees to exercise their judgement in favour of the organisation’s interests. A conflict of interest occurs when an employee performs an action or takes a decision that instead favours his or her own personal interests. These conflicts can be intentional, yet may also occur due to unintentional biases that impact decision-making.

Employers and managers should be well aware of these situations as they by definition negatively impact the company’s bottom line as this is no longer the first priority. This invariably leads to mistrust and erosion of employee morale and often results in business loss. Conflicts can be obvious or subtle and difficult to pinpoint. Regardless of the event or circumstance, conflicts of interest impact decision-making, performance, group cohesion, duties and loyalty to the organisation. According to Australian law, it is the duty of the directors to ensure that the company’s interests are upheld in such eventualities.

Some typical examples include; having an unqualified relative or friend on your team, writing negative messages about your organisation, offering your services to a competitor, sharing confidential information about your organisation, making purchasing decisions with a company in which you own stock or accepting gifts from a supplier. It should be noted that sometimes these actions may occur innocently and without any intention to harm the organisation. However, it can be daunting to differentiate between intentional and unintentional conflicts of interest and understand their corresponding impact on organisation welfare. Although most Australian private and government organisations implement their own policies, stressful situations often warrant special and independent investigation.

Conflicts are not exactly unethical or impermissible in themselves. There may be a very thin line demarcating right from wrong. However, employers should be cognizant of the potential dangers of employee interactions with the industry, competitors and customers. A potential conflict of interest situation always exists when an external relationship or interest affects the way your employees or partners work. It’s very important for managers to be sensitive to relationships, be they professional, personal or financial. Identifying conflicts and understanding their nature can go a long way in managing future problems.

As a manger or employer, it would be wise to avoid and discourage potential conflicts of interest right from the start. Even if the employee is genuinely unaware, you should take steps to ensure that their behaviour is not at odds with the organisation’s interests. But should a conflict occur, a professional, thorough and unbiased examination by a consultant or thorough investigation can fully explore the matter.

At ESN, we are happy to guide our clients through our range of HR consulting and investigative services. Professional intervention often helps prevent the problem from getting out of hand and subsequently leading to losses. Our experienced team of consultants and investigators can examine the perceived conflict using fair and robust procedures. Please feel free to enquire to hear more about our versatile range of workplace HR consulting and investigation services.