CONFLICT OF INTEREST IN AN ORGANISATION- WHAT IT IS AND WHY IT IS TOXIC.

Conflict of interest in business is an all-too-common occurrence in the corporate world and an issue that owners and managers must be prepared to deal with frequently and act in the best interests of the company.

Conflict of interest generally occurs when an entity or individual becomes unreliable because of a clash between personal (or self-serving) interests and professional duties or responsibilities. It could occur when a person’s or entity’s vested interests- such as money, status, relationships, knowledge or reputation- raise a question of whether their actions, judgement, and/or decision-making is unbiased. A potential or actual conflict of interest could also occur when an individual’s commitments and obligations to the organization or the widely recognized professional norms are likely to be compromised by a person’s other interests or commitments, particularly economic, especially if those interests or commitments are not disclosed.

In business basically, a conflict of interest is when an employee puts their interests before those of the organization and by doing so jeopardizes the operation, profits or even trade secrets of the organization. It normally refers to a situation in which an individual’s interests conflicts with the professional interests owed to their employer or the company in which they are interested. It arises when a person chooses personal gain over duties to their employer or to an organization in which they are a stockholder or exploits their position for personal gain in some way.

All corporate board members have fiduciary duties and a duty of loyalty to the corporations they oversee, if one of the directors chooses to take action that benefits them at the detriment of the firm/organization, they are harming the company with a conflict of interest. This could be in various forms such as self-dealing, gift issuance, insider trading, the hiring of, or showing favorable workplace treatment to, a relative or spouse -known as nepotism- can result in a potential conflict of interest.

In legal circles, representation by a lawyer or party with a vested interest in the outcome of the trial is considered a conflict of interest, and representation will not be allowed. Additionally, judges who have a relationship with one of the parties involved in a case or lawsuit will recuse themselves from presiding over the case.

WHY IT IS TOXIC?

It is generally in the interests of employees to avoid a conflict of interest because of the damages it can do to the employee’s reputation, it could harm relationships with coworkers and has the potential to cause loss of employment.

Conflict of interest will create problems of trust between the individual and the company, especially if the individual exposes the business to potential legal action or creates an unhealthy atmosphere in the workplace that can severely cripple employee morale.

A revealed conflict of interests can disrupt the employee ability to carry out duties of their role with the company. It could cast suspicions on an employee’s relationships with clients or other outside parties. There might also be a reluctance to share vital information with the employee.

However, if there is a perceived conflict of interest and the employee in question has not yet acted maliciously, it is best to remove that person from the situation or decision on which a possible conflict of interest can arise.

Also, an employee could simply remove themselves from all decisions that could directly involve their interests, to avoid making a biased decision.

Finally, conflict of interest can vary in toxicity as certain occasions where they can occur do not necessarily involve a criminal act.

Contribution by: Ogechukwu Ejim

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