Conflict Of Interest - The Challenge of Business Ethics

conflict of interest

Conflict of interest exist when you have two opposing interests such that there is the potential of acting unethically.

A conflict of interest situation is such that you are in the process of making a decision and the options available includes one or more that involves you having some sort of personal gain by implementing the alternative concerned.

Personal gain here does not always mean you personally gain from the option or alternative chosen. Personal gain in this contexts means a relative or friend stands to profit from your decision . . . from one of the options. And that desire to 'help' a relative or friend may influence your decision.

Let's take some examples to drive the message home.

Example 1:

You are a member of the tenders board in your company. A project is to be executed and the company calls for bids. One of the contractors who bid for the job is your brother or a cousin.

As a member of the tenders board, you get to see at the bids prior to negotiation with the contractors. You notice that the quote sent in by your relative is higher than that sent in by others. You foresee that he may not win the bid because of his outrageous bid.

In an attempt to help him secure the contract, you're tempted to show him (or inform him) what others have bided and encourage him to lower his prices to improve his chances of winning the bid.

Example 2:

You are the human resource personnel in charge of recruitment in your organization. Your organization is looking to recruit a team of technical staff for its electronics department. You have a brother who has a national diploma in electronics engineering and he has been on your neck to help him get a job.

This opening would have been a perfect fit for him except that one of the requirements is that candidates should have a minimum of 3 years on-the-job experience in an FMCG (Fast Moving Consumer Goods) company.

The sad fact is that your brother has just finished his course - he has no job experience.

This means that he shouldn't pass the short listing stage in the first place.

However, you decide to short list him with the proviso that he should be given an opportunity to 'prove himself' before the panel of interviewers. You rationalize that some people who have on the job experience are sometimes not as good as fresh men.

What do you notice about the conflict of interest situations above?

Well, one thing comes clear. Managers who succumb to the urge to bend the rules in favour of their relatives or friends try to justify their unethical behaviour in the name of helping their relatives. This sort of reasoning is deceptive. And the fact that a lot of executives fall for this trap is no excuse.

It is important to remember that even in situations where you have acted justly, fairly, and ethically, people may still have doubts as to whether you have acted ethically when they find that one of the parties benefiting from a decision made by you is related to you.

For example, if a supplier wins a bid and colleagues find out latter that this particular supplier is related to you, they may wonder if you influenced the decision making process to favour your relative. And there's no way to convince them otherwise.

Your reputation is at stake in conflict of interest situations. So, it's important to handle the situation right.

What should you do?

If the possibility of a conflict of interest exist, start by laying your cards on the table. Make it clear to the negotiating panel that a relative is involved in this transaction. And as such, you wish to be excused.

Secondly, you may make the decision not to get your friends or relatives involved in dealings with your organization. Some have taken this route. It is a painful thing to do. So, you have to personally decide whether you will go this route or not.

The kind of conflicts discussed above or similar conflicts will hit you sooner or later in your organization.

My advice?

Do the right thing.

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