How to mitigate conflict of interest
Knowing how to avoid conflict of interest can protect businesses from individuals prioritizing personal, financial, and professional gain over the business's interests.
An ethical business focuses on creating a healthy work environment for employees, so it's not only staff who must avoid conflict of interest. Instead, business owners, leadership, and stakeholders should also learn how to avoid conflict of interest in business to prioritize the overall company's success instead of their own personal gain.
Establish clear policies
Including a conflict of interest policy in your employee handbook and code of ethics can help employees and leaders understand how to avoid and handle situations resulting in a conflict of interest.
You should include common conflicts of interest they may encounter, such as:
- Gifts from suppliers: Preventing staff members from accepting gifts from clients or vendors can mitigate the risk of them choosing one over the other, even when it might not be the best option for the business.
- Insider trading: Insider trading is an illegal conflict of interest. Protecting against it safeguards your confidential financial information from being used in a way that can financially benefit employees.
- Non-competes and confidentiality: Non-compete and confidentiality clauses can prevent your employees from working directly for competitors and sharing confidential information.
Your company's communication strategy can help you promote awareness of conflicts of interest that can affect the business, other employees, stakeholders, and customers.
Teaching employees what a conflict of interest is and how it can affect them and those around them can help them understand the consequences and avoid potential conflict.
Encourage ethical decision-making
An ethical business needs ethical employees and leadership that makes decisions in the business's best interests. Encouraging ethical decision-making by prioritizing moral values over profits will ensure employees make the best decisions for themselves and the business.
Having conflict resolution skills is crucial when dealing with potential conflicts of interest. Holding your employees accountable for their actions makes them understand the potential repercussions of what can happen if a conflict of interest arises, such as financial and legal ramifications.
Foster open communication
When employees feel comfortable discussing potential conflicts of interest with their employer, they'll more readily disclose important information, such as a romantic relationship with another employee, a personal relationship with a vendor, a vested interest in another business, and so forth.
Your employees should want to disclose potential conflicts of interest and allow business owners and decision-makers to authorize them. While disclosure doesn't always benefit both parties, transparency can foster more trust among employers and employees.
Conduct regular reviews
While it's impossible to catch every conflict of interest in business, you should conduct regular reviews to ensure employees adhere to your business's code of ethics. In most cases, business leaders should review themselves and their relationships to ensure they're not engaged in such conflicts.
Reviewing the employee handbook and code of ethics can help you determine whether your guidelines are clear and provide advice for how employees can avoid them.
Navigate conflict of interest for an ethical business practice
Ethical businesses avoid conflicts of interest that can negatively impact the business as a whole and its employees, customers, partners, and stakeholders. Unfortunately, not all of your employees will disclose potential conflicts of interest that can impact your business, so it's up to leaders to provide clear guidance and help staff understand the potential consequences.
Your business's code of ethics can be an essential resource for employees, giving them examples and advice for what to do in these situations. Updating your handbook and sending employee surveys to help understand potential conflicts of interest in your business can improve corporate communication.
Use Mailchimp to improve your corporate communications strategy, highlight important updates for employees, and collect valuable feedback to learn about unethical business practices that may be happening in your business.