How to Deal With Conflict of Interest at Work: A Guide for Business Owners

28 Dec 2021 By: Daniel Cruz


Conflicts of interest are not only an issue for large organizations, they can occur in a business of any size and at any level

However, if these conflicts are managed properly, their effects can be largely mitigated. 

Dealing with conflicts of interest starts with the awareness and preparation. By putting the appropriate policies in place before a conflict of interest happens, you can often prevent it from occurring.

Sometimes it can be difficult to determine if a conflict of interest in business exists. That’s why we are here to help.

In this guide, you’ll learn how to deal with conflict of interest at work, and how to objectively and subjectively guide your employees for the common good helps to reduce this issue within your company.


What is a Conflict of Interest?

A conflict of interest is when a person or business has a vested interest that influences their duties and decisions. In turn, their vested interest then brings into question their partiality in making decisions. 

A vested interest can take many forms. 

Some examples of conflict of interest include:

  • A person may feel obliged to assist a friend in obtaining a contract.
  • They may gain a financial reward from a specific supplier if that supplier is favored.
  • They may want to assist a family member in obtaining a job with the company.
  • An employee who conducts their own personal business during their contracted hours.
  • An employee uses company equipment for personal use.
  • Personal relationships between senior and junior employees.
  • Personal relationships between an employee and a supplier.

These are just some examples that answer the question “what is a conflict of interest”? Some instances are obvious, while others can be difficult to determine. Many times employees may not even be aware that their behavior is a conflict of interest.

However, fundamentally, a conflict of interest in business is a type of corruption.


How to Deal With Conflict of Interest

When you become aware of a conflict of interest, it can often be difficult to know how to proceed. You can follow these 5 guidelines to prevent and deal with a conflict of interest in your business.

1. Define a Conflict of Interest Policy

You should draft a clear conflict of interest policy. Make sure that you are aware of all relevant HR legislation that needs to be taken into account. You should also determine who is responsible for drafting the conflict of interest policy. They would be responsible for ensuring that the policy remains up to date too.

Your conflict of interest policy needs to specify who it applies to. Many conflicts of interest policies has specified different categories of individuals. For example, such categories often include potential and current employees, managers, and contractors.



Your policy needs to clearly state what the company considers a conflict of interest. It’s a good idea to include an explanation of why certain behaviors are considered unacceptable.


The policy needs to detail the company’s conflict of interest procedures. The procedures need to detail how the company handles conflict of interest, how a conflict of interest is addressed, and how it’s recorded. Most of the numbered guidelines below would be detailed in your policy.


Your policy should include detailed examples of conflict of interest. Examples will help to provide understanding by providing context. Additionally, examples will serve as a guideline to the spirit of the conflict of interest policy. It’s important to note in your policy that the examples provided are not exhaustive.


Your conflict of interest policy needs to clearly explain the consequences of violations. This ensures there is no misunderstanding when action is instituted against an employee.

It’s also important to make sure that the severity of the consequence is proportional to the violation.


2. Disclosing Conflict of Interest

Disclosing conflict of interest should be part of your hiring process. Potential employees and contractors should formally disclose any potential or actual conflict of interest.

disclose any conflict of interest when hiring

Adding a disclosure form to the required documents is an important step in preventing conflicts of interest. A disclosure form can often resolve a situation that might otherwise become a conflict of interest problem.

Your company will also need clear procedures for cases of non-disclosure.


3. Reporting Conflicts of Interest

It’s important to provide ways for a suspected conflict of interest in a business to be reported. This provides a way for employees to expose conflicts of interest.

Whatever methods you provide for reporting, they should provide anonymity for the reporting party. It is also important to ensure that there are no repercussions for reporting, otherwise, you will find that unacceptable behaviors will not get reported. Your employees should feel safe and comfortable to disclose conflicts of interest.

Always investigate all reports of suspected conflict of interest. The perception of conflict of interest can have a negative effect on productivity and morale if not addressed.


4. Provide Training

Once you have a clear conflict of interest policy, you will need to provide training to everyone in your company.

Training should impart a thorough understanding of all parts of the policy. Particular attention should be paid to what constitutes a conflict of interest.

The training that you provide should not be limited to the conflict of interest policy. Training should also cover the following topics:

  • The negative effects of conflict of interest, particularly on the business.
  • How to deal with conflicts of interest.
  • How to report suspected conflict of interest.
  • Good judgment and ethics in the workplace.

Good training methods include teaching the theory and providing scenarios for the application of what has been learned. Scenarios help provide context for the policies and often lead to better understanding.

You can use the training to develop a culture of ethical behavior in your company and to promote openness and honesty in the disclosure of potential conflicts of interest.


5. Get External Help

With a well-defined conflict of interest policy and training provided to everyone, most conflicts of interest can be resolved internally.

Sometimes, particularly if the employer themselves is involved, it’s difficult to be impartial. In such situations, you should get external help. That help may be in the form of a neutral mediator or professional legal service.

When the situation requires it, you should not hesitate to enlist external help.


Making The Right Move

It’s inevitable that conflict of interest in any business will occur at some stage. 

Having a clear company policy is vital. In addition, providing a safe way for the disclosure and reporting of conflicts of interest is crucial. Giving adequate training on all aspects of conflicts of interest is another way to mitigate the negative effects of these situations.

Fostering an ethical workplace that promotes openness will go a long way to preventing many conflicts of interest from becoming a serious problem.

A well-developed conflict of interest policy will provide long-term benefits to your company.

If this topic seemed daunting, hopefully that’s no longer the case. If you know how to deal with conflicts of interest at work, you can save your business potential issues, and create a transparent, trustworthy environment where everyone thrives—and so will your bottom line.



Critical Thinking
Experts Corner
Management & Leadership
Personal Development
Small Business