What is a conflict of interest?

A conflict of interest is when an individual's interests compromise their actions and loyalty to their work or professional obligations. This often creates an ethical dilemma – the individual is pulled in both directions, and satisfying one side will harm the other. Any decision-making by the conflicted individual could potentially be unreliable and biased.

Personal interests that can lead to conflicts of interest include family members, friends, relationships, or even financial benefits. All of these lead to some form of personal gain: for family and friends, the individual wants to see them succeed; for financial gain, the individual could incline toward accepting bribes or indirectly gaining money through any impacted decisions.

Employees who join a company, especially for a managerial position, are expected to uphold a “duty of loyalty”. This means that the company's interests should come before the employee's personal interests. Duty of loyalty is used to try and prevent conflict of interest situations.

Examples of Conflict of Interest

Let's look at some examples of conflict of interest in the workplace:

• Hiring a family member even though they are not qualified for the position
• Purchasing lower-quality goods from a company that your friend owns
• Covering up negative data to convince investors to invest in your company
• Accepting a bribe from an impacted party to sway company decision-making in their favor
• Starting a business that competes with your current employer (Investopedia)

What is the outcome of a Conflict of Interest situation?

Generally, when an employee is caught in a conflict of interest situation in which they are planning to or have already caused harm to the company for personal gain, they are let go from their job. There can even be legal repercussions, especially if the party engages in illegal activity for their benefit.