Why Can A Conflict Of Interest Be A Serious Issue In SMEs?
As a small business, conflicts of interest can be a major issue (particularly when you have a small number of employees).
Conflicts of interest are often a trigger for workplace tension and gossip, reducing productivity and damaging employee relations.
A conflict of interest occurs when an individual’s personal interests – family, friendships, financial, or social factors – could compromise his or her judgment, decisions, or actions in the workplace.
Common examples of conflicts of interest in business include:
- Recommending a friend or family member for a job position.
- Employers not disclosing that a candidate being considered for a job is a friend or family member.
- An employee starting their own business that provides similar products or services, especially if a non-compete agreement has been signed.
- Working for a competing company.
- Posting to social media about the business’ failures.
- Romantic relationships between an employee and their supervisor.
- Accepting a favour or gift beyond the agreed amount from a client.
The best way to avoid conflicts of interest in the workplace is to establish a code of conduct that clearly outlines the standards and expectations of the business. It should cover details of business policies and list everyone it applies to, including employers and employees, board members, management, officers, and contractors. This code of conduct should be communicated to employees verbally and re-enforced through discussions.
A good code of conduct will reflect the culture and values of the business, provide information on how workers can expect to be treated and how they are expected to behave. It should be accessible to all employees, be well organised and comprehensive but also easy to understand.
This can be achieved by providing situational examples, answering common questions workers may have, and avoiding technical or legal jargon that may be confusing.
