Conflict of Interest
Meaning of Conflict of Interest
Segal (2019) describes conflict of interest as “a situation that occurs when an individual or an entity becomes unreliable because of a clash between self-serving or personal interests and personal responsibilities or duties. Conflicts of interest occur when individuals or companies have vested interests such as reputation, money, relationships, knowledge, or status, which can lead them to be biased in their judgment, actions, or decision making (Segal, 2019).
Article Summary
In this article titled “Conflicts of Interests in business: A review of the concept,” Dragomir (2017) observes that conflicts of interests are a threat to the reputation, integrity, and efficiency of companies. He argues that people enter into conflicts of interest because of three main reasons: a) because of self-interests, b) because of ignorance, and c) when conflicts of interest are a social norm or a common practice (Dragomir, 2017). The author proceeds to state that “self-interest is an automatic response,” which can be avoided by weighing benefits and costs. Refraining from using company resources for individual gains is a difficult, calculated ethical response that requires the existence of explicit guidelines (code of conduct) and education (Dragomir, 2017). The researcher suggests that companies have a number of strategies at their disposal to manage conflicts of interest, such as implementing stricter contracting and employment procedures, protecting the privacy data, establishing a system of peer review and supervision criteria, training employees on ethical standards, forming an ethics committee and establishing measures for entertainment and rewards (Dragomir, 2017). He also states that companies can foster an ethical climate by encouraging managers to lead by example: act ethically.
Discussion
The article summarized above relates to the term under discussion because it not only discusses the circumstances that can lead to conflicts of interest, it also discusses their effects to a company and how they can be avoided. Judging from the article summary above, it is obvious that conflict of interest is a major issue that corporate managers must be ready to deal with. In general, it is in the best interest of organizational employees to avoid conflicts of interest because they can harm their reputation by either leading to their dismissal from work or harming their relationships with colleagues. When employees find themselves in conflicts of interest, the most common action that employers do is to fire the affected employees. In extreme situations, however, it might be advisable to consult attorneys experienced in business laws so as to ensure that the company does not violate employee rights and find itself entangled in legal battles.
All businesses are vulnerable to conflicts of interest. Sadly, it is something that can be witnesses even among the most reliable and trusted employees in an organization. Therefore, the best thing that organizations can do is to create an environment or a culture that does not tolerate conflicts of interest. If this is not done, companies, organizations, or institutions may suffer certain reputational damages. As Dragomir (2017) explains in his article, the best way for employers to avoid conflicts of interest is for them to create a code of conduct that spells out how employees will be penalized for acting in manners considered to be conflicting to organizational policies. Employees must also be cautious not to find themselves in conflict situations. A conflict of interest can make a company lose its trust in affected employees, especially in their ability to carry out company duties. Additionally, conflicts of interests can lead to strained relationships between employees and clients, or other third parties; Clients and other parties may become unwilling to share certain vital information with questionable employees. When this happens, even the reputation of an organization may become damaged; hence company management must come up with effective measures for dealing with conflicts of interest.
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