Conflict of Interest Policy
A conflict of interest policy is a smart move to resolve ethical dilemmas that threaten decision-making integrity when an employee's interests clash with the company's. The policy addresses potential conflict of interest situations, outlining safeguards to eliminate such conflicts and detailing actions to take when these conflicts arise.
Created by
Naif O. Alawbathani
|
Human Resources Adviser
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What’s included in the conflict of interest policy?
Conflict of interest policy addresses situations where an employee's personal interests might dispute with the company's, potentially hindering their judgment, commitment to work, and the achievement of company goals.
According to this policy, such conflicts can arise in various scenarios, including working for another entity outside the company, hiring a relative, or gaining financial benefit from a business decision. Therefore, the policy identifies activities or relationships that could lead to conflicts of interest and sets rules for handling each case, resolving discrepancies through either prohibition or restriction.
To allow employees to address potential conflicts early, the policy outlines the necessary procedures for urgent, transparent, and impartial disclosure of any potential conflict of interest.
Finally, the policy clearly details the consequences of violating these rules, which could lead to termination of service, emphasizing the company's inherent right to investigate any related reports.
Conflict of Interest Policy - Table of contents
1. Objective
2. Definition of Conflict of Interest
3. Employment of Relatives
4. Personal and Financial Interests
5. Use of Position for Personal Gain
6. Gifts and Entertainment
7. Outside Employment and Business Activities
8. Confidential Information and Insider Trading
9. Disclosure and Reporting
10. Policy Enforcement and Violations
Why do you need a conflict of interest policy?
A preventative measure to resolve potential conflicts of interest before actual harm occurs.
A prudent measure to reduce potential legal disputes and foster a culture of transparency.
To protect the company's interests and maintain its reputation.
To meet a fundamental industry standard, e.g, in finance and healthcare.
How do you use the conflict of interest policy template?
Download the template and review the content.
Customize it with name, logo and potential conflict of interest situations.
Add it to Jisr HRMS so everyone can easily review it and remember their ethical obligations.
Ensure compliance by getting conflict of interest policy reviewed by a legal/HR expert.
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FAQ
How to write a conflict of interest statement?
To write a conflict of interest statement, follow these steps:
Identify the Conflict: Clearly define conflict of interest examples (financial, personal, organizational, or other) that could bias objectivity.
Describe the Conflict: Be specific. Detail the nature of the financial or personal relationship, name all involved parties, and explain how this relationship could create a potential conflict.
Explain the Potential Impact: Describe how the conflict might influence your judgment or decision-making. If applicable, outline any strategies in place to manage or mitigate the conflict.
What is an example of a conflict of interest?
A common example of a conflict of interest is gift issuance, occurring when a corporate manager or officer accepts a gift from a client. This creates a potential conflict because the gift could improperly influence the manager's business decisions in favor of that client, rather than acting solely in the company's best interest. Companies typically prevent this by strictly prohibiting individual employees from receiving gifts from clients.
What is conflict of interest at work?
A conflict of interest meaning is when an individual's personal interests clash with their professional duties or responsibilities to their employer. This situation compromises their ability to make unbiased judgments and decisions. Essentially, it arises when someone prioritizes personal gain over their obligations to the company they represent.
Such conflicts can lead to legal consequences or job loss. When a perceived conflict arises, the individual is typically asked, or legally required, to recuse themselves from decisions that could be influenced by their personal interests.
How to manage conflict of interest?
To effectively manage conflicts of interest in business, implement one or more of the following procedures:
Require formal declaration: Employees should use a specific form to declare any perceived, potential, or actual conflicts of interest to their supervisor or relevant corporate body (e.g., HR, legal, board chair).
Remove or restrict involvement: When a conflict is identified, the employee may be removed from the situation entirely, or their involvement in related activities can be restricted and documented.
Engage independent oversight: Consider bringing in an impartial third party to oversee specific processes or decisions where a conflict exists.
Require relinquishing of interests: In cases where a personal interest creates an unacceptable or ongoing conflict, the employee might be required to divest that interest.
Modify work responsibilities: Adjust the employee's duties or responsibilities to eliminate or mitigate the conflict, such as restricting access to sensitive information.
Ensure recusal from decisions: Employees with a conflict should abstain from debate or decision-making on matters where their personal interest could influence the outcome.
What are types of conflict of interest?
Types of conflicts of interest include:
Financial Conflicts of Interest: When personal financial gain influences professional decisions, like a financial advisor receiving bribery.
Relational Conflicts of Interest: Personal relationships (family, friends) impacting professional decisions, such as a manager favoring a relative for a promotion.
Professional Conflicts of Interest: Competing professional duties or allegiances hindering impartiality, like a marketer representing opposing clients.
Time-based Conflicts of Interest: Divided attention due to commitments in multiple roles, affecting effectiveness, like an employee working for two companies.