Conflict Of Interest

One of the most insidious traps in the world of business (or
in any other place for that matter) is this thing called a
"conflict of interest". The conflict produces a situation
whereby your decision to do or not do something is swayed by
other or outside interests. In other words, you need to make a
business decision, and your decision is changed (or appears to
have been changed) based upon something other than what's going
on at your job.

Sometimes these conflicts are completely and totally obvious.
In our company we are all forbidden to accept any gifts from
any vendor. In fact, this policy is brutally enforced by
suspension and possible termination. Why? Well, let's say a
buyer has to purchase a million dollars worth of product and
he receives "gifts" from various competing vendors. Is he
making decisions that are in the best interest of the company
or is he simply repaying that "special" vendor who gave him a
trip to Hawaii?

There are many ways that conflicts of interest appear.
Sometimes they are hobbies, sometimes gifts from people,
sometimes simply having an agenda other than that of the
company.

I've found that a person with a hobby is a person with what
is potentially a fascinating conflict of interest. For example,
when I was just seventeen years old, I managed a liquor store.
My boss was a German U-boat commander from World War II, and
he loved German wine. We had German wines all over the place.
The stuff never sold, not a single bottle, but regardless we
had the bottles everywhere. I distinctly remember having to
dust them constantly. I used to wonder why we carried these
dogs, but no longer. The boss had a hobby. He liked German
wines, and in spite of the fact that each bottle on the shelf
was wasted money (and a lot of it, these bottles were not
cheap) he continued to purchase them. This part of the
business was actually his hobby.

A more obvious conflict is the one between an auditor from an
outside firm and the auditor's firm. Let's say you hire Joe
from XYZ company to audit your books. You hire lots of people
from this company to perform audits all of the time. Since the
auditing firm makes money from your business, there is an
apparent conflict of interest here - an auditor which finds
problems may find himself out of a job. This conflict becomes
even greater if the auditing firm gets follow-up work based
upon the results of the audit. That's why intelligent managers
make it very clear to their auditing firms that they understand
this natural conflict. These managers also MUST make it clear
that they expect unbiased results, and attach severe penalties
for improprieties.

A boss who hires a friend or relative is also guilty of a
conflict of interest - in fact, the boss will find this
conflict will only get worse as time goes on. No matter the
circumstances, employees will never respect the boss who
performed this hiring or the employee who was hired. In this
instance, even if there is no conflict of interest, the
appearance is so strong that it cannot be overcome.

I remember at one job the boss (and owner) hired his wife as
the secretary for the company. She was soon promoted to a vice
president. This cause no end of problems at our company.
Several other competent people were passed over for the
promotion, which created a huge amount of bad feelings among
the staff. Every decision that she made was questioned, and
after that no one really trusted the owner anymore. In this
case the problem was not that she was hired or even promoted -
the problem as that the boss promoted his own wife. If she had
earned her way up and been promoted (or not) by other managers
based upon her merit, then the conflict could have been avoided.

I've seen people in situation where they had to make a decision
and took into account "what was best for their career" or made
the decision that would give them the best raise or bonus.
There is nothing wrong with pursuing a career or working
towards better pay, but decisions must be made which are best
for the company and which are ethical. Period. Thus, if there
is a choice between a good decision for my company or a good
decision for my career, then the company wins every time. And
in the long term, this is the best decision for any career.

Good employees and good managers avoid situations like these as
if their lives depended on it. A conflict of interest, apparent
or otherwise, is never a good thing. Decisions must be made
based upon facts and must be made to the advantage of the
company to which you work for (and owe your allegiance). The
most ethical thing to do is to make decisions which fulfill the
goals of the company, and not which fulfill your own personal
agenda.