A Conflict of Interest Policy is Good for Business

How do you create a good corporate conflict of interest policy?

In previous posts, I defined conflict of interest and explained why employers should expect their employees to avoid it. Yet a problem persists: too many employers assume employees understand conflict of interest. Often, they don’t. The invariable result is nasty surprises.

Conflicts of interest can sap employee discipline and morale, damage your company’s reputation, and expose you to liability. You can avoid these problems. As an employer, make sure that 1) conflicts of interest are well understood by your staff, and that 2) procedurally, conflicts of interest (even if just potential) can be quickly dispatched.

Most workplaces will benefit from some form of code of conduct or conflict of interest policy. These policies vary in complexity, but they should contain:

• • A clear explanation of conflicts of interest (both actual and perceived)
• • Rules on accepting gifts or other perquisites from your clients, customers, suppliers, etc.
• • Rules on use of the employer’s premises, equipment, information, and supplies for non-work   purposes
• • A requirement that employees disclose actual and perceived conflicts of interest as soon as they arise
• • Identification of persons to report conflicts to
• • A procedure for investigating and managing of conflicts of interest
• • A clear statement that breaching the policy will result in disciplinary action, including firing for cause

A conflict of interest policy that’s poorly communicated or understood is useless. Make sure that new employees get it right away. Reviewing the policy from time to time with existing employees doesn’t hurt, either.

A few other tips:

• 1) Annual conflict of interest ‘talks’ are a good way to heighten awareness and raise issues that might previously have gone undetected. They’re a worthwhile investment of time.
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• 2) Make copies of your policy available on the company’s intranet, on bulletin boards, and in employee manuals.
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• 3) Ensure that employees know whom to report conflicts to, or discuss concerns with. If speaking to direct supervisors is untenable or uncomfortable, designate senior officers of the company or in-house counsel as alternate persons to receive reports.

Ethical companies are better to work with and for. Don’t discount the role of an effective conflict of interest policy as a way to boost morale, save your reputation, and protect your company’s assets. It’s good for business.

This blog is written by Nicole Byres of Clark Wilson LLP and made available by BCBusiness to provide general information on employment law, and is not a substitute for competent legal advice from a lawyer licensed to practice in your jurisdiction. Neither the reading of this blog, nor the sending of unsolicited comments or emails creates a lawyer-client relationship with the writer or Clark Wilson LLP.