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DC and Virginia HR Consulting and Executive Coaching Newsletter - Issue #19

A Conflict of Interest

Larry is a sales professional based in Ohio.  He is assigned to call on customers on the West coast where he is from, and he typically travels about once a month during the week.  In May, Larry came to his boss with the idea that he could arrange his customer visits so that he could stay over the weekends at company expense to fit in more customer visits.  He explained that the airfare savings would offset any additional hotel or food cost.  It seemed like a good deal for the company, and the boss was appreciative of Larry's initiative.

By November, the manager noticed that Larry had gone back to his old travel schedule, and had actually started traveling a little less.  He also noticed that there were some new surfing trophies in Larry's office!  Apparently, Larry had been entering surfing tournaments on the weekend (and apparently winning) while he was in California on company travel.

Sales are good, travel costs are the same, and customers are happy.  However, his boss can't help but feel like maybe there was a little more personal appeal to the win-win scenario than first presented!  Now his boss wonders whether the extra customer visits were really needed.

Is this OK? Or is there something that feels a little wrong about this?

Businesses and managers deal with these types of decisions on a daily basis.  We look for ways to come up with novel ideas to balance the interests of the business with the needs of the individual.  We create happy, loyal employees when we can find ways to keep the interests of both parties are in sync.  However, sometimes those interests end up really being a conflict of interest.

Before I go further, I want to once again thank those of you who took the time to forward my last newsletter to your colleagues and friends.  I still need your help to increase my readership, so please take a second to use the button above to give others an opportunity to subscribe.  Thanks!

Webster defines conflict of interest as "a conflict between the private interests and the official responsibilities of a person in a position of trust".  When we think of positions of trust, we often think about judges, elected officials, physicians, policemen, etc. who are entrusted with the trust of the public.  Those are cases that make the news when a conflict of interest is violated.

Companies also are impacted by conflict of interest.  There are usually company policies that at least deal with these basic scenarios:

  • Employees having a personal interest with outside suppliers and vendors.
  • Employees having an interest or employment with a competitor.
  • Management having personal relationships with employees.

There is a nice, well written conflict of interest policy for 3M on their public website.  I would suggest that you take a quick look at this policy, and/or take a moment to review your own company policy.

So, back to the example above.  Did Larry violate company policy?  Maybe.  If you look closely at most company policies, they are pretty sweeping.  The 3M policy states that employees should "request management approval of outside activities, financial interests or relationships that may pose a real or potential conflict of interest."  That's pretty broad.  Larry could potentially be accused of conducting an "outside activity" that posed a "potential conflict of interest".  However, even if it was not pursued as a policy violation, Larry impacted the trust of his manager by not fully disclosing his interest.  Larry is going to have to earn that trust back.

Larry could have benefited by thinking through a few simple guidelines when he was discussing his request with his manager.  He and his manager could have had an open discussion, and both applied judgment as to whether the arrangement was really win-win.  When facing these issues, I would suggest that managers and employees have a discussion and document the following factors:

  1. Is the action legal?
    If no, the conclusion is pretty obvious.

  2. Is the action a violation of company policy?
    If you aren't sure, get clarification.  Be careful that things that seem OK may look like a conflict of interest, which may be enough to violate company policy.

  3. Have both parties disclosed all of the facts?
    Having facts come out later violates trust, and also makes it appear that the intent was wrong.  (If Larry had just told his boss about surfing tournaments, his travel may not be approved but it would not be an issue later.)

  4. Would every employee have the same opportunity?
    This is a good test for managers.  If an issue is decided one way for one employee, it should be decided the same way for all.

  5. Is management aware, and have they approved?
    Sometimes the direct manager's approval is good enough, but for certain items upper levels must be involved.  Be aware of who might care about the issue later, and be sure that they are aware and have approved.

  6. How would I feel if everyone knew?
    This is a good litmus test for any decision.  If everyone knew, would it still feel right?

Just for fun, let's apply the test above to some scenarios.  Every company is different on these types of policies (making decisions even harder), so I'll leave the answers to you.  I'd love to hear your answers, and I'll post mine on my blog site.

  • Your taxes are due today. You can either take time off and go to the post office, or go down to the company mailroom and take a stamp.  The company would actually save money if you stayed at work.

  • You are secretly dating someone in the office.  You don't have direct supervisory responsibilities, but you have some impact on assignment, and you sit in meetings where compensation is discussed.  You are extra careful not to show favoritism.

  • You hire a babysitter for the evening.  You are surprised when your babysitter arrives at your home with 2 other kids that she is also babysitting.  All the kids are thrilled to have playmates, and your babysitter doubles her pay.

  • You ask your boss if you can come in 2 hours earlier and leave 2 hours earlier to take care of your child during the school year.

  • You ask your boss if you can come in 2 hours earlier and leave 2 hours earlier to take work a part time job doing essentially the same work you do at your current job.

  • You want to work from home 1 day/week so that you can save gas money and traffic time.

  • You submit the resume of your brother into your employee referral system for a position outside of your organization.

These situations and others can be tough.  We are all looking for ways to make our jobs more fun, more convenient, and more motivating.  This can lead to some really creative and productive win-win arrangements.  However, it also unfortunately can bring up some conflicts that may be wrong, or at least on the slippery slope.  They key to this is open, honest communication between employees and management.

I welcome your comments as always on this article.&e.  Feel free to email, Twitter, find me on Facebook or LinkedIn, or post to my blog!

Jim Bowles
James Bowles and Associate