20 Examples of Conflict of Interest in the

Workplace
By Indeed Editorial Team
Updated April 2, 2021 | Published January 30, 2021

Many companies actively seek to eliminate conflict of interest in the workplace to

ensure the business remains successful and doesn't subject itself to employee issues.
Conflicts can have a profound effect on how an employee performs at work,
including how they make decisions, and can—both directly and indirectly—impact
the business and its success. While not all conflicts of interest are apparent, it's
important to understand what they are to avoid entering a similar situation.

In this article, we explain what a conflict of interest is, provide a list of examples of
conflict of interest and share strategies you can use to prevent conflicts of interest at
work.

What is a conflict of interest?

A conflict of interest is when you have a certain personal interest that may interfere
with the interests you must have as someone connected to another person or entity,
like your employer. A conflict of interest can cause one party to question what
another party's intentions are.

It can also call to question your ability to remain unbiased in your thoughts, ideas and
decisions. In the workplace, you could have a conflict of interest that causes your
employer to question your intentions and possibly take additional steps to address a
current or potential issue.

Some types of conflicts of interest include:

Nepotism

Nepotism is when someone hires, promotes or otherwise provides special treatment

in the workplace to a family member or close friend. Nepotism is a conflict of interest
because the family member or friend may receive job perks they don't necessarily
qualify for. To prevent this from occurring, employees and managers can disclose the

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relationship and choose not to be a part of hiring or promoting for that individual or
role.

Self-dealing

Self-dealing is happening when an individual in a financial role at an organization

uses their knowledge of company finances or their access to funds to benefit
themselves over the objectives of the business. To avoid this conflict of interest,
individuals can choose to remain neutral and act how they would without the
knowledge they possess.

Gift issuance

Gift issuance is another conflict of interest that occurs when someone at a company
accepts gifts from a client, vendor or another person they have a business
relationship with. While it may be an innocent exchange, many companies establish
policies that prohibit this so there remains no question of how professional the
relationship is. A vendor or supplier who offers a gift will only turn into a conflict of
interest if the employee accepts it, so it's best to thank the vendor, but turn down
the gift.

Insider trading

Insider trading is when an individual has access to confidential information and uses
that knowledge to further themselves or others they know. This is a common conflict
of interest in the financial industry. An individual can avoid insider trading by
continuing to act ethically and without bias or removing themselves from the role if
they feel too strong of a temptation to act out of order.

Understanding conflict of interest

When employees go to work for an organization, the stakeholders, managers and
members of the executive team expect a certain level of commitment to remaining
employed at the company and acting in the best interest of the business.

Many times, the human resources department requires that an employee sign an
agreement that states they understand what a conflict of interest is and agree to
avoid, or at least disclose, situations that can be considered a conflict. You may even
find an entire section of your employee handbook dedicated to describing conflicts of

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interest and what to do if you are in a potential situation that someone could
construe as a conflict.

Anyone at an organization may develop a conflict of interest, whether they're

entry-level or a member of the executive team. Especially for board members, who
have certain duties to the organization, it's important that they act in the best
interest of the business over their own personal gains and special interests. If they
don't, it could cause harm to the organization they are associated with.

If an employer determines that there is a conflict of interest, an employee may

experience different outcomes, from being asked to remove the conflict to complete
job loss, depending on how the employee has handled the conflict and the potential
ramifications of having that conflict in the first place. Many organizations also have
non-compete agreements to prevent employees from having a conflict of interest
after their employment has ended.

Although it's common to speak about conflicts of interest in a business setting, there
are other industries where it applies too, such as legal and financial.

20 conflict of interest examples

Even though conflicts of interest can occur in any workplace, there are often other
considerations that an individual can make to prevent them from engaging in a
conflict. Consider these examples of conflicts of interest so you are aware of what an
employer may consider a conflict in the workplace:

● An executive at the company who holds several shares of company stock sells
their holdings after becoming aware that the business will take certain actions
that can lower the price of stock in the near future.
● A manager hires their nephew in a supervisory role even though their family
member does not have any experience and other candidates are better suited
for the position.
● An employee accepts a vacation package as a gift from a vendor, then
purchases more than what the business needs from the vendor as a thank you.
● A human resources professional choosing not to investigate a claim of
inappropriate behavior because the person the complaint is against is a
personal friend of theirs.

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● An employee works for a marketing agency, but uses their work account on
certain tools and programs to manage their own list of clients for their
personal business.
● A financial adviser guides their client to purchase certain stocks, bonds or other
assets that have a higher commission rate, but may not be the best decision
for the client, so they can benefit from more pay.
● An employee who is working for one company while talking to a vendor about
coming to work for their company at a future date.
● A person buys company stock based on insider information they've received.
● An individual signs a non-compete agreement before starting their job at a
company. They later end their employment with the company, but go on to
work for a competitor and share proprietary information with the new
employer.
● An accountant for an organization who uses the company's funds to give
themselves a personal loan.
● A judge who has a personal relationship with one of the parties appearing
before them in court chooses to preside over the case anyway.
● A sales representative for a company creates their own personal website and
sells their employer's products without disclosing the relationship they have
with the company or getting permission from management.
● A manager who enters into a romantic relationship with a direct report. This
can be a conflict of interest because the manager is assumed to have a bias
toward their significant other and may even share insider knowledge with
them that they should keep confidential.
● An employee has a second job at an organization that develops a product or
offers a service that is in direct competition with their other employer.
● An executive chooses a vendor to have a business relationship with the
company, yet they own stock in the vendor's business. Although the
introduction of the vendor and their services can be beneficial to the
organization, the executive has a special interest in the relationship.
● A graphic designer provides paid services to their employer's client after
working hours.
● A board member who profited from serving on the board.
● An attorney who seeks to represent both individuals during divorce
proceedings.
● A manager advocates for their best friend's daughter to receive a promotion
over other employees in the office who are better qualified.
● An employee who has a competing side business where the individual and the
business are pitching the same clients and customers.

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Strategies for preventing a conflict of interest at work
Because identifying a conflict of interest isn't always easy, you could engage in a
conflict without realizing it. It's important to understand what a conflict is and work
on avoiding them. To prevent conflict of interest at work, consider these tips and
strategies:

1. Review the employee handbook

Many times, an organization dedicates a section of the employee handbook to

describing what a conflict of interest is for the organization, how you can avoid them
and what the consequences are if you knowingly engage in a conflict. You may also
find this information in a company's code of conduct or a non-disclosure agreement.

If you want to perform an action in the workplace or make a decision and you're
unsure if your employer will consider it a conflict, consider asking your human
resources representative or manager first.

2. Attend business ethics training

If your company offers training on business ethics, consider signing up. This training
can provide even more knowledge about conflicts of interest in the workplace. You
may hear about more scenarios that can help guide you in future situations, helping
you understand what constitutes a conflict of interest and, more importantly, what
you can do about your situation if you conflict with interest.

3. Report conflicts of interest

If you know that a coworker or manager is engaging in a conflict of interest, consider

taking the appropriate steps as outlined in your employee handbook. This may
include approaching the individual and discouraging the behavior or making them
aware that their actions are a conflict of interest.

Otherwise, most organizations ask that you inform human resources of any
questionable activities so they can investigate. By taking this action, you're complying
with the company's code of conduct and possibly preventing future conflicts in the
workplace.

4. Disclose

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One of the best ways to prevent conflicts of interest is by disclosing your
relationships and potential conflicts with management or human resources. They
should be able to guide you in what you can do or should be doing to prevent
conflicts from occurring.