Conflicts of Interest: What is the Issue?

Professionals frequently face the issue of divided loyalties between what is best for them individually and what is best for the organization.
Employees and consultants are aware of what is expected of them but they face a parallel issue of obtaining recognition, how best to get that promotion and in the case of consultants asking the client to expand the scope of the assignment could be construed as self-serving although it might also be in the best interest of the client.

Organizational Policy

Employees and consultants are frequently presented with organizational policies to preclude them from acting in self-interest against the interest of the employer. Example: a division head offers a gift of value to a consultant to ensure that his or her division is not adversely effected by the consultant’s recommendations even if that would be beneficial to the organization. If such a gift were offered, it would represent a clear conflict of interest between that division and the organization and should the consultant accept the gift, he or she would be thwarting the intentions of the consultant’s engagement. The consultant is clearly obligated to the party to whom he or she is being paid. This is the rationale for requiring the disclose any gift given by any member of the organization to the consultant.

Insider Information

Insider information is when someone is privy to information about the internal workings of an organization and can profit from it. For example, if a consulting assignment has resulted in increased profits or lowered costs or an impending merger/acquisition and the consultant trades on that information before it becomes public information, he or she has benefited from insider information. This is considered unethical and in most cases against the terms and conditions of the consulting agreement.

Dealing with conflicts of interest

Human greed is omnipresent. When there is an opportunity to profit from information, there is the temptation to do so regardless of the laws. A consultant who is privy to insider information should keep in mind the policies of the company he or she works for as well as the client – both of which are likely to have policies against insider trading. And there are the regulatory organizations which keep an eye out for these types of violations. Conflicts of interest can be taken very seriously and could wreck the career of anyone who engages in it – even to the point of going to jail.

You will sleep better with a clear conscience

Conflicts of interest exist in all professions and the temptation to profit from it can be very strong. If an employee or consultant is privy to information that indicates that this is taking place, it is their obligation to report it to the appropriate party be it a manager, the compliance department or regulatory organization. Should an investigation take place, all those who might be privy to such information are likely to be investigated. If fired, the employee or consultant may only receive a reprimand and or be fired without being turned in to the authorities but wouldn’t it be better for all parties concerned if people followed policies and procedures? One can certainly sleep better at night if they know that they have done nothing wrong and that their reputation remains intact.