In general, it is seen that surgeons never operate on their family members, lawyers avoid defending their loved ones and managers do not hire close relatives in roles where they would be directly working with each other.

Each of these practices is about avoiding conflict of interest. The definition of conflict of interest is when someone has competing loyalties or an invested interest in the situation. They could either benefit from it directly or could face consequences because of it.

Incompatible goals can also lead to a conflict of interest. For instance, an auditor who’s privy to sensitive information about stock prices and uses it to make a profit would be accused of insider trading.

Let’s explore the meaning of conflict of interest and how to tackle it if it occurs at the workplace.

Meaning Of Conflict Of Interest

A conflict of interest can arise in multiple situations. It doesn’t always lead to profits or benefits but can also limit you from doing your job. Say, you have to choose between two coworkers for a project and one of them is your cousin. Now, picking your cousin for the job—even if the choice is based on merit—may create a conflict of interest because your other coworkers may question your bias.

The meaning of conflict of interest is that there are opposing views on a situation, action or decision, based on an implicit interest that one of the parties may have. It may occur with the parties involved or others who recognize that there’s a conflict of interest. At the workplace, it’s important to resolve a conflict before it creates a hostile work environment.

Here are some disadvantages of having a conflict of interest in the workplace:

  • Affects teamwork that may impact the organization

  • Quality of work may be compromised

  • It can lead to hostility among coworkers

  • Work performance may deteriorate if left unchecked

  • May lead to burnout if someone is indirectly affected by a conflict of interest

  • It can lead to legal consequences that may work against the organization and its employees

  • Damage relationships with internal and external stakeholders—employees, clients and customers

Characteristics Of A Conflict Of Interest

If you want to understand the meaning and definition of conflict of interest, you have to dig deeper and look at what constitutes a conflict. For instance, a conflict of interest in the workplace can be to hire a vendor who’s related to one of the employees. The employee can be blamed for favoritism in such a scenario. Fulfilling personal interests and overlooking the needs of your coworkers can result in poor work culture.

Here are some characteristics and examples of conflict of interest to help you identify it:

  1. Self-Serving

A significant aspect of a conflict of interest is that it’s self-serving. What this means is that it involves someone prioritizing their interests and gains over others’. Someone who’s self-serving overlooks every other aspect of a situation or action and makes a decision for the sole purpose of personal gain.

  1. Opposing Views

A conflict generally arises in situations where there are opposing views. If you don’t agree on something with a coworker, there’s a chance that it can lead to a conflict. Say, you want to work independently on a project but your coworker wants to collaborate, meet and discuss. This may become a problem if you don’t address the difference in work style. There are times when you have to compromise and meet each other halfway at the workplace. This ensures that you continue working harmoniously.

  1. Competing Loyalties

Many organizations have a non-compete clause in an employee contract. This states that an employee can’t work for a competitor during and for a short period after their employment. Working for competitors at the same time can lead to a conflict of interest because the employee can misuse important information that may work against any one organization. Competing loyalties is when you have an invested interest in multiple places. To serve one, you may have to compromise the other. It’s important to keep a check on this because it can lead to severe—even legal—repercussions.

  1. Personal Over Organizational Interest

When your personal interests overshadow the interests of the organization, it results in a conflict. Consider a situation where you’re being offered higher pay by a competitor. If you leverage this offer for a pay increase in your current organization, it can affect your reputation and position at work. It’s important to align personal goals with organizational goals if you want to make progress in your career.

  1. Unethical Practices

There may be times when a conflict of interest arises out of unethical practice. For instance, trading information for personal benefit or stepping on someone’s toes for career advancement. These are only a few of many examples of conflict of interest that are a result of unethical practices.

Recognizing a conflict of interest is important if you want to tackle it. If left unchecked, a conflict can fester and cause irreparable damage to a team or an organization. You may lose trust in your coworkers or vice-versa. Trust is the foundation of a healthy work environment—relationships can survive only when everyone’s best interests are considered.

How To Resolve Conflicts Of Interest

If you want to build teamwork, support a robust work culture and work effortlessly with your coworkers, you must work at resolving workplace conflicts. Let’s explore some of the ways to navigate conflicts of interest at work.

  1. Understand Who’s Involved In The Process

A conflict of interest at the workplace can lead to legal consequences. So, it’s important to recognize who’s involved. Employees who have a vested interest or competing loyalties must be informed before taking action. For instance, if a coworker is running a side business and using organizational resources to serve their purpose, the management may decide to terminate their contract. It’s important to be sure of who’s involved and why.

  1. Discuss The Reason

An organization must take measures to get to the root of the problem. If an employee is leveraging another offer for an increment, it’s better to discuss the terms before making a decision. It’s ideal to discuss and resolve the problem internally rather than involving other parties like competitors or legal teams. If a conflict of interest is more serious, the organization may decide to take action.

  1. Disclose Possible Outcomes

The concerned parties must be informed of possible outcomes of their actions—be it legal repercussions or termination of employment. If the conflict isn’t too serious, such as a conflict like figuring out a schedule with a coworker, it may be resolved with a simple discussion. But there are times when it can only be managed by taking severe action. Organizations usually account for a conflict of interest in their employee contracts or code of conduct. You must be well-versed in official policies for comfortable work life.

  1. Assign Accountability Where Necessary

Organizations must make sure to assign blame to the right parties. If someone is acting out of personal interest, they must be held accountable for their actions. Recognizing whose actions can cause a potential conflict of interest is necessary to manage conflicts. Organizational guidelines can help tackle conflicts of interest. Employees should be aware of possible outcomes and be accountable for their actions.

  1. Arrive At A Workable Solution

If possible, conflicts of interest should be resolved internally. Organizations should avoid locking horns and save time, resources and effort. Unless it’s a critical issue like market manipulation or speculation, conflicts may be resolved within teams. This can even help organizations build strong relationships and trust among employees. An open and informal work culture can encourage communication to help everyone get along.

Communication is one of the most important aspects of managing conflicts of interest. You can arrive at solutions simply by talking to others about their motivations, intentions and interests. Encouraging free and informal communication at the workplace can open doors for conflict resolution. For an employee to work toward achieving organizational goals, they should be made to feel valuable. This is a foolproof way to involve employees in the organization. They’ll be more inclined to work collectively to achieve their goals.


A conflict of interest can arise anywhere, anytime because each one of us is working hard to achieve personal and professional goals. Opportunities may come in all shapes and sizes. What’s important is to recognize how to deal with uncertainties and challenges.

Becoming an effective decision-maker will help you tackle conflicts of interest like a pro. You’ll learn how to assess your options instead of making hasty decisions. With Harappa Education’s Making Decisions course, you’ll be introduced to topics like the Good Decision Process and the PRISM Framework to navigate biases.

It’s critical to consider all stakeholders before you make a decision. This way you’re more likely to manage conflicts of interest positively. Every organization has to deal with conflicts of interest. Rather than avoiding them, it’s better to learn how to manage them.

Explore Harappa Diaries to learn more about topics related to the SOLVE Habit such as Decision-MakingProblem-Solving & Root Cause Analysis in order to enhance your decision-making skills.

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