In the most general sense, conflict of interest arises when you(as an individual or organization) face a scenario where one decision that may be beneficial to you, may not be beneficial to another entity that relies on your decision.
For example: visualize that you are the reception of a hospital. You are having intense pain in your upper abdomen, along with an irregular pulse. The doctors at the emergency room, conduct their tests. They realize that there is a minor probability of serious heart condition and a major probability of it being a simple acid-reflux in your stomach. However, if they let you leave, the organization(hospital) stands to make a very small amount for providing emergency services. On the other hand, if they inform you that you may be having a heart condition, and they need to keep you in the hospital for 48 hours under observation. In this case, they stand to make significantly more money from you. This situation is a conflict of interest for the doctor. She should keep your interest in mind while making any decision. However, if she decides to present a more gloomy picture, she would be rewarded monetarily.
What does the law say?
As per the law, when you enter a contract with your client, you are enshrined with certain ‘fiduciary responsibilities.’ Therefore, you are obligated to act under a sense of loyalty or duty towards your clients. Any action that is undertaken voluntarily that may disregard the benefit of your client may be liable. This liability may not be always legal. However, at times, it may be ethically wrong to act in a way that does not benefit your client. If there is a clear case of malpractice or intention to harm, then it may even lead to legal ramifications.
Personal vs professional conflict of interest
On the other hand, there may be cases where you have a conflict between your personal and professional spheres. What does conflict of interest mean in this case? It simply means that you have a dilemma where you have to make a choice between acting to favor your family member, friend, an acquaintance in a way that jeopardizes your professional ethics. For example, consider the situation that you are the mayor of a city. You get tenders for some construction work. Among the bidders, is your brother-in-law. No one in your office knows that you both are related.
However, you know that it is a conflict of interest situation. Even if you act ethically and evaluate all the tenders for their merit and choose the best tender, you will still be liable in the future if someone finds out. You may be incriminated if you pass the tender in favor of your brother-in-law. Even if he is the best candidate. In this situation, the best option is to declare it a competent authority in your office, that you are having a conflict of interest situation. You may ask to step aside from the decision process citing this reason and ask the task to be delegated to someone else.
This type of transparent approach is not just ethical, it also safeguards you against any allegations in the future. Therefore, it is important to understand what is a conflict of interest situation and how you need to act in these cases. Even if there is the probability of entering into a conflict of interest situation, you should be transparent about it.
3 Steps to resolve conflict of interest
- Understand the situation – if there is a conflict between your personal interest and professional/organizational/client interest, it is a conflict of interest. Even if there is a chance of getting into such a situation it is a ‘potential conflict of interest situation.
- Be transparent about it – You should inform a competent authority or superior about your conflict of interest. If you believe you can walk away or delegate the responsibility then you may do it.
- If in doubt, seek advice – It may not always be possible for individuals to understand what may constitute a conflict. In these cases, you may seek help from superiors or from the legal team in your organization.
If you are a senior manager, you may take these steps. You may ensure that you empower your employees. Consequently, it will enable them to feel confident. Therefore, they may come forward, when they find themselves in such tricky situations.