The world is drastically changing. Since the beginning of its existence, human beings have always been at the parting of the ways. Having the intention to earn more money or gain a better reputation, people often become the participants of the conflict of interest. It was my idea to choose this topic from the many other great persuasive topics. And I hope that it'll be interesting.
The Notion of the Conflict of Interest
The conflict of interest is the situation when the personal interest of an individual opposes their ability to carry their duties and responsibilities impartially in order to act in the best interest of their employer. There is a high possibility of the conflict of interest appearance between the employer and the customers or any other third-party involved. The situation sets in when the employer’s obligations to one business interfere with his dedication to another company or third-party agent. It will be correct to say that the conflict of interest appears when the objective part of the personality confronts its subjective part. In other words, the conflict of interest happens when the personal interest of the employee confronts their commitment to the employer’s interest fulfillment.
The modern legal lore defines several types of conflicts of interest with the distinctive traits mentioned as well. First and foremost, conflicts are divided into personal and impersonal. A personal conflict of interest emerges when an individual makes personal gains from the management of two or more team members. The impersonal conflict makes the appearance when the management of two or more people brings the gain to the organization an individual works for rather than to the individual.
The science also defines the actual and potential conflicts of interest. The actual conflict of interest happens when the personal interest of the individual leads them to act against the interest of the employer, organization or any other agent the individual is obliged to serve. On the contrary, a potential conflict of interest occurs when there is a discrepancy between the personal interest of the person and their obligations to the employer. In this case, the outside independent observer may question whether the individual’s actions are determined by personal gain or something else.
The next important distinction divides conflict of interest into individual and organizational. The individual conflict of interest occurs when the person acting as the agent has the opportunity of acting against their employer’s interests. An adverse to the individual, an organizational conflict of interest takes place when the company acts as the representative in the negotiations process.
In addition to the above-mentioned types, there are some other forms of conflict of interest. The one being commonly qualified as the conflicts of interest is the self-dealing. This typically takes place when the private and public interests of the individual collide. Outside employment is another form of conflict of interest. In this case, the interest of one job or position contradicts another. The next form is the family interests. This form outlines the situation in which a family member has business connections to the company or organization operated by their relatives. The next substantial point is the gifts from people who conduct business operations with the person receiving the gifts. This item is another form of conflict of interest. The last but not the least is the pump and dump. This term describes the situation when the individual increases the demand for the good or service (the price increases consequently) in order to sell the stocks. As a consequence, both profit margin and price become artificially increased.
The Ethical Factors
The conflicts of interest have a number of ethical dilemmas. First and foremost, the conflicts of interest have a significant relation to the misuse of the position the employee occupies. The problem appears when the individual addresses their authorities to the third-party needs abusing the official duties. In addition to the previously mentioned point, direct competition occurs as the multiple agents affect the quality of the works provided. The next ethical dilemma is irrationality. The biased judgment worsens the situation drastically as the individual takes into considerations only their personal gain but not the interests of the employer. The last but not least is the violation of confidentiality. This issue has an immense effect on the organization as the use of confidential information to get personal benefits can affect the employer in the worst way possible.
The Management of the Conflict of Interest
Before moving to the actual conflict of interest management, it is important to outline a few essential circumstances. The conflicts of interest are not merely the matter of the individual’s ethical principles, despite the person’s duties, obligations and morality. In spite of the utmost perfection of the ethics the employee has, the conflicts are inevitable. As organizations develop, the conflicts will become more severe.
The very management of the conflict of interest contains the number of principles that should be followed both to prevent and eliminate the conflict. These principles are the objectivity of the individual, avoidance-oriented approach, maximum exposure of the case, open competition and disaggregation of functions in order to diminish the authority of one person and improve the communication scheme. For example, if the conflict appeared, the person should immediately inform their supervisor in order to solve the issue effectively. If the conflict is about to happen because of the employee’s participation in it, the employee should immediately divulge their interest in it and discontinue their participation in the decision-making process. The ones in authority should take these actions to prevent possible conflict or eliminate the already existing one.
The conflict of interest has eventually made a significant influence on the global business community. The understanding of the notion, types and effective conflict of interest management contributes to the business performance improvement and strengthening of the organizations’ positions.