How to Avoid Conflict of Interest in the Workplace

How to Avoid Conflict of Interest in the Workplace (With Helpful Examples)

Written by Risk Management Team on May 9, 2023

The concept of conflict of interest may seem easy enough for most professionals to grasp, but without a substantial understanding of just how to avoid conflict of interest in the workplace, employees can unwittingly find themselves in some sticky situations. Some conflict of interest situations may be unavoidable, but armed with the proper training and information, employees can avoid the risks associated with such conflicts. 

Those in leadership positions need to take extra care to avoid conflicts of interest in the workplace because their decisions and actions can significantly impact the organization they work for. When a conflict of interest comes into play, even the best leader’s judgment can become clouded and cause them to put their personal interests over those of the organization. Sometimes, conflicts of interest can even result in legal or ethical violations which can lead to severe consequences for both the individual and the organization. 

By cultivating a clear awareness on how to avoid conflict of interest in the workplace, employees can maintain their credibility and ensure that the organization’s interests are always prioritized. With the right strategies and know-how, conflicts of interest can be avoided and navigated appropriately. In this article, we will discuss some common types of conflicts of interest and how to avoid them.

Managing Different Types of Conflicts of Interest


Nepotism in the workplace occurs when an individual in a position of power shows preferential treatment to their family members or close friends. Nepotism can take many forms. Hiring or promoting a family member or friend without considering other candidates who may be more qualified, giving preferential treatment in terms of salary or job responsibilities, or even overlooking mistakes or poor performance are all examples of nepotism.

To avoid nepotism, employees and managers should maintain objectivity and ensure that decisions are made based on merit rather than relationships. Personnel should be expected to disclose any familial relationships they may have with job candidates or other employees, and to recuse themselves from the hiring or promotion process for those individuals or roles. Even in a family business, it’s important to establish clear hiring and promotion policies that prioritize qualifications and experience over personal relationships. By prioritizing objectivity, organizations can avoid the consequences of nepotism and promote a fair and equitable workplace culture.

Romantic Relationships

Romantic relationships among co-workers can create conflicts of interest and should be managed thoughtfully. When people are romantically involved, they may show favoritism toward each other. These relationships can cause performance issues if the connection fizzles out, and can shake a perception of fairness, even if no impropriety is taking place. 

However, forbidding romantic relationships in the workplace will not typically prevent them from forming, and the implementation of this type of policy is often detrimental to a culture of transparency within a company. Employees should instead know how to avoid conflict of interest in the workplace and be encouraged to be honest about their relationships. Having a policy of openness allows certain boundaries to be in place for those involved. For example, it’s best to never have someone in a relationship directly manage or supervise their partner, participate in performance reviews, or make decisions regarding promotions. Steps should be taken to prevent impropriety and limit any perception of a conflict of interest.

Accepting Gifts or Favors

Accepting gifts or favors in the workplace can be considered a conflict of interest because it can create a perception that the recipient is biased or indebted to the giver. This perception can damage the recipient’s integrity, and it can compromise their ability to make impartial decisions. Employees should know how to avoid conflict of interest in the workplace by having a clear policy in place. 

There’s nuance when it comes to appropriate gifting culture at work. It is typically best to turn down a gift or favor, or to only accept gifts that fall within a defined value limit. High-dollars items, or things that are given with the expectation of receiving some benefit in return are problematic. By contrast, gifts of nominal value, something like food meant for the whole office, are usually considered appropriate. 

Insider Trading

Insider trading is the illegal practice of buying or selling securities based on material, non-public information about a company. It’s illegal because it gives an unfair advantage to those who possess the inside information, allowing them to profit at the expense of other investors who do not. It’s considered a serious breach of trust and can result in fines or criminal charges for those who engage in it.

To avoid insider trading, employees must prioritize disclosure to ensure that no one is trading on insider information. One way to do this is to disclose any relationships with individuals outside of the company that could lead to insider trading, such as a cousin who works for a rival company. In addition, employees who feel too tempted by insider information should consider removing themselves from a particular role to eliminate the possibility of being exposed to insider information. 


Self-dealing occurs when a person with access to confidential information or resources uses that information or power to benefit themselves, rather than acting in the best interests of the company or their clients. 

To avoid self-dealing, employees in this position should continue to act as they would if they didn’t have access to this information. Employees managing finances should have oversight in place to prevent unauthorized financial transactions. By implementing checks and controls, companies can ensure that financial decisions and transactions are made with accountability, and that no one person has the ability to make financial decisions or move money without others being aware. It is also important for companies to regularly review and update their controls to ensure that they are effective in preventing misconduct.

The Importance of COI Disclosure

It’s vital to acknowledge the significance of conflict of interest disclosure within a company. If potential conflicts are never disclosed, the risks associated with them will remain unknown. This could lead to severe consequences for the organization. It’s wise to emphasize the need for reporting potential conflicts and to stress that having a conflict does not inherently mean an employee has done something wrong. To make the disclosure process easier, companies can create a disclosure form that is clear and asks for all of the relevant information from the appropriate people. The process should be easily accessible and discreet so that colleagues are not privy to the details of another employee’s COI. Ultimately, a transparent COI disclosure process can help mitigate potential risks and foster a culture of integrity within a company.

Protect Your Company From Conflicts of Interest With ComplianceBridge

Knowing how to avoid conflict of interest in the workplace can be challenging, but with proper training and strategies, employees can learn how conflict can be avoided and handled in a way that reduces fallout. By cultivating objectivity, transparency, and disclosure, employees can avoid conflicts and promote a fair and equitable workplace culture. 

Ensuring all of the proper measures have been taken to reduce risks and manage potential conflict can be a tedious process, but there are tools that can make it painless. Using compliance management software like ComplianceBridge can streamline and simplify the process of managing conflicts of interest in your workplace. With the ability to create custom questionnaires, tailor the distribution of materials to certain personnel, and deliver results in real time, ComplianceBridge provides an effective tool for maintaining ethical decision-making and a culture of integrity in the workplace. Request a one-on-one demo today and make ComplianceBridge a part of your culture.

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