Managing Conflicts of Loyalty in the Context of Conflicts of Interests:
Conflicts of loyalty can create complex situations that require careful navigation. Often they are not as obvious or clear-cut as financial or direct conflicts of interests. In this article, we delve into the world of managing conflicts of loyalty within the context of conflicts of interests.
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Contents
Defining Conflicts of Loyalty
Conflicts of interests occur when an individual’s personal interests or biases may compromise their professional judgment. On the other hand, conflicts of loyalty arise when a person’s allegiances to different stakeholders—such as employers, clients, or personal relationships—create ethical tensions. While these terms may seem distinct, the way they overlap reveals a moral landscape rife with challenges.
Conflicts of loyalty can arise more frequently in certain industries or sectors.
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Charities: personal experiences often inspire people to volunteer for or become trustees of charities
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Health and social care: people (doctors or nurses etc.) may be tempted to facilitate access to health and social care for unwell friends and family. Conversely their decision making may be clouded by personal feelings
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Criminal justice: if friends or family are the victims of crime, or may have committed a crime themselves, it can present a very difficult challenge for police officers, solicitors and judges.
It is important to understand conflicts of loyalty are not purely personal or down to personal interests. They can arise through any connected person.
Examples of Conflicts of Loyalty
Conflicts of loyalty arise when an individual’s personal obligations or interests clash with their professional responsibilities. These conflicts can pose significant challenges in making impartial decisions and maintaining ethical conduct. Examples include:
Representing Two Parties with Opposing Interests:
A solicitor’s firm representing both the plaintiff and defendant in a legal case faces a conflict of loyalty. Representing both parties simultaneously makes it difficult to provide unbiased advice and advocate effectively for each client’s interests without clear professional boundaries and codes of conduct.
An example like this can be seen in this case.
Family Relationships in Business Decisions:
A manager favouring a family member for a promotion or awarding a contract to a company owned by a close friend creates a conflict of loyalty. These actions prioritise personal relationships over professional obligations and could lead to unfair or biased decisions.
In this case the role of perception matters too. The promotion or contract could have gone to the best person or company. But people may suspect wrongdoing anyway. You can find out more about perceived conflicts of interests here.
Loyalty to a Former Employer:
An employee working for a new company while still maintaining close ties to their former employer may face a conflict of loyalty. Sharing confidential information or favouring the former employer’s interests over the current company’s interests raises ethical concerns. This is why some industries implement “gardening leave” to ensure a gap between ending work in one job and starting another.
Personal Beliefs versus Professional Duties:
A teacher with strong personal beliefs that contradict the school’s curriculum may face a conflict of loyalty. Balancing personal beliefs with professional obligations and presenting objective information to students can be challenging.
Political Affiliations and Public Service:
An elected official’s personal political views may conflict with their responsibilities towards their constituents. Making decisions based on party loyalty rather than what is best for the constituents raises concerns about impartiality.
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Managing Conflicts of Loyalty
There are a number of approaches that, when combined, allow for the effective management of conflicts of loyalty. In summary they are:
Disclosure and Transparency: Openly acknowledging and disclosing potential conflicts of loyalty can help build trust and allow for informed decision-making.
Recusal or Avoidance: recusing oneself from decisions or situations that could lead to biased or unfair outcomes is crucial when a conflict of loyalty is identified,.
Confidentiality and Ethical Boundaries: Maintaining confidentiality and respecting ethical boundaries can help prevent conflicts of loyalty from arising.
Institutional Policies and Guidelines: Clear institutional policies and guidelines can provide guidance on identifying, managing, and reporting conflicts of loyalty.
Training and Awareness: Educating employees and stakeholders about conflicts of loyalty can help prevent them from occurring and promote ethical conduct.
Systems for Managing Conflicts of interests
All of the approaches outlined above can only be deployed if there are the right systems in place. Those systems break down into three key areas:
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policies
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declaration
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decision making
Policies
Having a clear and accessible policy for managing conflicts of interests is important. The policy will perform a number of crucial functions. It will set out the organisation’s attitudes to conflicts of interests, what it expects people to do, where they can go for help, and the consequences of non-compliance.
In the context of conflicts of loyalties it will describe what they are, and how they will be managed. For example, as discussed above, people with close personal relationships with a supplier or bidder for a contract may be excluded from buying decisions that involve them. It should also set out that it is everyone’s duty to declare their interests.
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learn more about the importance of policy here.
Declaration
To be managed conflicts of loyalty must be declared. How and when to declare conflicts will be set out in your policy. However, in general conflicts of loyalty should be declared:
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on appointment
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at least annually as part of refreshing declarations
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when circumstances change
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proactively if a conflict arises during working activity
How and when to declare any interests or conflicts of loyalty is discussed in more detail here.
Decision Making
A decision must be made on how conflicts of loyalty will be managed. Management approaches could include any of the examples above.
Whatever the approach chosen is it must be explained to the person making a declaration, and compliance must be monitored. Naturally, the higher risk cases or most serious conflicts will require the most attention.
We go into more detail about best practice for managing conflicts of interests here.
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Available in person, online or in-house the focus on practical skills and unique post-course support you get by learning with us will ensure you and your organisation can tackle this key governance activity with confidence.
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Conclusion: Resolving Conflicts of Loyalty
Managing conflicts of loyalty within the context of conflicts of interests is a challenging but necessary endeavour. By understanding the intersections of these ethical dilemmas and exploring real-world case studies, individuals and organisations can better equip themselves to make ethical decisions that uphold their integrity, the trust of stakeholders, and the greater good. In a world where ethical dilemmas often test our moral compass, navigating the complexities of loyalty and interest is an ethical imperative.