Covered persons
Not every person is covered by every part of the policy, so it should clearly explain to whom it pertains. And remember, your policy can apply to employees, board members, independent contractors, freelancers, and anyone who acts on behalf of your organization.
For example, if only the Board of Directors cannot invest in a competitor, the policy should clearly state that. Similarly, is it just managers who cannot be in a relationship with a direct subordinate, or do you not even want two people on the same team or section in a relationship?
Do not leave employees guessing here with ambiguous phrasing. Spell out the specifics of which part of the conflict of interest policy covers which group of people.
Disclosure procedures
If you do not yet have a company conflict of interest policy, you need to provide an avenue for employees to self-disclose potential conflicts of interest, especially in the initial policy roll-out phase. During this time, these disclosures should (for the most part) be consequence free.
However, if employees disclose a major conflict of interest, like a controlling interest in a competitor or romantic relationship with a direct report, then you will likely need to take some action.
You should handle self-disclosures with less severe consequences (if they warrant any at all) since employees are making a forthright effort to be honest and transparent.
However, your conflict of interest policy (and accompanying procedures) should clearly explain how self-disclosures will be reviewed and handled. Again, leave nothing to surprise.
Procedures for handling discovered conflicts
When someone does not self-disclose a conflict of interest, the policy should clearly explain the process (and consequences) of concealing this information. If a conflict is discovered by someone else rather than through self-disclosure, then the consequences should likely be more severe.
You might want to include a separate whistleblower policy, now required by law for most companies. This policy covers how employees should report suspected conflicts of interest in others (especially their superiors).
Consequences
Whether self-disclosed or discovered by others, conflict of interest needs to have some kind of consequence. Ideally, the policy should outline escalation steps.
For example, a first-time violation yields a warning with 90 days to comply, a second offense yields a fine, and a third breach ends with suspension.
Clarity is your friend here, as the disciplinary action shouldn’t be subjective or arbitrary. Specify every consequence in the policy.
Oversight or review board
Because so many types of conflict of interest exist, they are rarely cut-and-dry situations. That is why your company needs some kind of oversight committee, person, or review board to make final decisions on the matter.
Your corporate conflict of interest policy should clearly define who that is, what their authority is, and when a matter will come to their review. While they still need to follow the prescribed consequences and procedures in the policy, they can help determine if, in fact, an action is a conflict.
Plus, they can decide if the person deserves some latitude in the severity of consequences, especially if the conflict was self-disclosed.
Confidentiality and proprietary information
If you don’t already have a separate, dedicated policy that covers confidential information or intellectual property, your conflict of interest policy provides a good place to include this key area.
Namely, the policy should point out that employees cannot use company information, client lists, equipment, or other proprietary information outside the scope of their job.
For instance, they cannot take a client list to help them in their part-time job, or they cannot use the company’s marketing plan for other consulting work.
