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LP101: Ethical Standards and Conflict of Interest

Generally, a conflict of interest exists when a person has a divided loyalty, when an individual is motivated or influenced by personal considerations or relationships, or by placing ourselves in situations where we might potentially be motivated or influenced as a result of conflicting personal considerations or relationships. This may also apply to your immediate family, relatives, close personal friends or other people who may have a personal stake in a company that supplies or has interest in supplying goods or services to the company.

Basically, when we act in our own self-interest, we potentially forfeit trust and damage our reputation. Acting in our own self-interest can make it difficult to remain objective when making any business decisions or recommendations on behalf of the company. Avoid any personal relationships, activities, investments or financial interests that may influence your objectivity or interfere with good judgment concerning the company’s best interests. You cannot exploit your position or relationship for personal gain. You should avoid even the appearance of such a conflict.

This issue can be particularly magnified when you do business with family members. For example, let’s say a member of your immediate family is employed by a vendor or supplier to the company. The best course of action is to tell your supervisor immediately so that you are not placed in a compromising situation. The same holds true for a family member who becomes employed by a party who competes with your company.

Unfortunately, selling company merchandise in venues outside of the company is far too common. Generally speaking, it is a violation of the code of ethics to resell new company merchandise through outlets such as flea markets, garage sales, eBay® or other auction services. Selling your company‘s merchandise through these venues is acting in direct competition with your company. Never use your position to promote personal or financial gains.

- Digital Partner -

Another area of concern occurs when a company employee works for himself or someone else on his own time, and that outside business is in competition or conflict with the business. A conflict of interest can potentially occur when working for competitors, suppliers, customers, or distributors. A conflict of interest can potentially occur when a personal business sells products or services that are the same or similar to products sold by the company.

Additional Considerations

You can’t use your access to company information, your employment or your position to promote an outside business. You can’t promote products or services from an outside business to other employees during working hours or on company property. You can’t use company resources, equipment, supplies or facilities for personal gain. You can’t conduct business for any outside employment on company time.

Some fundamental questions to consider when evaluating potential conflict of interest would include:

  • Does it interfere with the individual’s job performance or responsibilities?
  • Does it interfere with the job performance, responsibilities or morale of others within the company?
  • Does the individual involved have access to confidential information?
  • Does the issue impact or potentially impact our business?
  • Does the issue impact or potentially impact our relationships with customers, vendors or other service providers?
  • Does the issue enhance or support a competitor’s position?
  • To what extent would it result in financial or other benefit to the involved party?
  • To what extent would it result in financial or other benefit to our customers, vendors or other service providers?
  • To what extent would the issue or conduct appear improper to an objective or outside observer?

If you have a question about whether any activity or outside interest represents a conflict or potential conflict of interest, the best course of action is to review specific situations with your supervisor, a Human Resource representative, and/or other department responsible for ethical issues within your company.

LP Solutions

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