Most companies and professional organizations have a Code of Ethics that employees and members must follow. It is important to remember that many of those ethical guidelines we have at work and in our professional lives are also important for us outside of work. When individuals act contrary to a Code of Ethics in their personal lives, people can also get hurt – just as in our professional lives.
Most Codes of Ethics require the disclosure of potential conflicts of interests, which arise when a person may be influenced in their decision as a result of an interest that they have that is in conflict with the decision that they need to make for their company. Conflicts of interest are not just at work; they are in our personal life, too, and can involve our friends, neighbors, relatives and people we have never met. Unfortunately, not everyone is motivated by a Code of Ethics in their personal life like they should be in their professional life.
For example, if someone asks me what company they should use to host their website, I have a potential conflict of interest because my brother owns a company that hosts websites. If I were to recommend my brother’s company, the question becomes whether I am recommending it because it a good web hosting company, or because it is my brother, or maybe even because I might receive a commission for every person that I refer.
It is not that conflicts of interest are automatically bad. However, an undisclosed conflict of interest is unethical, and potentially harmful. If I recommend my brother’s company and I do not tell the person that it is my brother’s company that I am recommending, I have potentially caused that person harm because I have not given them all of the information they need to make an informed decision. However, if I tell them that my brother owns the company, then I have not done anything to cause that person harm.
The disclosure of this conflict of interest may even be helpful to my brother. If I have acted and worked in a way that causes this person to respect me, the fact that it is my brother’s company may be the reason that the person chooses my brother’s company. By behaving ethically and professionally, my recommendation means more, and the fact that I am related to the owner of that company is a positive thing for the person who asked.
In our personal lives it is also important to disclose conflicts of interest. I live in a state that recently deregulated its electricity market, which means that I am now able to choose which company I want to produce the electricity that I use. Needless to say, I was swamped with phone calls and mail from the different companies that wanted me to choose them. One evening I was talking to my neighbor and asked if he had chosen a company and how happy he was with his choice. He told me which company he had chosen and that he was happy.
Later, after I had made my selection, I found out that if I recommended others to select the company that I had chosen, they would pay me $50 for each person I recommended and signed up. When I read this, it made me wonder about my neighbor – did he make his recommendation because he was happy, or because he was going to get $50 if I selected the same company that he did?
So, when someone gives you a recommendation, (especially when it is a website giving you a recommendation), you should ask yourself if they have a conflict of interest that they are not telling you about. It might just change your mind about what decision you should make in a particular situation.
Brian Hock, CMA, CIA