Conflict of interest in business: ways to prevent and resolve

A conflict of interest sometimes lies literally on the surface and is clearly visible to others. However, the most serious problems arise in cases where such a phenomenon is outwardly invisible. If it is not detected in time, it can ultimately greatly damage the reputation of a person or organization.

There are many real-life examples of conflicts of interest. For example, a man is the boss and his son works as his assistant. And even if the latter does his job brilliantly, people will never objectively evaluate such a situation.

What is a conflict of interest and how can it be detected? Let's try to understand this issue using specific examples.

Distribution area

Conflicts of interest are a ubiquitous phenomenon. Similar situations can arise in any area of ​​life. Examples of conflicts of interest often occur between family members and classmates, among employees of the same organization, as well as in communities created by like-minded people. Moreover, their presence does not at all mean that people experience personal hostility towards each other. The most difficult areas in which conflicts of interest occur are the political and public sectors.

Prevention of corruption under 273-FZ

Based on the provisions of 273-FZ, civil servants are prohibited from:

• store funds and valuables in foreign banks;
• conduct business, manage foreign companies and receive awards from them;
• receive benefits in kind or monetary terms from the performance of their duties, including sponsorship when traveling abroad;
• be an attorney and lobby for private interests;
• combine work with another position or activity that is subject to payment, exceptions: creativity, science, teaching, if the activity is not carried out on behalf of the authorities;
• use proprietary information for your own purposes.

According to Law 273-FZ “On Anti-Corruption”, civil servants are obliged to:

1. Report income and expenses (including close relatives).
2. Inform management about inducement to bribe.

Definition of the concept

A similar phenomenon occurs in our lives quite often. It is simply impossible to hide a conflict of interest or quickly exhaust it. That is why a federal law appeared in Russia, which is called “On Combating Corruption.” This document interprets the concept of “conflict of interest” as a situation in which there is an indirect or direct personal interest of a municipal or government employee. At the same time, she is capable of influencing or is already influencing the performance of his official duties. As a rule, examples of conflicts of interest in the state and civil service relate to the receipt of material benefits by employees not only for themselves, but also for those third parties with whom there is a connection in the form of financial obligations.

In a 2009 report, Marilyn Field and Bernard Law pointed out that a conflict of interest is nothing more than a set of obligations that create risks that a secondary interest will directly influence professional actions or judgments regarding the primary interest. In other words, a similar phenomenon can occur in the case of existing personal benefit of a person who participates in the process of making a particular decision. This leads to damage to the interests of the company or society.

Let's look at some clear examples of conflicts of interest:

1. A pharmaceutical company awards a research grant to a doctor. In this case, the specialist begins to feel obligated to prescribe medications from this particular manufacturer to his patients, despite the availability of better alternatives. In this case, damage to public interests is caused.
2. A woman who is an employee of the company describes to the boss the merits of her nephew as a candidate for a vacant position. However, she does not mention her family ties with him.
3. The boss gives the employee the task of finding a supplier for the company. He offers in response an organization in which he himself is the owner of shares.
4. At the end of the year, the boss gives himself and his team impressive bonuses. Moreover, this is happening against the backdrop of the fact that the company’s owners are facing serious losses.

In most cases, such situations are not a violation of the law. This is why there are so many examples of conflicts of interest in any organization. But the existing problem will certainly call into question the employee’s reputation, reliability and honesty. In the future, this will negatively affect the work of the entire team.

The essence of conflict of interest in business

A conflict of interest in business occurs when an employee’s personal preferences influence the quality, completeness and impartiality of his performance of his official duties.

Each company, as a form of organization of economic activity, has legal categories that determine the characteristics of a legal entity, its competence, the structure of governing bodies and other issues regulated by federal legislation.

But no less important are social factors, such as the relationship between employees and managers. Very little attention is paid to such aspects in Russian law and in the business environment today.

Many entrepreneurs can give examples from their own practice regarding conflicts of interest in business. In most cases, such situations are associated with disagreements within the workforce and a lack of proper understanding between the founders of companies and hired management personnel.

Individual interest

– this is not necessarily a search for benefits for oneself or the appropriation of material resources. You can also use this power illegally in favor of your friends or acquaintances, relatives, other individuals or companies if you have a certain responsibility to them.

In absolutely any company, a conflict of interest in business can arise. This is a standard situation. These disagreements will not always be contrary to the law, but they will ruin the status and reputation of the employee. In the future, this may negatively affect teamwork and the activities of the company as a whole.

We recommend

“Online reputation management: directions, mistakes, tools” Read more

Conflicts of interest in business can cause an organization to suffer huge losses. These disagreements can arise between current shareholders or former ones, as, for example, in the situation of Rosneft and AFK Sistema. When the first company demanded compensation from the other for losses in the amount of 170.6 billion rubles, which it incurred during the reorganization of Bashneft. The dispute continued for 8 months and was resolved by the fact that Rosneft received compensation in the amount of 100 billion rubles, and AFK was released from interim measures.

Another example is that a conflict arose between the founder of Modulbank and the leading shareholder. The first filed claims of unjustified enrichment and demanded to pay 650 million rubles. As a result, 22.5% of the shares were returned to the shareholder without revaluation, and the parties withdrew from the authorized capital.

According to the assessment of analysts involved in the study and analysis of risks in business (small and large), it was revealed that this year the number of conflicts arising between employees and employers, as well as between entrepreneurs and other people who participate in the creation of a product, has increased significantly. Regarding conflicts of interest in business, statistics for previous periods also indicate an increase in their number when compared with previous years. The percentage of disagreements increased by several tens of units.

Signs and forms

The word "conflict" comes to us from Latin. Translated from this language, it means nothing more than “collision.” That is, a certain point comes when two or more members of a community or group begin to make claims on the same object. This leads to the intersection of the areas of interest of all those who are related to this situation.

Conflicts of interest are divided into personal and organizational. In the first case, the performance of official duties by a person comes into clear conflict with his own desires. Examples of conflicts of interest in the service sometimes concern, for example, a situation where, despite the fact that the task will not be completed on time, the employee wants to go home either at the end of the working day or earlier. After all, he has his own plans for the evening.

In the event of an organizational conflict, an entire private enterprise stands up to defend its benefits. In this case, the company takes into account only its own interests and tries to refuse or refuses to cooperate with the state, becoming unable to provide its services impartially. Responsibility for such a situation rests entirely with the manager, because such actions will certainly cause damage to the company as a whole. If damage is caused to structures supported by the state, then in this case the current legislation may come into force.

Similar situations arise in cases where the object of the conflict cannot be divided between the two parties laying claim to it. At the same time, no one wants to make concessions or seek compromises.

Video

A conflict of interest is a situation in which the personal interest of an official can influence the decision-making process and harm the interests of the individual, society or state.

Of greatest importance for society is the problem of conflicts of interest among state and municipal employees.

In accordance with Art. 10 of Federal Law No. 273-FZ of December 25, 2008 “On Combating Corruption,” a conflict of interest is a situation in which the personal interest (direct or indirect) of a state or municipal employee affects or may affect the proper performance of his official (official) duties and in which a contradiction arises or may arise between the personal interest of a state or municipal employee and the rights and legitimate interests of citizens, organizations, society or the state, which can lead to harm to the rights and legitimate interests of citizens, organizations, society or the state.

Personal interest is understood as the possibility of an employee receiving income in cash or in kind during the performance of official duties, income in the form of material benefits directly for himself or for persons of close kinship or property, as well as for citizens or organizations with which the civil servant is bound by financial or other obligations. .

As practice shows, the basis of any corruption offense is a conflict of interests of persons holding public positions in the public administration system and having, in connection with the powers granted to them by the state, the corresponding influence that can be used by them for personal interests, including contrary to the interests of the state.

The basis for the legal regulation of conflicts of interest in any area of ​​legal relations is the establishment of the obligation to take measures to prevent the possibility of a conflict of interests arising.

So, in accordance with Art. 11 of the Federal Law “On Anti-Corruption”, state or municipal employees are obliged to take measures to prevent any possibility of a conflict of interest arising, and are also obliged to notify, in the manner determined by the employer in accordance with the regulatory legal acts of the Russian Federation, about a conflict of interest that has arisen or about the possibility of its occurrence , as soon as this becomes known.

In turn, the representative of the employer (employer), if he becomes aware that an official has a personal interest that leads or may lead to a conflict of interest, is obliged to take measures to prevent or resolve the conflict of interest.

Prevention or resolution of a conflict of interest may consist of changing the official or official position of a person who is a party to the conflict of interest, up to his removal from the performance of official (official) duties in the prescribed manner and (or) his refusal of the benefit that caused the conflict of interest, by recusal or self-recusal of the specified person in cases and in the manner provided for by the legislation of the Russian Federation.

Failure by a person who is a party to a conflict of interest to take measures to prevent or resolve a conflict of interest is an offense resulting in the dismissal of the said person in accordance with the legislation of the Russian Federation.

• when medical research is funded by pharmaceutical companies;
• when therapists try to treat family members;
• when professors have personal relationships with students.

In all these cases, people ignore their job responsibilities for personal gain.

May also arise in business or social life. This occurs when there is a discrepancy between what an employee can obtain on a personal, perhaps financial, level and their professional obligations. If the collision is disclosed and properly addressed, it will not entail any significant consequences. However, if not resolved, it can cause damage to the people involved as well as the entire organization. Therefore, recognizing potential or actual conflicting goals is critical.

Conflict resolution

Article number 11 of the federal law, which provides for combating corruption, identifies two subjects of settlement, as well as the prevention of conflicts of interest. One of them is a municipal (civil) employee. The second subject is the employer's representative.

In this regard, municipal and civil servants are vested, according to the law, with two main responsibilities. First of all, they need to take measures to help prevent any situations in which a negative phenomenon may occur. In addition, they must write a conflict of interest notice, an example of which is given below, to their immediate superior. Such a document should indicate not only the existing situation, but also the possibility of its occurrence. Moreover, a civil servant is obliged to take such a step already when he becomes aware of it.

To prevent a conflict of interest, this government representative should not maintain contacts with organizations whose activities are in an area that intersects with his official responsibilities. This does not apply to cases where he is obliged to perform such work.

As for notification of the likely occurrence of a conflict of interest in writing, the degree of personal benefit of an employee, according to current legislation, should be determined only by the official himself. His failure to take measures to resolve such a problem entails his dismissal.

Main types of conflicts

Conflicts of interest occur in every area of ​​business and in every company. Regardless of what area it exists in, how many employees it employs, or what volume of products it produces.

Let's consider the main types of conflicts of interest

:

1. Disagreements related to conflicting personal and corporate interests
   . Such conflicts may arise if, for example, the head of an organization chooses as a partner a company whose head is his relative. Often this happens not only because of friendly relations, but also for a certain fee. And other buyers at this time may offer better prices or higher quality.
2. Conflict of professional interests in business
   . Similar disputes may arise if the head of an organization, in order to fictitiously increase his performance indicators, begins to act to the detriment of the company. For example, a responsible employee of the sales department ships a large batch of products in order to increase sales volume. In this case, the delivery is made to the dubious address of the counterparty with a deferred payment. In this case, there is no guarantee that payment for the products will be made in the future.
3. Perhaps the most serious type of conflict of interest in business is disagreement between several managers of the same company
   . Each participant has his own vision of the situation, goals and ways to achieve them. Distributing responsibilities in such a situation can be difficult. Most often, such conflicts arise when a company experiences a sharp increase in profits, which can increase exponentially.

Let's assume that the organization's income has become significantly higher. Therefore, one manager wants to increase profits through sales in the region and region, as well as open subsidiaries in other countries. And the second is to invest money in improving production and equipment, improving product quality or expanding the range. This conflict of interests in business will inevitably lead to stagnation, and in the worst case, to the complete destruction of the company.

Sample notification

How should a civil servant prevent the possibility of a personal problem arising in resolving a particular issue? To do this, he will need to write a notice of conflict of interest, an example of which can be filled out below.

The document must be drawn up in the name of the boss. The following is its title: “Notice of Conflict of Interest.” The text of the document indicates the last name, first name and patronymic of the civil servant, as well as his position. After this, a situation is described that provokes the possibility that a conflict of interest may arise. For example, it may concern the conclusion by an organization of contracts with a supplier company, headed by a close relative of the official. This is followed by the employee’s agreement or disagreement to be present during a meeting of the commission created to resolve this conflict of interest. At the bottom of the notification is the signature of the person who wrote it, as well as his full name and the date the document was compiled.

Let's consider typical situations and examples of conflicts of interest in the Russian civil service.

Procedure for detecting a conflict of interest

If the head of an organization becomes aware of a conflict of interest in business, he must immediately take steps to prevent it in order to prevent the situation from worsening in the future.

Use a step-by-step algorithm if you don’t know how to act correctly and what steps to take

.

1. Conduct a trial
   .

Do not make hasty decisions without familiarizing yourself with the situation. Find out the reasons that provoked the employee to conflict. Remember that an employee cannot always act on his own initiative. Sometimes the employer can force him to act to realize his goals.

Read also:  “Such a person most often thinks badly of himself.” How to properly respond to rudeness? The psychologist explains
2. Notify your manager
   .

Inform your employer or superiors about any emerging conflict of interest in the business or its potential occurrence.

3. Create an algorithm of steps
   .

If the manager has not given any instructions on what to do with the employee who provoked the conflict situation, draw up an algorithm of actions at your own discretion and coordinate it with the employer.

4. Take all necessary measures
   .

In order to prevent or resolve conflicts of interest in business that have arisen in state-owned companies, amendments can be made to the position of the official. One of the highest degrees of punishment may be the removal of an employee from his official duties.

In private organizations, punishment is personal. For example, a reprimand entered into a personal file, a fine, demotion, deprivation of a bonus or dismissal. To choose the right punishment, take into account the losses the company suffered as a result of the conflict of interest. If you take radical measures, then rely on the requirements of the law.

5. Prepare a report to the employer
   .

Report to the company management about the results of the work done and the measures taken. If the employee has been fired from his position, discuss with the employer a candidate who can fill the vacant position from among the possible applicants. If there is none, start looking for a new employee.

Remember!

If the result of making wrong decisions is serious financial losses, the employee must compensate them. Explain to him that resolving the conflict peacefully is the best solution for everyone. Otherwise, file a claim with law enforcement agencies.

Relationships with relatives

There are examples and situations of conflict of interest in the public service in the event of an official’s personal benefit. Thus, an employee can be directly involved in resolving personnel issues regarding his relatives. In addition to close people, we can also consider other persons in respect of whom the civil servant is likely to receive benefits. Let's look at examples of conflicts of interest in municipal service:

• An employee of a government agency is part of a competition commission that considers candidates for a vacant position in his institution. One of the contenders is his relative.
• The duties of a civil servant include the implementation of certain managerial functions or issues of making personnel decisions concerning relatives or other persons close to him.
• In such cases, it is mandatory to write a notice about the likelihood of a conflict of interest. In this regard, the employer's representative must remove such an employee from those duties that involve his interaction with close people.

Conflict resolution

Psychologists and conflictologists working in the field of finding solutions to resolve confrontation situations offer the following methods of conflict resolution.

First of all, they recommend refraining from continuing the confrontation. Theorists in the field of conflictology advise preferring open competition to confrontation. In accordance with the preliminary agreement, the winner of such a competition is given the object of the conflict, and the losing side has to voluntarily give up possession of the object of the confrontation. This option is considered one of the most acceptable.

You can voluntarily cede the subject of the dispute. This method is more effective in resolving personal conflicts, since such actions on an organizational scale can lead to serious financial losses.

The most effective way is to find a compromise. It is better to make an effort to find a compromise than to waste energy on scolding. This method is relevant when the parties involved in the confrontation have the resources, time and desire to find an optimal solution that satisfies the needs of all opponents, as a result of which all contradictions will be exhausted.

Psychologists also recommend not starting a quarrel, but trying to agree on fruitful cooperation, the result of which will be equal possession of the object of the conflict by all parties.

Separately, it is worth highlighting ways to resolve conflicts of interest caused by service in government bodies. There are four such methods: preventive, information disclosure method, voluntary refusal, monitoring.

The preventive method is to prevent the emergence of a situation of confrontation of interests. This method is considered the most effective in terms of fighting corruption. An example of the described method would be the refusal of an official appointed to a position to part in the capital of an enterprise.

The information disclosure method assumes financial control. All government employees are required to annually declare income and property in their private property.

Voluntary renunciation of participation in the decision-making procedure, which is associated with the emergence of conflicts of interest. Moral views, professional ethics, and current legislation may force a civil servant to take such actions.

Monitoring is carried out in the system of government bodies by specially authorized organizations aimed at combating acts of corruption. Such organizations monitor compliance with the requirements of the legislative framework, requirements for the behavior of officials and the resolution of conflicts of interest.

Competent and timely resolution of conflicts is the key to people’s mental health, since any confrontations give rise to contradictions, division, and disharmony in the team. At the same time, conflicts are also a necessary condition for uniting the team and bringing it to a qualitatively new stage of development.

The ability to manage conflict is considered an essential skill for a successful leader. After all, as they say, ignorance of the aspects of conflict management in a team does not relieve management from responsibility.

Confrontations in organizations are classified by direction and can be horizontal, vertical or mixed.

Horizontal conflicts are caused by competition and comparison. Vertical - observed between individuals who are subordinate, that is, between superiors and subordinates. Mixed confrontations, respectively, are vertical and horizontal confrontation at the same time.

Resolving conflicts between a manager and a subordinate within a team is possible provided:

— recognition of the fact of the existence of a situation of confrontation, the presence of an opposing participant and his claims;

— a clear idea of ​​the content of conflicting interests;

— preparing opponents to accept specific general norms of behavior.

For every leader, if he cares about the prosperity of his organization, it is very important that the psychological climate in the team has a beneficial effect on the nature and quality of the collective activities of employees.

Today, one of the main conditions for the fruitful activity of a leader is considered to be his socio-psychological awareness, a component of which is conflict management preparedness and competence.

Conflict competence, competent and effective resolution of conflicts between a manager and a subordinate within a team includes:

- awareness of the nature of clashes, disagreements, conflicts between subjects;

— developing in yourself and your employees a constructive attitude towards contradictions in the organization;

— possession of skills of non-conflict communicative interaction in difficult situations;

— ability to analyze and explain emerging problem situations;

- the ability to develop useful principles of emerging confrontations;

— presence of skills in managing confrontation phenomena;

— the ability to anticipate possible consequences of conflicts;

— the presence of skills to eliminate the negative consequences of contradictions;

- the ability to constructively regulate clashes, quarrels, disputes and conflicts.

Conflict resolution forces managers to act as a third party. In other words, the boss is a mediator who seeks to restore psychological balance in the team. The manager’s activities as a mediator include assessing and analyzing the situation, as well as directly resolving the conflict.

Analysis and assessment of a confrontation situation consists of obtaining information about the subject of the confrontation, collecting information about it, studying the data obtained, checking its reliability, and analyzing the conflict situation.

The process of resolving contradictions includes choosing means for resolution, the type of mediation, implementing the chosen method, clarifying data and decisions made, reducing or removing post-conflict tension in the relationship between opponents, and analyzing the experience of conflict management.

However, today the most acute problem is not resolving conflicts in the professional sphere, but the ability to resolve disagreements that arise among teenagers.

For many years, psychologists and sociologists have been studying the problems of puberty, but to this day there are many unresolved questions. Adolescence is considered the most conflict-ridden and particularly sensitive age. Children, reaching puberty, try to live separately from adults; they create a special subculture, which is based on certain norms, moral principles, and beliefs. It is characterized by specific forms of behavior, extraordinary clothing, a unique language, original symbols, attributes and rituals. This subculture is incomprehensible to adults, who consider teenagers to be children, incapable of making independent decisions and having serious feelings. Misunderstanding among adults is one of the key components of disagreements among teenagers.

Conflicts play a significant role in the formation of new character traits and in personal transformation.

Conflict interaction during puberty occurs in three directions: teenager - teenager, teenager - parents and teenager - teachers.

Among teenagers, conflict interaction is based on confrontation, the goal of which is leadership. Here, the main factors of the conflict behavioral style are status, level of aspirations (ambition) and self-esteem.

Contradictions between significant adults (parents) and teenage children are caused by flaws in upbringing, destructiveness of intrafamily relationships, and individual psychological transformations in the development of children. A conflicting behavioral style in adolescents is observed when adults do not take into account their age-related changes, individual characteristics, when the content and form of communicative interaction between adults does not change.

Pedagogical conflicts are characterized by features related to the specifics of the educational process, differences in age and status of the parties.

An example of a conflict and its resolution at school. A high school student is characterized by poor academic performance, she is rude and aggressive in her interactions with the teacher. During class, a schoolgirl interferes with her classmates’ ability to complete the teacher’s assignments, throws pieces of paper at the children, and does not respond to the teacher’s comments.

A constructive solution to the described problem would be the following. After the girl ignored the teacher’s comments, the teacher could get out of this situation by saying something ironic to her. For example, “Olga ate little oatmeal this morning, so the range and accuracy of the throw suffers, the last piece of paper did not reach Petya.” After these words, you can continue to calmly continue the lesson further. At the end of the lesson, you need to discuss the current situation with the child, demonstrate to the girl your understanding, your friendly attitude and desire to help. In subsequent lessons, it is recommended that this student pay more attention, encourage her answers with praise, and trust her with important assignments.

Thus, we can derive a unified algorithm for the constructive resolution of school conflicts:

- first of all, you must remain calm;

- secondly, situations should be analyzed without vicissitudes;

- thirdly, it is important to maintain an open dialogue between opponents, be able to listen to the opposing side, and calmly express your own point of view on the problem that has arisen;

- fourthly, it is necessary to discover common goals and methods for solving the problem that will allow one to achieve these goals;

— fifthly, it is imperative to draw conclusions that will allow such clashes to be avoided in the future.

Conflict resolution in adolescence can be achieved in three ways: suppression, concessions (compromise) and cooperation.

Contrary to popular belief, resolving teenage conflicts through repression is not always a bad thing. For example, in difficult extreme situations. Suppression is about placing responsibility on your own shoulders in its positive sense. However, abuse of this style of conflict management leads to the development of submission due to fear, anger, secrecy, and inability to make decisions.

A compromise way to resolve the conflict process is through mutually directed concessions.

The way to resolve disagreements through cooperation is based on mutual respect between the parties, communication and constructive decision-making.

Conflict resolution can also be achieved in adolescence using the following techniques:

— creative approach (transforming a problem into a potential opportunity for yourself);

- optimal self-affirmation, which consists of attacking a specific problem, and not an individual;

— empathy;

- managing emotions;

— recognition of personal attitudes that interfere with an impartial view of the subject of the collision;

— development of alternatives;

— effective planning, development of strategy options (negotiations);

- mediation.

Performing other work subject to payment

An example of a conflict of interest in the public service is a situation when an official, as well as his relatives or other persons close to him, are going to perform or are already performing work for the organization where this employee works, under the terms of a paid civil law or other contract.

In this case, a notice of conflict of interest must also be drawn up. But at the same time, the employer’s representative does not have the right to indicate the impossibility of performing other work by this official.

An example of a conflict of interest in the public service is a situation where an employee, together with his relatives or other persons with whom beneficial interaction is carried out, performs work in a subsidiary, parent or other similar company in relation to which these employees perform managerial functions.

And in this case, a notification must be drawn up to the employer’s representative. In it, the civil servant must indicate the connections that take place between interacting organizations. The employer's representative, in accordance with the law, is recommended to remove the employee from fulfilling his duties in making management decisions in relation to the affiliated company.

An example of a conflict of interest in the civil service can be seen in a slightly different situation. It concerns the performance of work, the customer of which is the body in which the person holds a position. The employer's representative in this case must indicate the emergence of a conflict of interest. If a person does not take any measures to correct the problem, then he should be removed from the position he is replacing.

How to prevent conflicts of interest and resolve already ripe disputes

A conflict of interest or even the risk of its occurrence is very dangerous for the effective operation of a company, says Teymur Kerimov. – You don’t have to sit and wait for a fire to break out and cause losses, you need to start acting immediately.

Individual employee motivation

Kerimov advises minimizing the risk of a conflict of interest through individual motivation of employees. For example, a manager who works with clients is interested in attracting them, and the risk department is interested in building a high-quality portfolio.

To avoid conflicts of interest, recruiters should be interested not only in selling, but also in attracting the highest quality clients, and risk takers should be interested not only in the “quality” of the client, but also in the percentage of approvals, that is, when considering applications, use not a formal approach, but an individual one, - says Kerimov. – In such a situation, the main thing is to provide sellers with a flow of clients, and risk takers with tools and mechanisms that allow them to make quality decisions as quickly as possible.

An internal audit or a methodologist who will monitor violations will help evaluate the effectiveness of the motivation system.

Identifying emerging conflicts

The manager must monitor every stage of the team’s work and regulate emerging conflicts.>

It is important to attract good clients so as not to overload the analysis services with unnecessary work and allow the risk department to weed out only truly unreliable clients.

Smart search for clients for business. Select organizations that benefit from your product or service. Eliminate insolvents.

Try for free

Each employee can offer new indicators both for themselves and for colleagues, adds Kerimov. – KPI is a tool that measures performance, but blindly following it can have a negative impact on the final result.

Olga Turenko, a lawyer at the Borodin and Partners law firm, warns that the most dangerous conflict of interest is a latent one, that is, one that occurs hidden. This is why it is important to try to convince employees to voluntarily disclose conflicts.

Drawing up local regulations

Conflicts of interest can be easily prevented using local regulations. They can set out job descriptions for specific employees or a general provision on conflicts of interest for all employees. Turenko advises establishing in the job description the employee’s obligation to report a conflict of interest to his employer under threat of dismissal (Article 81 of the Labor Code of the Russian Federation).

The regulations will make it possible to oblige employees to disclose conflicts of interest, thereby making concealment of a conflict punishable, and the company will be able to manage disclosed conflicts - for example, it will remove a member of the tender committee from voting on the selection of the winner if one of the participating companies belongs to his wife. It is also useful to periodically check for conflicts of interest, says Vladimir Serkin.

The Four Eyes Rule

Victor Mironov, managing director of the Tim consulting group, advises using the “four eyes” rule, popular with his European clients. According to this rule, all important documents must be signed by two managers, one of whom can ask questions about the choice of contractor and justification of the price. The rules and procedures for identifying and verifying counterparties KYC (know your counterparty - “know your counterparties”) will help with this.

Checking counterparties for bankruptcy, arbitration cases and debts. Selection of clients and suppliers.

Try it

It is useful to make sure how long the counterparty has been on the market, what its reputation is, and whether it is connected with any of the company’s managers or employees. For Team clients, contractors are checked using a questionnaire that includes more than 30 points. This allows you to reduce the risks of conflicts of interest, non-fulfillment of contracts and tax claims.

It is impossible to protect yourself 100%, but you can reduce risks as much as possible without creating space for abuses that arise when the decision-making system is uncontrolled and opaque, says Viktor Mironov. – Traffic rules and traffic lights save lives, and following their instructions is not so difficult.

Coordination of behavior options in disputes

Alexander Vysotsky notes several ways to prevent conflicts of interest between co-owners. He advises choosing someone who will set the initial goals for the company, distributing areas of responsibility among the owners, and concluding a written agreement between all owners with their cooperation goals and functions.

In three companies I signed agreements that stated who sets the goals, how cooperation is terminated, and how shares in the company are inherited in the event of the death of one of the owners. “I spent a couple of months getting the consent of the co-owners,” admits Vysotsky.

To avoid conflicts in business, Alexandra Chirikal advises drawing up a corporate agreement, limiting the acquisition of shares in the charter, for example, prohibiting withdrawal from the LLC during the formation of the business, and drawing up a prenuptial agreement.

A corporate agreement helps partners develop clear rules of behavior for a certain period of time and propose in advance agreed upon options for behavior in a controversial situation, for example, establishing the procedure for additional financing for the further development of the company, indicating the percentage that each partner will contribute depending on financial performance indicators. In the event of losses, partners may think about increasing the authorized capital and attracting loans from company members.

It is possible to temporarily prohibit the alienation of shares in the authorized capital in favor of third parties.

A corporate agreement can provide for peaceful ways to resolve contradictions in the event of stalemates and controversial situations, such as inviting an independent negotiator (an expert, possibly a mediator) to resolve the conflict, says Chirikal. – The other extreme would be the use of an option structure, for example, if pre-established targets for the financial performance of an enterprise are not achieved, the obligation to repurchase a share of the company’s authorized capital is assigned.

The mediator advises to prevent conflicts, and if they have already arisen, to turn to professionals and try to resolve the conflict through negotiations or mediation before trial.

Linking bonuses to profits

Giorgio Parola suggests introducing the most transparent motivation system in companies, when an employee understands why he receives bonuses. In addition, the motivation system should be aimed primarily at a priority task - for example, increasing profits.

The motivation system should be as clear as possible,” explains Parola. – It is necessary to avoid complex calculations in which employees do not understand the bonus system. It should also be built on market principles, that is, correspond to the proposals of competitors. You can make a bonus below the market if it is a popular product that is easy to sell. And vice versa, above the market if the product is very difficult to sell.

Ownership of certain securities

Let's consider other cases of conflict of interest. Examples in the service of state or municipal bodies may relate to the ownership by an employee and/or his relatives of securities belonging to this organization. This must also be notified in writing. In this case, the securities must be transferred to trust management. In addition, the issue of their alienation may be considered.

Examples of conflicts of interest may also relate to situations where a civil servant has deposits in banks or other credit institutions in relation to which he exercises managerial functions. In this case, you will also need to write a notice of personal interest addressed to your immediate superior. Until the necessary measures are taken, the employee must be suspended from performing those official duties that relate to working with banks and credit organizations.

Methods for resolving conflicts of interest

If situations of conflicts of interest in business arise in an organization, you can try the following working methods to resolve

:

1. Don't give the employee too specific information. Then she will not affect his personal interests.
2. An employee of an organization voluntarily refuses to discuss issues or is removed from certain discussions for various periods of time. Even the smallest issues to discuss can have a significant impact on the creation of a conflict of interest in a business.
3. Checking and redistributing the responsibilities of an employee of the organization.
4. The employee is suspended from performing work duties for a certain time. This measure is often necessary if an employee has conflicts in his duties.

We recommend
“Methods of Conflict Resolution” Read more

5. Transfer of an employee to a position not related to a conflict of interest. At the same time, the performance of duties should not cause subsequent conflicts of interests and various disagreements.
6. The employee must place his or her belongings in trust that affect and cause conflicts of interest.
7. An employee’s refusal to benefit, which is one of the reasons for creating a conflict of interest.
8. Voluntary dismissal of an employee from the organization. At his own request.
9. Dismissal of an employee by an employer for failure to perform duties. For example, for violating the discipline rules established in the company. Failure to perform or poor quality work containing gross errors and flaws.

Receiving services and gifts

It is also possible that a civil servant or his relatives receive various benefits. These could be discounts and loans, free services, payment of travel expenses, entertainment, etc.

Such gifts, if they are provided by organizations or individuals in relation to which the civil servant currently exercises or previously exercised managerial functions, are subject to a growing conflict of interest. To avoid such a situation, it is recommended to simply not accept these benefits. If the employer’s representative becomes aware of the receipt of gifts by a civil servant, he must assess the connection of what was received with the performance of the official duties assigned to the employee, and, if necessary, take disciplinary action.

Main reasons

Interpersonal conflict - what is it in psychology

Disagreements can arise for various reasons. There are so many of them that it is impossible to list them all. The most potential ones include:

• Along with the received order, there is an opportunity to perform additional work or provide services for which an additional fee is charged;
• Personal interest may arise when owning enterprise assets, securities, etc.;
• The situation may arise when receiving gifts for services rendered or financial “thanks”;
• The situation often arises during litigation, during the division of property, etc.;
• Provision of services by former employees of government or other structures;
• Exceeding official authority;
• Providing services for carrying out various works to people who are related to government officials, without concluding a contract, out of turn, with a reduced cost of goods, etc.;
• Failure to comply with job instructions or violation of official duties during the implementation of the subject of the Agreement;
• Failure to comply with the law by civil servants, violation of the rights of individual citizens;
• Conducting public tenders with companies whose directors are close relatives of government employees. Such tenders are held for the purpose of “laundering” money and opening new financial flows, which may not be subject to taxes;
• Unauthorized assistance in resolving any issue for which a fee is charged.

Main reasons for disagreement

The sphere of education

In addition to public service, examples of conflicts of interest can be given in school. This applies to situations where a teacher, in parallel with his work activities, provides paid services.

The legislator seeks to combat such a situation when a teacher teaches a student who is studying at the school that is the place of work of this teacher. As a result of such actions, a conflict of interests arises in education. Examples of the provision of such paid services can be found everywhere. At the same time, some teachers artificially create situations in which the children’s parents or their legal representatives are forced to agree to the provision of tutoring imposed on them. Sometimes colleagues “supply” such students to each other. At the same time, they use the principle “you - to me, and I - to you.”

It is worth understanding that the law does not prohibit the provision of paid educational services. They can be provided by the school on a contractual basis. In this case, the teacher who conducts a regular lesson with the child, according to the curriculum, may well provide paid services. That is, this can be done legally only by being a representative of the contractor when concluding contractual obligations.

In what cases do the services provided by a teacher violate the norms of current legislation? This happens when the following conditions are met:

• the service provided by the teacher is informal and paid;
• the student is studying in the educational organization where the tutor works;
• the provision of a paid service becomes the cause of a conflict of interest for the teacher.

If all the above conditions are met, additional training does not comply with legal requirements and is prohibited. This also applies to those cases when the teacher does not teach a particular student. Indeed, in this case it is impossible to prove the absence of collusion among teaching staff.

A conflict of interest in the field of education is the contradiction that arises between professional responsibilities and a person’s personal benefit. After all, upon arriving at school, a teacher is faced with the possibility of acquiring material or intangible benefits. This is the reason for his failure to fulfill his professional duties or their improper performance.

What kind of situation is this

A conflict of interest is a situation in which an employee has a personal interest, and he begins to try to gain his benefit by any means, regardless of the fact that the result may lead to financial or any other losses in the company. In the labor law of the Russian Federation there is no definition of the concept of “conflict of interest”. This legal uncertainty often becomes the reason for the impossibility of solving this problem at the enterprise.

Concept and definition in psychology

In psychology, this concept has 2 varieties:

1. Organizational;
2. Personal.

For your information. An organizational conflict arises when an enterprise providing services to the Customer cannot objectively perform the work specified in the Service Agreement due, for example, to competitive advantages.

The definition of a personal conflict can be understood as a situation where the personal interests of an employee contradict the labor legislation of the Russian Federation, for example, when receiving financial benefits. Most often the law “On Corruption” is violated. There are no pedagogical laws for solving and regulating this process, unlike the previous type.

Personal gain

Disagreements regarding conflicts of interest

Disagreements in conflicts of interest usually arise. Although this depends on several factors:

• personality type of the participant in the conflict of interest;
• civility and competence of the participants in the situation;
• relationships between employees.

Personal Interest

Self-interest is often present in disagreements. Personal interest involves obtaining financial benefit. Most often, this situation arises between relatives working at the same enterprise. The anti-corruption law should spell out this situation and ways to solve it. This concept is also mentioned in Article 19 of the Federal Law “On Civil and State Service”.

Personal Interest

Charter of the company

According to Article 12 of the Federal Law of February 8, 1998 No. 14-FZ “On Limited Liability Companies” (hereinafter referred to as Law No. 14-FZ), the constituent document of the company is the company’s charter.

In 2015, changes were made to the above norm that allow the company to act on the basis of a standard charter (paragraph 2 of Article 12 of Law No. 14-FZ).

At the same time, a standard charter can hardly be considered as an effective tool for preventing corporate conflict. For these purposes, the charter must be adapted to a specific company, taking into account not only the specifics of its activities, but also informal issues, such as the relationship between the founders, their business style and reputation.

The company's charter must regulate:

• procedure for election (appointment) and change of senior management;
• competence of management bodies;
• special conditions and procedure for concluding individual transactions;
• the need for approval of transactions by one or another body of a legal entity;
• criteria for major transactions and interested party transactions;
• alienation of shares in the company to participants and third parties;
• pre-emptive right to purchase a share;
• transfer of shares to heirs and legal successors;
• providing participants with additional rights or giving them additional responsibilities, and so on.

Thus, the charter of the company must regulate the relationship between the participants of the company, as well as between the participants and the top management of the company. The provisions of the charter must be applied consistently throughout the entire period of operation of the organization, making changes and additions to it if necessary.

Bibliography

1. Ivanova L.L. Conflict of interests in the state civil service and features of its resolution // State and municipal management. Scientific notes of SKAGS. – 2013. – No. 4. – P. 93-101.
2. Kabashov S.Yu. Resolving conflicts of interest and combating corruption in the civil and municipal service: theory and practice: textbook. – M.: INFRA-M, 2011. – 196 p.
3. Kazina T.V. Conflict of interests in the system of state civil service // State power and local self-government. – 2015. – No. 9. – P. 48-53.
4. Kandybin R. The essence and typology of conflict of interests in public service in the military organization of the state // Military law: electronic. scientific ed. – 2013. – No. 1. – URL: https://www.voennoepravo.ru.
5. Conflict of interests in the state and municipal service, in the activities of the organization: causes, prevention, resolution: scientific and practical manual / resp. ed. A.F. Nozdrachev. – M.: Institute of Legislation and Comparative Law under the Government of the Russian Federation, 2016. – 224 p.
6. Kostyuk O.N. Causality of conflict of interests in the public service // Young scientist. – 2012. – No. 5. – P. 337-340.
7. Kudashkin A.V., Kozlov T.L. Conflict of interests in the state municipal service: object, subject, subjects // Current problems of economics and law. – 2010. – No. 3(15). – pp. 156-163.
8. Kudashkin A.V., Kozlov T.L. The procedure for regulating conflicts of interest needs to be improved // Russian Justice. – 2010. – No. 10. – P. 45-50.
9. Maksimenkova E.A. Conflict of interest in the public service // // Advisor to the public sector accountant. – 2014. – No. 2. – P. 90-100.
10. Nozdrachev A.F. Conflict of interest: a new “universal” regulatory legal definition of the concept in anti-corruption legislation. – URL: https://branch-prava.rf/article/22819 (posting date: 02/28/2017).
11. On the joint service in the internal affairs bodies of employees who are closely related: letter of the Ministry of Labor of Russia dated August 28, 2014 No. 18-2/B-599. The document was not published. SPS Consultant-Plus.
12. Soloviev A.V. Conflicts in the public service: typology and management: educational and practical guide. – M.: Alfa-Press, 2008. – 292 p.
13. Shilkin A.M. Optimization of mechanisms for resolving conflicts of interest in the public civil service // Management in modern systems. – 2014. – No. 2. – P. 18-27.
14. Shchekoldin S.Yu. Complex aspects of the regulatory understanding of the category “conflict of interest” // Vestnik VGU. Series "Law". – 2009. – No. 1. – P. 210-220.

What the Ministry of Labor recommends

The methodology of the Ministry of Labor applies to organizations that act as customers under 44-FZ and 223-FZ, and recommends a set of additional measures to prevent bribery, which includes:

1. Appointment of an employee (or employees) responsible for the implementation of measures, whose responsibilities include the prevention of corruption.
2. Training an employee on a training course in the field of procurement.
3. Providing the responsible person with access to information that is relevant to procurement.
4. Carrying out preventive measures.
5. Comprehensive data analysis.
6. Preparation of a competent conclusion and transmission of information to the head of the company and the tender commission.

IMPORTANT!
Not every violation committed during a procurement contains a corruption component.