A conflict of interest, Accountability, Back to basics, Conflicts of interest, Ethics, Grey areas, Kellyanne Conway, Leadership, Matt Hancock, Motives, Nev Power, Not so grey areas, Patrick Lencioni, Responsibility-centered leaders, Reward-centered leaders, Scott Morrison, Shinzo Abe, The leader's motive, The UK Coronavirus Vaccine Taskforce
For leaders serious about their influence and impact on others, a wise approach is to get Back to the Basics when facing conflicts of interest – whether real or perceived – and grey or not-so-grey areas.
Recently our team began working on strengthening and enhancing our relationships. We have not taken our team synergy for granted. Despite genuine respect for one another and the confidence that we can count on each other to work well towards our goals, we are fully aware that relationships require constant reminders, tending and nurturing. It includes leaning into discomfort and having crucial conversations.
The Leader’s Motive
As leaders, we need to ask ourselves why we are in leadership, or why we want to be in leadership. Reward-centered leaders believe that being a leader is the reward for their hard work – they expect the leadership experience to be pleasant and enjoyable, where they have the freedom to choose what they really want to do and avoid anything mundane, unpleasant or uncomfortable. However, responsibility-centered leaders believe that being a leader is first and foremost, a responsibility – they expect the experience of leading others to be challenging, requiring hard work and involvement even in areas they may not enjoy, while at the same time acknowledging that leadership is not without elements of personal gratification. Leaders struggle with both approaches but one of the two motives will be the predominant style. Given that the leader’s motive will have a profound impact on the success of the leader and the organisation he/she leads, the winning approach is that of the responsibility-centered leader.
We also know that when we manage people, simply managing the team as a whole is not enough, even if we do it regularly. Time also needs to be set aside for leadership team development, as well as individual team members. Leaders who manage to build strong, successful teams do not hesitate to lean into discomfort, and are at ease with holding difficult and uncomfortable conversations, whenever necessary. They also ensure that meetings are held intentionally and productively, and that employees are communicated to regularly and consistently.
These truths are elaborated in an excellent fable I read some time last year, in a book which deserves more attention, The Motive: Why So Many Leaders Abdicate Their Most Important Responsibilities (A Leadership Fable) by Patrick Lencioni. A very quick read, it has principles which are simple yet not easy to implement, as they require commitment and consistency; they are time-consuming yet truly worthwhile.
Healthy Work Relationships
Our team has also realised that a good work relationship is not only a mutual or two-way exchange; it often involves one party to be willing to contribute or share more with the other. Far from being a dumb move, it is actually highly intentional and strategic. When the other party sees that we are genuine and big-hearted, including willing to share ideas, it builds trust and good will, and will often be reciprocated, in a healthy collaboration. (We are of course talking about healthy work partnerships or alliances. Any party that is constantly opportunistic at the expense of others should however be avoided like the plague.)
Grey Areas, Conflicts of Interest and Accountability
Yet while working on mutually beneficial relationships, there is another key issue in work or business relationships which needs to be addressed, especially for those in leadership. It is corporate governance, and more specifically, so-called “grey areas”, conflicts of interest and the need for accountability. These are crucial issues as we strive to be a team of leaders who are intentional about our impact in our respective spheres of influence. It is however interesting and disturbing how despite clear guidelines, a number of governments, organisations and leaders keep getting caught in conflicts of interest, with the convenient excuse that they are “grey areas”. Sadly, there are enough people who believe they can get away with wrongdoing. Keeping abreast of the news no matter where we live around the world would prove this point time and time again.
Most recently, the UK health secretary made the news when he bowed to pressure and resigned, following the shocking revelation that he was in a secret extramarital affair with his closest aide, a woman described to have “access to lots of confidential information”. The hypocrisy of the UK health secretary’s mantra of “hands, face, space” on social distancing has understandably hit a raw nerve with tax payers, after the discovery that they have been funding his aide’s at-least-£15,000-a-year role as a non-executive director for his department, with scrutiny over its operations. The brother of the aide, an executive at a private healthcare company, has also reportedly won a string of NHS (National Health Service) contracts.
Conflict of Interest
So, just to be on the same page, what exactly is a “conflict of interest”?
According to the Cambridge Dictionary, a conflict of interest is “a situation in which someone cannot make a fair decision because they will be affected by the result: ‘I need to declare a conflict of interest here – one of the candidates for the job is a friend of mine.’“
Another way of describing a conflict of interest is when a work situation benefits an employee in a way that also affects the organisation or institution. Employees are bound through the organisation or institution’s “code of conduct” to act in the interests of their employer and not for their own personal gain. It is wise for employees not to enter into a situation where their actions might create a conflict, whether it is actual, potential or perceived. Afterall, perception is reality.
Here are some examples of conflicts of interest:
At the Personal/Relational/Interpersonal Level
- Failing to investigate a subordinate or colleague’s wrongdoing because they are a friend or relative.
- Reporting to a supervisor who is also a close friend or family member.
- Taking advantage of confidential information learned on the job for your own benefit.
- Hiring an unqualified relative or preferring the relative over other strong candidates to provide services your company needs.
- Failing to disclose that you are related to a job candidate the organisation is considering hiring.
- Dating or having a romantic relationship with a supervisor or subordinate.
At the Organisational or Business Level
- Making a purchase or business choice to boost a business that you have a stake in.
- Cashing in on a business opportunity that your company might have pursued.
- Starting a company that provides services similar to your full-time employer.
- Accepting payment from another company for information about your employer.
- Sharing confidential information about your employer with a competitor.
- Doing business or work for a competitor.
- Accepting a favor or a gift from a client above the amount specified as acceptable by the company.
The list is not exhaustive, but the examples are certainly helpful illustrations for us to navigate our work life, especially since all of us have some form of influence in different areas of our lives.
Conflicts of Interest in Politics
Beyond the organisation or institution, and at the national level, a conflict of interest would arise if a government were getting a monetary, political or other benefit while acting against the public interest. Government decisions should afterall be guided by public interest – by what is believed to be most beneficial to the general welfare of society. Therefore, a conflict of interest arises when the private interests of a politician or official clash or coincide with that public interest. The key question is whether private or personal interest could influence, or appear to influence, the decisions officials have to make in their working lives.
Overestimation of Virtue or Open Defiance
Many leaders – whether at work, in business or in politics – have succumbed to the temptation of crossing the (red) line, because they have over-estimated their own virtue and self-restraint; or made light of “red flags” and perceived “insignificant” breaches of conduct right at the beginning. Unfortunately, not a small number act in open defiance, willfully and deliberately ignoring guidelines and boundaries that keep them safe.
A Worldwide Problem
Apart from the incident already mentioned, examples of conflicts of interest abound in the news, such as how the UK’s Covid-19 advisers to the coronavirus vaccine taskforce have been found to have financial interests in pharmaceutical companies receiving government contracts.
In 2017, a high-ranking government official in a self-styled “free commercial”, encouraged TV viewers to purchase items from the clothing line of the businesswoman daughter of the sitting President of the United States, who also happened to be one of his advisors.
Yet another example is when leaders in congress or the legislature have substantial investments or holdings in firms that their legislative actions affect. It is possible for members of Congress in the USA “from both sides of the aisle” to use their influence to benefit the firms in which they invest. In fact, in 2008, the financial institutions in which key committee members owned stock received favourable bailouts in the “Emergency Economic Stabilization Act”.
Interestingly and tellingly, a nearly three-quarter increase in members of Congress who held Apple stock from 2007 (22 people) to 2008 (38 people) was followed by a nearly 50% reduction in lobbying intensity the following year (2009). For some time now, savvy companies, such as those in the tech and big pharma industries, are increasingly strategic in their relentless pursuit of stronger revenues, and they have discovered that the owning of stock aligns the interests of the firms with those of their stock-holding lawmakers. A happy consequence for these companies is that they get to substantially reduce their expenditure on lobbying.
Firms also donate to election and re-election campaigns in what are seen as “quid pro quo” arrangements, which have a direct impact on the personal interests of individuals in Congress.
Meanwhile, over in the southern hemisphere, Down Under, controversy began escalating in 2020 regarding potential conflicts of interest among the commissioners handpicked by the Prime Minister to provide advice at the height of the coronavirus crisis. All but one of the commissioners were being paid for their advice, out of the National Covid-19 Coordination Commission (NCCC) budget of more than $5m. The leadership position of the chairman of the NCCC with ties to a gas company raised concerns about a potential conflict of interest because the commission has been promoting gas development as a key way to boost economic growth after the Covid-19 crisis. While he had stepped aside from his role as deputy chairman of the gas company, the chairman of the NCCC acknowledged that he had not recused himself from NCCC discussions about developing gas during the Covid-19 recovery.
In late 2019, the then Prime Minister of Japan came under fire from opposition politicians for inviting his political contacts to a publicly-funded official government event, the annual cherry blossom party; the party was subsequently cancelled amid accusations of cronyism. In a damning indictment, government bureaucrats reportedly shredded the list of attendees on the same day the question was raised by an opposition lawmaker. Such conflicts of interest have been enough to bring down Japanese prime ministers in the past.
Worldwide, and across organisations, there are not enough political or business leaders who automatically and responsibly recuse themselves from working on issues that have a potential conflict of interest, including those involving their work history or business interests. Needless to say, such conflicts of interest further undermine public trust.
We know that nobody is perfect. And because we understand human nature, it is therefore crucial that we set in place the necessary safeguards to prevent conflicts of interest. Even at a simpler level that does not involve high-brow politics, there are relatable scenarios in our more mundane lives.
The following is a fictional account with some slight similarities to the current scandal involving the recently ousted UK health secretary, but it was uncannily written before the incident, perhaps because it is a familiar scenario around the world – it aims to illustrate the pitfalls of conflicts of interest as well as when concrete actions are not taken to deal head-on with these conflicts and so-called “grey areas*:
Nightmare Case Study
Tom, a man known as “a visionary with many talents”, is hired to be the CEO of a multi-national corporation (MNC) that seems to be past its heyday. Over the course of only a year, Tom skillfully forms a strong team of senior executives, and through them, restructures the company, putting key systems in place, turning around the company to be highly profitable once again. The Board and shareholders adore Tom as the company’s share value and returns have tripled.
Then one of Tom’s trusted senior executives, Bill, the Director of Sales, retires from the company, leaving his position vacant. During the interim, a few high-potential executives, including Sally and Nicole, are hired to beef up the operations. Meantime, the company needs to fill Bill’s position urgently. As job applications flood in, Tom’s fiancée, Tina, finds out about the job and applies for it. Those involved in the recruitment and selection process are three of Bill’s direct reports, John, Sarah, and Peter. While they are aware of Tom and Tina’s relationship, they are strongly encouraged by Tom to consider Tina over the other job candidates. Sarah feels uneasy about the situation and shares her concerns with John and Peter. But her colleagues shrug their shoulders and admit that they would rather not “rock the boat”, as Tom is the star of the company, and they would be foolish to be in his bad books. They also start making excuses that hiring their boss’ fiancée isn’t a big deal, as they have already met her several times before and she has the required skills on paper.
Eventually, Tina gets the job, despite Sarah’s continued unease. Tina proves to be driven and highly confident, and she often out-talks everyone, seeming to be privy to all kinds of confidential information and having much more direct access to Tom, even in comparison to Tom’s most trusted lieutenants in his senior management team, John and Peter. Tina’s subordinates Sally and Nicole are intimidated by Tina, and find themselves stressed out by Tina’s hard-driving, top-down management style. They also know Tina does not like to be contradicted. Whenever she is unhappy, Tina sends a chill down their spine by simply ceasing all conversation and giving them a cold hard stare. Nobody utilises the company’s sick leave even when they are visibly unwell. When Sally fills out a form to apply for a day off to secretly see a doctor about her work-related stress, Tina flatly turns down the application, citing the busy sales period. A month later, even when her team of executives knows Tina has made a series of errors regarding some sales numbers and projections, they remain silent as she deftly covers the matter up. Neither Sally nor Nicole, or anyone on the company’s payroll, including Peter, the Director of HR, feels comfortable and safe enough to bring the matter of the cover-up to anyone, least of all, Tom. John, who is Tina’s assigned “mentor” in the company, soon learns about the serious errors that have been covered up, but he feels uncomfortable confronting Tina about the matter too. He also knows that while he is her designated “mentor”, since both of them are at the same pay scale, her annual performance appraisal, like his, will still be signed off by Tom, their boss and CEO. Nobody wants to lose their job.
*The above case study is a work of fiction. Any resemblance to actual persons, living or dead, or actual events is purely coincidental.
Questions for Reflection and Appropriate Action
- Are you able to identify the conflicts of interest in this case study? What are they?
- What are some ways to deal with these conflicts of interest?
- “Prevention is better than cure.” What are some helpful measures that can be put in place to prevent such conflicts of interest in our respective organisations?
- Even with the establishment of clear rules, standards and codes of conduct, what would you recommend to ensure the adherence to these guidelines and greater accountability?
- How can we ensure that those in office and even post-office do not derive any personal advantage from access to confidential information?