There are 3 basic tools you need to have in your conflict of interest ‘toolkit.’
First, you need to know the definition of conflict of interest:
“We can define a conflict of interest as a situation in which a person has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties as, say, a public official, an employee, or a professional.”
(Source: Chris MacDonald, Michael McDonald, and Wayne Norman, “Charitable Conflicts of Interest,” Journal of Business Ethics 39:1-2, 67-74, Aug. 2002. p.68)
It is worth noting how broad the concept is. Conflict of interest is not just about money. It is about the presence of factors — any factors — that a reasonable person might think is likely to bias a decision-maker’s judgment.
Second, you need to understand the significance of conflict of interest:
It is crucial to see that a COI is a situation, not an accusation. Being in a COI is not the same as being corrupt, and pointing out that someone is in a COI is not the same as accusing them of bias or lack of integrity.
A COI, if not dealt with properly, may leave doubt about the objectivity of a particular decision-making process. This is bad because it can leave vulnerable individuals in doubt about the loyalty of those sworn to protect their interests. But even more importantly, it can render entire organizations and institutions suspect.
Third, you need to be prepared to take action on conflict of interest:
For individuals, the standard advice for dealing with conflict of interest is:
1) Recognize it;
2) Disclose it;
3) Remove yourself from the decision-making, and ideally from the entire discussion.
For organizations, the three keys are:
1) Have a good, clear, up-to-date COI policy in place. (See: Advice for writing a conflict of interest policy.)
2) Make sure all employees understand the COI policy and its significance;
3) Foster a culture that is ready to recognize COI when it happens and to deal with it in a non-accusatory way.
For more insight, see also:
Conflict of Interest: What is it, why does it matter, and what should we do about it? [PDF] (presented to the Canadian Centre for Ethics and Corporate Policy, April 5 2011).
See also: Conflict of Interest, in the Concise Encyclopedia of Business Ethics.