HomeProductsHRM/PayrollConflict of Interest | Definition, Categories, Factors, and Impact

Conflict of Interest | Definition, Categories, Factors, and Impact

In business, there is a term conflict of interest. This relates to the nature or attitude of workforces in a company such as employees, managers, and other positions. Conflicts of interest are very common in a business because of the different nature of each individual in each company and also the different opinions of each individual. These things can make the work atmosphere bad which will have an impact on decreasing employee motivation. For that, the business owner or manager needs to know how to resolve the conflict in the interests of the company. Usually, a business or company already has policies and procedures to identify and resolve a conflict. Because conflicts must be avoided or resolved if they have occurred.

Conflict of interest

Table of Contents

What is a Conflict of Interest?

Conflict of interest is a situation in which an organization prioritizes personal interests over public interests without considering the values ​​of honesty and fairness. A conflict of interest occurs between two actors, known as the principal and the agent. The principal is someone who assigns responsibility or obligations to the agent. This relationship can occur between managers and employees, commissioners and directors, leaders and members, and others.

In the context of an organization, conflict of interest occurs when someone does something without the interests and goals of the organization and ignores the ethical code. This usually happens when a person holds a very important position or title in the company and uses that position to resolve issues that are unfair to other company employees. Conflicts of interest can cause employees to act outside the interests of the company. The emergence of a conflict of interest is bad for the reputation and image of a company.

Category Conflict of Interest

1. Family conflicts of interest

This category of conflict occurs when family members receive a special treatment based on family relationships with other people in a business. The general term for this category is nepotism.

2. Conflict of interest romance

This category of conflict occurs when a person’s romance affects a treatment within the company. This can happen because of someone’s liking for employees which will have an impact on salary increases or special treatment. Therefore, company owners must be aware and selective about this incident because it can damage the company’s image.

3. Financial conflicts of interest

This conflict occurs when an employee or other position benefits from a monetary payment. The purpose of obtaining benefits such as influencing decisions or actions is to provide a treatment that benefits the employee. This can happen because they do not have enough salary so they commit fraud against the company. To manage company finances, you can use the Accounting System from HashMicro.

4. Hidden conflicts of interest

The secrets and also interests of a company must be kept unknown to the public. When employees intentionally share confidential company information with other companies, it can cause harm to an organization or company. To safeguard company assets, you can use Asset Management Software.

Read also: Pitching: Powerful Strategies to Increase Customers

download skema harga software erp
download skema harga software erp

Why does a Conflict of Interest Occur?

Some of the factors that cause conflicts of interest are:

  1. Having a personal or business interest
  2. Relationships with relatives and family
  3. Relations with representatives of the parties involved
  4. Relationships with those who work and receive salaries from those involved
  5. Relations with parties who provide recommendations to parties involved
  6. Relationships with other parties prohibited by the provisions of laws and regulations

Some things that can trigger factors for the conflict of interest were:

  1. Double job
  2. Power and authority
  3. Affiliate relationship
  4. Personal interests
  5. Weaknesses of organizational system
  6. Gratification

Impact of Conflict of Interest

Conflicts of interest in the workplace can lead to employees earning a bad reputation, poor relationships with coworkers, and ultimately potential termination. After that, the impact is that people don’t trust your business anymore, which causes the company’s reputation and revenue to decrease. In addition, this can also cause the work atmosphere to become uncomfortable which has an impact on the loss of enthusiasm and motivation of employees to work.


Conflict of interest or conflicts of interest you must know when you enter the workforce. It is important that you do not use your position or relationship arbitrarily for personal gain. You also need to know the factors why conflicts of interest can occur so that in the future you can avoid them. Conflicts of interest clearly damage the image of the company or the reputation and internal state of the company.

Conflict of interest

In addition to avoiding conflicts of interest, you can also improve employee performance by HR Software from HashMicro. This system allows you to manage payroll, attendance lists, as well as other operational activities. In addition, with HRM – Advanced you will also be able to manage recruitment, KPI, training, employee evaluation, employee loans with just one application. Schedule a free demo now to implement this system in your business.

Interest in getting savvy tips for improving your business efficiency?

Muhammad Syahrian
Muhammad Syahrian
Content Writer Intern at HashMicro. Passionate and hardworking person to develop my marketing skill.


Please enter your comment!
Please enter your name here

Looking for software system to improve your business efficiency?

Get a free consultation with our business expert by filling in this form!


Typically replies within an hour

Looking for a Free Demo?

Contact us via WhatsApp and let us know the software you are looking for.

Claim up to 80% Productivity Solution Grant for various HashMicro Software!
Book a Demo by WhatsApp