Conflicts of interests and ethical decision making

The term "conflict of interest" has been present in poetry since early times, but its usage gained prominence in the 19th century due to the growing global interest in transparency and integrity within the political, administrative, and business domains. It involves the decision-making process where personal interests intersect with the interests of the greater public.اضافة اعلان

That said, what does ethical decision-making mean?Well, it entails making choices based on moral standards and values such as justice, honesty, integrity, respect, transparency, and social responsibility. It involves a thorough analysis and evaluation of the situation or problem, taking into account the ethical consequences and potential impacts on individuals and society as a whole.

Some influential individuals within organizations mistakenly believe that ethical decision-making solely involves strict compliance with internal laws and regulations or adherence to internal audit and compliance procedures. In my opinion, this belief misunderstands the nature of ethical decision-making.

Ethical decisions require practical application and a balanced consideration of interests and influences of all parties involved. The significance of ethical decision-making lies in its role in building trust, fostering a positive reputation for individuals and organizations, and contributing to sustainable development and social justice.

Promoting professional ethics, including transparency, integrity, responsibility, impartiality, justice, and cooperation, can help reduce corruption and safeguard the organization's interests. Relying solely on internal or external audit functions or compliance functions within the organization or directly linking them to shareholders or owners is insufficient.

When a conflict of interest arises, it can lead to various disadvantages and negative repercussions. For instance, it can result in a loss of confidence in organizational management, tarnishing their image and reputation due to the impact on professional decision-making. These negative effects, in turn, affect the public interest and the overall interests of organizations.

Conflicts of interest can also have legal and financial consequences. Most importantly, prioritizing personal interests can hinder opportunities for development and progress. Ignoring chances for professional growth, innovation, and utilizing available potential due to a focus on personal interests impedes progress and prevents organizations from fully benefiting from their capabilities.

Within this context, another term that emerges is "professional ethics," which encompasses the ethical responsibilities and obligations that professionals must uphold. It establishes various rules and principles of behavior to ensure the achievement of the public interest and organizational interest, as well as the preservation of integrity and trust within the profession. Professionals can make ethical decisions in light of the challenges posed by conflicts of interest, thereby guaranteeing honest and responsible professional conduct.

For instance, in the field of medicine, physicians must act in the best interest of the patient and avoid being influenced by financial or personal interests that may compromise the quality of medical care. In the field of law, lawyers must avoid conflicts between the interests of their clients and the interests of other parties involved in the case. And in the realm of internal audit and compliance, professionals should openly and transparently disclose any potential conflicts of interest and ensure alignment with internal regulations and shareholders' interests.

This fosters integrity, trust, responsibility, and objectivity in their professional work.

It is also crucial to distinguish between what is ethical and what is legal. While they may align at times, they often differ, especially when ethical decisions become entangled and confused within them. Although both concepts are used to define standards of behavior and distinguish right from wrong in organizations, they differ in nature and application.

In Jordan, corporate oversight requires joint-stock companies to adhere to governance standards by establishing independent boards of directors and appointing independent financial commissioners.

Ethical behavior directly relates to individual and collective values and morals, and the ability to differentiate between right and wrong, acting in accordance with those values and standards. Ethical behavior may sometimes be considered illegal, as it represents actions that may or may not be acceptable in different contexts.

On the other hand, legal behavior pertains to adherence to laws and regulations that govern individual behavior within organizations. It requires compliance with applicable laws and regulations and entails legal responsibility for unlawful actions. Generally, behavior is ethical when it aligns with an individual's perceived morality, correctness, and conformity with values and standards. Behavior is legal when it adheres to the laws and regulations defined by the relevant authorities.

For instance, the misuse of a right may be legally justified when supported by a specific provision, but it is considered unethical when justified solely by procedures. Consequently, violating the provision and procedure is deemed illegal or immoral behavior. Violation of a provision necessitates punishment, while violation of a procedure requires procedural reform despite its unethical nature.

So where does this leave us in terms of conflicts of interest and the link between ethical and legal behaviors in administrative practices?

Well, this conflict intensifies as the potential for conflicts of interest increases. In such cases, individuals with authority may prioritize their immediate and personal interests over the interests of the organization, individuals, and society as a whole, which is known as the agency theory.

From a practical standpoint, administrative or financial corruption, for example, is both unethical and a violation of professional standards. It is also contrary to the law since corruption involves the abuse of power, which may result in personal gain at the expense of the organization's interests. Corruption encompasses activities such as bribery, fraud, document forgery, and various forms of exploitation.

Promoting professional ethics, including transparency, integrity, responsibility, impartiality, justice, and cooperation, can help reduce corruption and safeguard the organization's interests. Relying solely on internal or external audit functions or compliance functions within the organization or directly linking them to shareholders or owners is insufficient.

In countries committed to combating corruption, individuals are appointed as employees whose primary responsibility is to blow the whistle or report indicators of administrative or moral corruption, conflicts of interest, or ethical lapses within their organizations. These employees are provided with adequate protection to carry out their work without fear of reprisal.

In Jordan, corporate oversight requires joint-stock companies to adhere to governance standards by establishing independent boards of directors and appointing independent financial commissioners. These measures aim to ensure a fair and equitable working environment while adhering to a code of conduct.

Several studies indicate a positive relationship between work ethics, combating financial and administrative corruption, and increasing the severity of punishments for such actions.

The key findings of these studies can be summarized as follows: curbing corruption requires promoting a culture of integrity, transparency, accountability, and disclosure; enhancing moral awareness among workers and their role in protecting their organizations; and providing continuous training to executive leaders on ethical decision-making.

And employees who possess sufficient knowledge and understanding of the risks and negative effects of corruption are more likely to act ethically and report unethical practices within their organizations.




Jehad Y. Al-Qdeimat is an HR manager for several companies in Jordan and the GCC. He is a PhD dissertation researcher in business management.


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