Unsurprisingly, recruitment decisions come under plenty of scrutiny and cause considerable damage if they are seen to be influenced by outside factors. One can assume it caused no small amount of humiliation for both James Caan and the coalition when it was revealed in June 2013 that Hannah Caan, the new social mobility tsar’s daughter, had landed three jobs at his companies – especially embarrassing as it followed hot on the heels of a statement from Caan that parents shouldn’t help their children secure work. While the former Dragon staunchly denied that his daughter secured positions on anything but merit, the episode does underline exactly what it is that makes these conflicts of interest so incendiary.
Obviously, a conflict of interest casts a much broader shadow than is covered by just nepotism. Any personal factor that could compromise or influence a recruiter’s decision represents a potential conflict. Beyond any form of friendship, familial connection or relationship between the applicant and recruiter, there are other cases that could unfairly sway a hiring decision.
“One thing would be if they had any kind of financial interest in the outcome of the hiring process or they had a financial relationship with the applicant,” comments Claire McCartney, adviser at the Chartered Institute of Personnel and Development (CIPD). But it isn’t just positive recruitment decisions that might be influenced: there’s also a risk that passing over an applicant could be based on other individual biases. McCartney continues: “Another factor would be if they had a difficult or an acrimonious relationship with any of the applicants.”
In Caan’s case, the issue seems to have been little more than a source of embarrassment, but that doesn’t mean there can’t be real damage in proven cases where a conflict of interest has influenced a decision. Aside from presenting all manner of legal risks, it can also have a strong impact on an enterprise’s reputation.
Unsurprisingly, public perception of these sorts of conflicts of interest are very unforgiving, particularly with regard to high-profile roles, and if a poorly made decision comes under public scrutiny it can have huge ramifications for the brand. “It would obviously impact upon whether they’re seen as a good employer of choice; whether they’re seen to be fair, open and transparent in their recruitment process,” says McCartney.
But this knock to confidence in the company doesn’t only affect people on the outside. “You’ve got the damage internally, in terms of other team members, who perhaps know that things have been negatively influenced by some sort of relationship,” explains McCartney. “And that can run quite deep.” When staff begin to question the even-handedness of an influential figure’s approach, it can have a huge impact. “If people feel there are things that aren’t fair or there are procedural injustices, then it can affect people’s outlook and productivity.”
Of course, being aware of the potential risks involved doesn’t mean a founder or exec-suite manager will be able to personally keep a watchful eye over every recruitment decision. As with any element of the business, mitigating against the risks posed by conflicts of interest is a case of educating staff and making sure you have the right procedures in place to allow staff to act autonomously.
“The best way organisations can approach it is to have clear policies around what potential conflicts of interest might look like and how staff can avoid them,” McCartney says. However, we all experience conflicts of interest at points in our lives and learn the hard way that it’s not always something that can easily be glossed over or ignored. “If they’re not able to avoid it, the right guidelines need to be in place to support staff, so they can disclose that conflict of interest and take themselves out of the process.”
As with other policy areas within a business, while you need to ensure you do everything you can to ensure you’re protected, clarity and simplicity are key if it’s going to make it easier for staff to avoid potential conflict situations. “It’s about having clear policies and codes of conduct but not making that too complicated or people won’t use them,” comments McCartney. “You need something quite robust so it’s almost like a checklist that people could potentially use.”
Inevitably, there also needs to be recourse to a more formal structure in the rare cases a conflict of interest may slip through the net. If you have firm procedures and policies in place, it should be categorically clear what an enterprise’s stance is on taking advantage of a recruitment position for personal interest, and then the familiar ground of the established disciplinary procedures should offer a clear path forward. Feeling confident in these policies will also allow other employees to feel more comfortable raising potential conflict cases, as they’re aware there is a reliable framework in place.
Given that, upon occasion, experiencing divided loyalties is an inevitable part of life, finding oneself encountering some degree of conflicting interests is inescapable. As evidenced by Caan’s case, the majority of these situations are likely to be relatively innocent and more discomfiting than something actively damaging. However, this doesn’t mean that it’s worth ignoring potential conflicts of interests entirely, as, often, they can be the thin end of the wedge and only lead to further trouble down the line. Therefore, a little training and prep work can ensure that the best interests of the business are what’s guiding everything forward. 
