Holiday Disclosures: Avoid Conflicts of Interest During Gift-Giving Season 

Learn the fundamentals of a successful conflict of interest management program

‘Tis the season… For office holiday parties, gift exchanges, team celebrations, and conflicts of interest. Although the former are much more fun and festive than the latter, it is important to remember that the holiday season is jam-packed with potential conflicts of interest, placing a magnifying glass on your Gift, Travel, and Entertainment (GT&E) policies. Have you taken a fine-tooth comb to your GT&E policy lately? Have you updated your Conflict of Interest (COI) policies? Even though everyone is shifting important meetings and conversations until after the holidays, this is one topic that should be in the mix now. Consider this your invite to the most festive ethics & compliance party of 2021!

Common Conflicts of Interest

Gifts & Hospitality

  • A procurement manager accepts season tickets from a potential vendor
  • An elected official goes on a private vacation paid for by a CEO

Personal Relationships  

  • A supervisor is involved in a romantic relationship with a direct report
  • A manager sits on the hiring committee for a position for which his nephew is applying

Personal Financial Interests  

  • A manager is a major investor in a company he selects as a supplier
  • An auditor owns stock in the company he is auditing

Outside Employment/Personal Business Interests  

  • An employee performs consulting work for a competitor of her full-time employer
  • An employee forms a company that competes with his current employer

Public Service  

  • A company executive serves on the board of a charitable organization that could create reputational harm for her full-time employer
  • A company executive leaves his post for a government appointment related to his former industry

Assumptions and Misperceptions

Most people tend to overestimate their ability to stay objective at the intersection of personal and professional interests. Believing that you can manage conflicts of interest on your own can lead to the overconfident belief that conflicts of interest won’t need to be disclosed or incentives to disclose are unnecessary. Many organizations struggle with managing conflicts of interest because their estimate of caseload is often higher than the reality. The fear that the number of disclosures will overwhelm an already overextended department is a prevalent assumption. In the event of a compliance failure, the fear that the record of misconduct and the subsequent actions taken (or not taken) will leave a trail of breadcrumbs straight to ruin.

There are also some tough misperceptions to grapple with, especially when it comes to relationships and conflicts of interest. The main theme here is that, with proper disclosures and candor, relationships do not have to present a conflict and conflicts of interest jeopardize an employee’s status with their employer. Started at the bottom, now you’re here (in a leadership position)? The risks of COIs are more prevalent at the leadership level. Your junior employees might be new to the workforce and their misperceptions about the realities of leadership mean that your increased influence, decision-making power, and access to confidential information makes you an infallible leader. Once you’ve landed that corner office, the risks increase right along with the perks. Remember that your increased influence, spoken or unspoken, on more junior employees is a powerful force, especially when the holidays bring more offsite parties, meals, and alcohol.

How to Avoid Conflicts of Interests (COI)
During this Festive Season
 

Train, Train, Train! 
Building a culture of compliance starts with trust, transparency, and consistency, and the easiest way to bake those important ingredients into your corporate culture is to mix them into everything you do. Encouraging employees to speak up isn’t enough; it must be paired with appropriate training. If an employee receives an extravagant gift, how will they know to report it unless your GT&E policies have been internalized? Will they trust their supervisor enough to disclose the gift in the first place? Avoid COI by making sure your trainings are strong enough to survive all the cheer, merriment, and spiked eggnog. 

Plus, consider running a seasonal awareness campaign on your GT&E policy during the month of December, or just after the holidays have passed, to generate disclosures about gifts received. Below are some messages that your training and awareness campaigns may include. 

Judge a Book by It’s Cover
We’ve been told that when it comes to gifts, focusing on appearances isn’t right and it’s always the thought that counts. Not so! When it comes to exchanging gifts in a professional setting, the way a gift is perceived is far more important than the thought that went into the gift. Remember that a gift doesn’t need to actually influence the recipient to be a conflict. If you’d be embarrassed to disclose a gift to your manager, do not accept it!  

Sharing is Caring
A supplier has sent you a gift basket of unclear monetary value… What should you do with it? ‘Tis the season for sharing, so why not share it with everyone in the office? Celebrate the season and avoid the appearance of favoritism or improper influence by inviting others to share your new bounty.

Cash is NOT King
They say that cash is always a great gift, but if you want to avoid the appearance of impropriety, leave the envelopes full of legal tender alone. No matter the sum, cash and gift cards are an improper gift. Looking for a gift for someone you barely know and selecting a meaningful gift is next to impossible? Donations made on the behalf of the recipient are acceptable so look for a charity or cause that will make more of an impact than a holiday card with a few bills slipped inside ever could.

Be Value-Driven
Gift giving can come with expectations, beyond the initial exchange of the presents themselves. The monetary value of the gift can be a way to communicate the intent of the gift giver, so the more expensive a gift is, the more expectations come with it. Never assume that an extravagant gift is just an expression of the gift giver’s eccentricity or taste.

Get Your GT&E and Code of Conduct in Shape
Already thinking about your New Year’s Resolutions? Consider flexing your compliance muscles and give your Code of Conduct and GT&E policies in tip-top shape. Your employees are already familiar with your Code of Conduct, so polish up your GT&E policies and add them to your Code. Don’t have a GT&E policy? Look at a few examples from successful companies like 3M or FedEx for inspiration, and build a policy from there. Remember that you’ll need to think like a marketer to build engagement with your code, so take off that Santa hat and put on your thinking cap.

Elevate Your Program Now

Learn the key requirements that are fundamental to building a successful conflict of interest management program with our free guide, 14 Requirements for Effective Conflicts of Interest Management.