“Those are my principles, and if you don’t like them… well, I have others,…”

So famously said frequent contributor to this blog, Groucho Marx.  Well, we know that’s not right, but should we go all the way in the opposite direction, and agree with Einstein that “Relativity applies to physics, not ethics”?  At least when it comes to COIs the answer is a clear Sometimes (or Maybe).

Certainly the underlying principle of being faithful to those to whom one owes a duty of trust seems to leave no room for compromise. But in practice it often is not that simple, given that loyalties can… conflict. For instance, and as described in guest posts from Lori Tansey Martens, in some societies  there are sound ethical underpinnings for approaches to hiring that in the West would be considered unacceptable nepotism. More generally, what could be considered a relativist approach to COIs is embodied in the law – specifically the Securities and Exchange Commission’s rules regarding codes of conduct for senior financial executives and CEOs of public companies.  That is, rather than banning COIs outright for individuals in such positions, codes must provide for “the ethical handling of actual or apparent conflicts of interest between personal and professional relationships… .”   Finally, as we have explored in other posts, there are indeed a variety of circumstances where COIs are not in fact ethically worrisome. Still, public companies seeking to meet the Sarbanes COI code requirement and other organizations seeking to handle COIs ethically can’t rely on a Marxist (referring to Groucho) approach to this area.

One step that can be helpful in this regard is to write into the company’s relevant compliance documentation (such as an ethics committee charter) words to the effect that, “Conflicts of interest will be permitted only upon clearing showing that doing so is in the best interest of the organization.” The idea is to erect a high standard for decisions of this type – so that a close call means no go.  (Note that this should be an easy thing to do in most businesses  – but, in my experience, relatively few organizations have done it.)

Another step is to structure decision making regarding conflicts so that there is “strength in numbers” and taking other measures discussed in this post.   Building up a solid infrastructure for  dealing with COIs may help not only to ensure that COIs are handled ethically, but can deter some of them from arising in the first instance.