Policies and Procedures

In addition to code provisions, some companies have stand-alone COI policy documents, with more detailed standards and procedures. When does it make sense for a business organization to have such a policy, and what standards and procedures should be in a document of this kind?

Frequently asked questions about conflicts of interest

An earlier post  explored the various contexts – such as board meetings, hiring interviews, employee engagement surveys, training, compliance audits and exit interviews – where asking the right question can help promote C&E at a business organization. To this list should be added frequently added questions documents (“FAQs”).

FAQs are used with some frequency to supplement codes of conduct and policy statements. They can provide a greater level of information than is feasible in a traditional policy statement – because they are generally easier to read than the latter.

FAQs can be particularly useful in promoting COI-related compliance measures. That is because the issues raised in the COI realm tend to be more personal than are other types of C&E issues and so employees might welcome a chance to have their questions answered in this way rather than through actual contact with someone in their organization – at least as an initial matter.

Those seeking a model for drafting a COI FAQ, should take a look at what Walmart has done in this area – which can be found here. It is a very comprehensive document, covering in some detail what are presumably all the major COI risk areas for the company (financial interests, gifts and entertainment, outside employment, personal relationships with other associates, personal relationships with suppliers, protecting personal and business information and information sharing). For each, the document recites the relevant company policy and follows that with one or more questions and answers. (E.g., the Outside Employment section asks and answers questions about working for a competitor, operating a side business and working for a supplier.)

The Walmart FAQ document also does a good job in explaining the reasons for the company’s position on the issues raised in the questions. For instance: I supervise an associate who does odd jobs on the side. I would like to hire the associate to do some work at my home. Is this okay? As a manager with direct reports, it’s important to remain objective regarding your associate’s work. This situation requires a manager to think through all of the potential issues and use good judgment. This particular situation could potentially create a real or perceived conflict of interest since the work done for you at home may appear to influence how you view your direct report at work. If you hire someone you supervise to do work on your home, the boundaries between work and personal life may become blurry and difficult to manage. For instance, if you are not pleased with the outcome of the work, it could impact your perception of the associate. It may also appear to others that you are more lenient on that associate’s performance at work since the associate is doing work for you at your home. Finally, the associate may not want to do personal work for their manager for these same reasons, but may feel obligated to do so.

Of course, not every C&E program needs an FAQ – for COIs or any other risk areas. Those that do tend to be large and have relatively complex compliance profiles. And in considering whether to go this route companies should consider the total mix of relevant information about the risk area in question (i.e., not just what is in the code and policy document, but also the treatment of the risk area in training and other communications). As with any part of a C&E program, one has to be mindful of the dangers here of doing too much as too little.

A code of conduct for Caesar’s wife

“Follow the money” is as good a rule as any for an assessment of compliance risk, and this is surely true for conflicts of interest.   In many companies that trail leads to procurement – and often to the understanding that those involved in buying goods and services for a company on a day-to-day basis must be above any suspicion.

Increasingly (at least from what I can see) procurement activity is being centralized in enterprise-wide procurement functions.  Much of the impetus for this has nothing to do with conflicts of interest – but, rather, arises from a need to bring more professionalism to procurement and to get the benefit of buying in large quantities, among other things. However, centralization is also a plus from a COI prevention perspective, as it is easier to monitor and otherwise mitigate COI risks in a small group than in the much larger general employee population.

Such C&E measures sometimes include having a specific (and typically very short) code of conduct for the procurement department (in addition to the general code). Among the types of COI issues that could be covered are those relating to gifts, entertainment, travel and donations – meaning these codes can have more restrictive rules about such activities  for procurement staff than for the rest of the employee population. Other types of COIs are typically addressed in these codes as well (e.g., having an ownership interest in or receiving other income from a supplier).

Of course, procurement codes should cover issues beyond  those in the COI area. Confidential information (meaning that of suppliers) is one such topic.  Another is antitrust, with a focus on the oft-neglected buy side.

Reviewing such a code should be part of the on-boarding process for new procurement employees.  As well, periodic training on its key provisions should be provided.  And, one should consider certifications by procurement employees too.

I should emphasize that not every company needs a code like this. However, in my view there are many companies that don’t but should consider developing one.

Finally, there is more to a “Caesar’s wife” approach to compliance for procurement than a code, training and certification. Companies should also be alert to “point-of-risk” compliance opportunities (a concept explored in a recent post). For instance, when a procurement department member  leaves a company to go work for a supplier and has knowledge of pricing and other sensitive information of other suppliers (meaning her new employer’s competitors) the exiting process should include  a reminder of the continuing obligation to keep information of this sort confidential.  And, somewhat more drastically, for higher risk business lines or geographies, rotating procurement assignments may be what it takes to be truly above suspicion.

 

Are conflicts of interest policies a violation of labor law?

In recent years, an unfortunate – in my view – line of decisions and reports has been issued by the U.S. National Labor Relations Board (“the NLRB”) holding that various aspects of company policies violate the National Labor Relations Act (“the Act”).  For those looking to learn more about this area generally, a good place to start is with this article by Joe Murphy in a recent issue of Compliance & Ethics Professional.  Of particular concern to readers of the COI Blog might be a decision handed down by the NLRB  in June – in Remington Lodging & Hospitality, LLC d/b/a The Sheraton Anchorage – finding that a generic conflict of interest policy in an employer’s handbook was unlawful under the Act.  The case can be found here, but – given the procedural history involved – readers may wish instead to review this summary of it published by attorneys at the Arent Fox law firm.

The case may be seen as an instance of bad facts making bad law, as the respondent company had asserted that certain employees had violated its COI policy by engaging in what were clearly protected activities under the Act (presenting a boycott petition to management).  Based on this, all three members of the NLRB panel hearing the case found that the company had engaged in an unfair labor practice.

However, two of the panel members also found that the COI policy was unlawful on its face. As noted in the Arent Fox summary, the majority found that “employees would reasonably interpret the rule prohibiting them from having a ‘conflict of interest’ with the Respondent as encompassing activities protected by the Act. Particularly when viewed in the context of the Respondent’s other unlawfully overbroad rules, ‘employees would reasonably fear that the rule prohibits any conduct the Respondent may consider to be detrimental to its image or reputation or to present a ‘conflict’ with its interests, such as informational picketing, strikes, or other economic pressure.’”

The third member of the panel – while agreeing “with the majority that the Respondent violated …the Act when it applied the rule against conflicts of interest to restrict employees’ [protected] activity…. disagreed with the majority’s additional finding that the rule against conflicts of interest was unlawful on its face. ‘Employers have a legitimate interest in preventing employees from maintaining a conflict of interest, whether they compete directly against the employer, exploit sensitive employer information for personal gain, or have a fiduciary interest that runs counter to the employer’s enterprise.’ Therefore, he wrote ‘I do not agree with my colleagues’ conclusion that employees would reasonably understand the conflict-of-interest rule as one that extends to employees’ efforts to unionize or improve their terms or conditions of employment.’ In his view, ‘the rule, on its face, does not reasonably suggest that efforts to unionize or improve terms and conditions of employment are prohibited.’ He also noted that the challenged rule was immediately adjacent to a rule in Respondent’s handbook stating: ‘I understand that it is against company policy to have an economic, social or family relationship with someone that I supervise or who supervises me and I agree to report such relationships.’ He claimed that this context ‘bolsters my conclusion that the Respondent’s rule merely conveys a prohibition on truly disabling conflicts and not a restriction on activities protected by the Act.’”

I wholeheartedly agree with this concurrence (and the authors of the Arent Fox piece) and add that in my 25 years of creating, enhancing and assessing C&E programs I have seen zero indication (until this case) that generic COI provisions are likely to be interpreted as limiting activities protected by labor law. Murphy’s general analysis of the NLRB’s approach to C&E policies applies with particular force to this recent decision: “what the NLRB has done here is venture into the field of Compliance and Ethics without close consultation with those in the field and without sufficient regard for the important public policy behind compliance and ethics programs.”

Beyond this, the underlying assumption of the decision is that the efforts of working people to act through labor unions are in fact disloyal to such individuals’ employers.  While ostensibly a “pro-labor” holding, the implication here is potentially anti-labor.

One hopes that this will be fixed before too long – by the NLRB itself, or some court.

 

Does your company need a stand-alone conflicts of interest policy?

Last month, Pro Publica published an extensive report regarding a dispute on whether Goldman Sachs should be sanctioned by the Federal Reserve for failing to have a firm-wide policy on conflicts of interest.  An examiner for the Fed had argued in favor of such an action but the firm contended – successfully – that the COI provision in the company code of conduct coupled with COI policies for various of its divisions was good enough.

At least for C&E aficionados, the story is an interesting one (and the issue, in my view, a close call), particularly given Goldman Sachs’ recent COI history.  (See this post and this one.)   But for readers of this blog the piece may be most useful as an occasion to ask: Does my company have the COI policy that it needs?

To begin, a great many businesses don’t need a stand-alone COI policy. For many what’s in the code of conduct is policy enough. But there are, in my view, quite a few companies that should have stand-alone policies but don’t.

Five things to ask in a COI policy needs assessment

Certainly where companies have client relationships that could give rise to COIs there is a good reason to have a stand-alone policy, as such businesses generally face a greater array of COI risks than do others. Such risks tend to warrant a fuller discussion of COI standards and mitigation than can fit into a code of conduct. Put otherwise., companies that have relationships of trust with clients tend to have higher COI risks – both in terms of likelihood and impact – than do other sorts of businesses, and that should be reflected in how formal and extensive the related mitigation should be.

But other types of organizations should  consider drafting stand-alone policies too, at least if they:

– Have had more than their share of COIs in recent years, as a stand-alone policy can help signal to key constituencies resolve in dealing appropriately with COIs.

– Face more diverse, complex, non-obvious or culturally challenging COI possibilities than the average company has.  The more there is to say about different sorts of COI risks, the greater the need for a stand-alone policy, as there simply won’t be enough room in the code to do justice to all pertinent issues.

– Have significant COI-related process needs – in such areas as disclosure, management and auditing. Here too the code may not offer enough space to deal with the company’s requirements.

– Face heightened COI expectations for other reasons (e.g., non-profits, or other organizations that could be held to a “Caesar’s wife” standard of ethicality).

And don’t forget organizational justice

Even companies that don’t fit into any of the above categories should consider developing a stand-alone COI policy as a means of promoting “organizational justice.” As noted in this earlier post: “The special harm that COIs can cause to organizational justice arises from their frequently personal nature: because COIs often involve a personal benefit to an individual employee that is denied to others, the latter (i.e., rule abiding employees) can feel personally harmed (from a relative perspective) by the COI in a way that they would not feel, for example, with an antitrust offense or violation of export regulations.” Implementing a stand-alone COI policy can thus, in my view, help elevate the confidence employees have in the overall ethicality of their companies. Of course, to do so the policy must be sufficiently promoted and enforced.  But being successful here could have a ripple effect – by enhancing trust that management is committed to doing the right thing generally, which can be utterly vital to compliance and ethics program efficacy.

Note that while this consideration presumably applies to all companies, it does not mean that all companies need stand-alone COI policies.  But it is a factor that all companies should weigh in determining whether to implement such a policy.

Drafting a policy

If one does opt to create a stand-alone COI policy there are obviously lots of choices to be made in determining the content of the policy, and the links below to prior posts in the COI Blog might be useful in that regard.

To start, you might see this overview,  which includes links to several leading companies’ policies (that could be helpful samples from a form – as well as substance – perspective).

Regarding the key question of what COIs to address in the policy, a fairly comprehensive list is included in this post about certifications (the content of which is equally applicable to policies).

Here are some more specific discussions:

–  G&E generally  and gifts between employees.

Supervising family members in the workplace.

Moonlighting.

– Serving on another company’s board.

Next, regarding standards for allowing COIs to continue and related process issues, see this post and this one.

Finally, note that within the above posts there are links to many other posts and resources that might be useful in drafting or revising a COI policy.

Strong ethics medicine: best practice COI policies for academic medical centers

In the universe of conflicts of interest, perhaps none are more significant – and worthy of study…. and action – than are those  involving doctors and health care industry (e.g., pharma, medical devices) companies.

On the one hand,  these types of conflicts are widely recognized to be very damaging.  Indeed, when I last compiled my largest  federal corporate criminal  fine list, three of the top four  cases of all time involved such COIs (though with a new entrant  to be added to this list  –   the SAC insider trading case – one should now say three of the top five).  On the other hand, this is one of the few areas where there is actually research to show that  good policies can in fact mitigate conflicts – as described in this earlier post

But that raises the question: what constitutes a best practice policy?

A new and useful resource in that regard is  this recently published article from Compliance Today by friend of the COI Blog Bill Sacks of HCCS,  which is based on a study issued by the Pew Charitable Trust late last year on best practice COI policies for academic medical centers. While most readers of this blog (to my knowledge) do not work in the health care area, C&E practitioners of all types (or others who are COI aficionados) might be interested in this case study of what strong COI-related mitigation can look like, and find useful ideas in it for dealing with COIs in their own respective fields.

Supervising spouses and other family members in the workplace

A story earlier this week in the NY Daily News  reported:  “The doctor picked by [NYC] Mayor de Blasio to run the municipal hospital system was slapped with a conflict-of-interest ruling after his wife went to work for the hospital he was overseeing. The city Conflicts of Interest Board issued its ruling against [the doctor] in 2008, but allowed the arrangement to continue as long as [he] avoided matters involving his wife…”  The particulars of the case are not especially interesting, but it did serve to remind me that in the more than two years of its existence the COI Blog has yet to cover the often important issue of supervising family members at work.

But first a disclosure: my parents met in a workplace (the newsroom of the Minneapolis Tribune, in the 1940’s), where my father (then a night city editor) supervised my mother (then a police reporter) and, but for the personal relationship they formed there, I literally would not exist.  So, I have what could be called an existential bias on this issue.  On the other hand, at least judging by the classic film about journalists about that era – His Girl Friday – maybe workplace relationships weren’t  prominent on the ethical radar in the industry then, so perhaps I’ve over-disclosed (which comes with writing a COI blog, and for which my mother will hopefully forgive me).

But in the contemporary world, conflict-of-interest issues involving supervision of family members in the workplace can be among the most sensitive that a C&E officer ever faces.  Often one (and sometimes both) of the individuals involved is at a high level within the corporate hierarchy, making the issue as inviting to approach as a field of landmines.  Moreover, because of the strong loyalty instincts that people tend to have about their families, allegations about conflicts of this sort often trigger strong defensive reactions – as discussed in this earlier post  (which should be read mainly  for the immortal story about the late Mayor Daley’s saying – with respect to his having the city of Chicago do business with one of his children:  “If I can’t help my sons, then [my critics] can kiss my ass.”)

On the other hand, other employees may feel deeply resentful of those involved – particularly where the relatives in question are seen (rightly or wrongly) as receiving favored treatment and benefiting from job-related opportunities that otherwise might have gone to such other employees.  The others could also feel stifled in how they do their work.  For instance,  many employees might  be  uncomfortable criticizing a favorite business idea that the spouse of a senior executive has – even if they  think it is no good. Unlike most other COIs, those involving family members on the job tend to be very visible  – and grating, possible even on an everyday basis.

Not surprisingly,  many companies’ COI policies address the issue of supervision of family members.  A somewhat typical policy of this sort is the following from Tower Bank: “The potential for conflict of interest clearly exists if your spouse, partner or immediate family member also works at the Company and is in a direct reporting relationship with you. Officers or employees should not directly supervise, report to, or be in a position to influence the hiring, work assignments or evaluations of someone with whom they have a romantic or familial relationship.”

Of course, a direct reporting relationship between spouses is widely seen as being problematic – and that part of the rule should be easy to apply.  But the “being in a position to influence” part of the rule is much broader, and presumably anyone higher up in a reporting chain is in such a position regardless of how many layers there are in between.

Still, the more layers there are, the more checks against abuse exist – even if they are not strong checks (since they rely on subordinates in preventing and detecting conflicts by their workplace supervisors).  One company that relies explicitly on the number of such layers is United Technologies, whose policy asks the question, “[i]s it a Code of Ethics violation for my spouse and myself to work in the same department at our UTC Division?” and provides this answer: “In most instances this would not be a problem as long as neither employee reported to the other. A sufficient number of reporting levels (at least three) between supervisor and family member must exist to preclude conflict of interest issues.” While not a cure-all, this seems like a strong approach to me.

A final point: given the nature of this particular type of conflict the concern is often less actual COIs than apparent ones.  For this reason, effective mitigation must address the issue of what will employees think about a proposed solution to such a COI – including the broader question of whether such a solution will undermine the workforce’s view of management’s commitment to ethics in general.   More on apparent COIs can be found here, but the bottom line is that this is among the most difficult types of COI to mitigate.

What counts as a conflict of interest policy?

Conflict of interest policies were in the news last week.   The first story comes from the world of medical schools. As described in a recent issue of Science Codex, “U.S. medical schools have made significant progress to strengthen their management of clinical conflicts of interest (CCOI), but a new study demonstrates that most schools still lag behind national standards. The Institute on Medicine as a Profession …study, which compared changes in schools’ policies in a dozen areas from 2008 to 2011, reveals that institutions are racing from the bottom to the middle, not to the top. In 2011, nearly two-thirds of medical schools still lacked policies to limit ties to industry in at least one area explored, including gifts, meals, drug samples, and payments for travel, consulting, and speaking. Only 16% met national standards in at least half of the areas, and no school met all the standards.”  This finding is unfortunate because –as discussed in an earlier posting – COI policies in medical schools have been shown by research to be effective in actually reducing COIs.

A different type of COI policy story concerned a whistleblower lawsuit brought by a “former senior bank examiner for the Federal Reserve Bank of New York [against] her ex-employer, which claim[ed] she was fired because she refused to change her findings that Goldman Sachs Group Inc. … lacked a firm-wide conflict-of-interest policy.”  As best I can tell from the various pieces about the case, the examiner felt that although the firm had divisional COI policies and a COI section in its code of conduct it was deficient in that it lacked a stand-alone, firm-wide document in policy form addressing COIs of the sort that was evidently common in other investment banks.    Of course, as with any lawsuit, we will learn more here as the case  progresses.  But the initial complaint alone does raise what is for the COI Blog an interesting question: what exactly counts as a COI policy?

The answer here will depend on the context.   For many (indeed most) organizations a code of conduct provision on COIs is policy enough.  Indeed, as can be seen from some of the links in this earlier post, COI provisions of a code can be as detailed as those in a stand-alone policy.

But for large, complex organizations – and particularly those with complex COI issues, as an investment bank likely has and Goldman Sachs clearly has had (see posts here and here) – a stand-alone, firm-wide policy seems like a good idea, as a way of ensuring sufficient attention is devoted to the area and that standards are applied thoroughly and consistently throughout the organization.   And, it is hard to see what the argument against having such a policy would be.

This is not to suggest that I think that there is merit to the whistleblower’s claim or that the firm was deficient in this respect.  Rather, as with most news-related posts on this blog, I’m only using the story of the day to make a more general point about COIs.

“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.

Gifts, entertainment and “soft-core” corruption

I once asked students in an executive MBA ethics class if they thought that their employer organizations should have restrictive policies on gift receiving.  Nearly all said that such policies were unnecessary – as the students were sure that they wouldn’t be corrupted by gifts from suppliers or customers.  I then asked if the school should allow teachers to receive gifts and entertainment from students. As you can imagine, the response was very different.

The ethical challenges of dealing with gifts have been with us since at least around 1500 B.C. when, according to this piece on the Knowledge at Wharton web site, “Gimil-Ninurta — a poor citizen of the city of Nippur in Mesopotamia — tried to enlist the assistance of the mayor of Nippur by offering him a goat. The mayor accepted the goat, but rather than providing assistance ordered that Gimil-Ninurta be beaten.” However, the extraordinary focus in present times on preventing bribery has drawn unprecedented attention to more “soft-core” versions of the problem, including traditional gift giving.  (For instance, in the past week, several large companies in Malaysia adopted a “no festive gift” policy.)

Global companies addressing issues of gift giving and receiving in the current environment indeed have a lot to deal with.

First, there is a growing body of laws and rules from around the world governing gift giving that must be complied with.  (The co-publisher of this blog –  ethiXbase – maintains an extensive data base of these standards for its members.)  For many companies and individuals, what previously had been in the realm of ethics/good-to-do has moved squarely into the province of law/need-to-do.

Second, one needs to be mindful of different cultural standards relating to gift giving and other COI-related issues, as discussed in this guest post  by Lori Tansey Martens of the International Business Ethics Institute.  A gifts-and-entertainment policy that is culturally narrow-minded can be ineffective.

Third, the operational aspects of compliance/ethics in this area can be daunting. Among other things, not only global companies but also organizations in highly regulated businesses may need to use technology to promote and track compliance to a sufficient degree, as described in this guest post by Bill Sacks of HCCS.

Moreover, all companies – regardless of where they operate or what they do – should have well thought out compliance standards for gift giving and receiving. This post  describes some of the considerations that might go into such a policy and this survey conducted by the Society of Corporate Compliance and Ethics in 2012 (available to members on the organization’s web site) could be useful for policy drafting, as well. For global companies, this recent piece by Tom Fox on FCPA cases involving gifts, entertainment and travel should be a helpful resource.

Finally, one should consider the role of behavioral ethics in developing/implementing gift-related compliance measures, and particularly the fact that we tend to underestimate how much COIs can impact our judgment. For instance, last year, the Wall Street Journal  reported on a study in which different groups of professionals were asked to assess the necessity of conflict of interest standards of conduct both for other professions and their own: “Doctors participating in [in a study] tended to think [certain COI-related] strictures sounded pretty reasonable [when applied to financial planners]. However, when ‘financial planners’ was replaced by ‘doctors,’ and ‘investment companies’ by ‘pharmaceutical companies,’ the doctors started to raise objections — that the supposed conflicts were hypothetical, for example, and that no one’s views about which drugs to prescribe could ever be swayed by a coffee mug. And investment managers surveyed by the researchers reacted similarly: The rules for doctors sounded fine to them, but the ones for investment professionals seemed petty and unnecessary.”

Is there a behaviorist-based cure for this aspect of “soft-core” corruption? Dan Ariely’s column in this weekend’s Wall Street Journal – although not specifically about COIs/gifts – may be instructive on that score.  He was asked the broad question, “What is the best way to inject some rationality into our decision-making?” and responded, “I am not certain of the best way, but here is one approach that might help: When we face decisions, we are trapped within our own perspective—our own special motivations and emotions, our egocentric view of the world at that moment. To make decisions that are more rational, we want to eliminate those barriers and look at the situation more objectively. One way to do this is to think not of making a decision for yourself but of recommending a decision for somebody else you like. This lets you view the situation in a colder, more detached way and make better decisions.” His piece also describes the results of a fascinating experiment that helps demonstrate this.

One can readily see how this framework could be useful for promoting ethical and law abiding behavior relating to gift giving and receiving, where our instincts might not be a reliable guide for identifying appropriate behavior.  Indeed, Ariely’s recommendation could help business people address many other areas of ethical challenge too.

Drafting or revising conflict of interest policies

G.K. Chesterton once said “There are no uninteresting things, only uninterested people,” but some would argue that that meant that he never saw a conflict of interest policy.   You can bet that series of justly famous beer commercials won’t show The Most Interesting Man in the World line editing such policies.

But being a less interesting person, they do interest me. Indeed,  more so than with most other risk areas, effective compliance here requires close attention to policy creation and maintenance, as a company must clearly define what it considers to be a COI and what its employees should do when faced with an actual, apparent or potential conflict. So, this post collects some resources and thoughts that may be useful for COI policy drafting/revising.

First, it is often helpful to start with a sample.  While codes of conduct are – at least for public companies – essentially required to be posted on the web, the same is not true for more detailed COI policies (at least in the private sector – there are, by contrast,  plenty of examples for universities and other non-profits to be found with a quick search).  But a few corporate COI policies are available on the web, such as those of Best BuyNovartis  and PG&E  (the last one is actually part of a code – but is quite detailed, and so worth including here).

Second, while it is helpful to start with a template, one also should base the policy on a COI risk assessment, as discussed in this series of prior posts.

Third, if you are part of a global company you should keep in mind cultural differences that are relevant to COIs as you draft or amend your policy.

Finally, in policy drafting/revising, consider how (if at all) you intend to “check” for COI compliance, such as through a certification regimeauditing,  and/or technology-based controls, since with each of these the capacity for checking should inform (although not necessarily dictate) the provisions of the policy.

Fascinating stuff? Certainly not!  But that’s okay, because often in the C&E realm what is most interesting is when things go wrong – and it is the mission of the C&E officer to keep work life happily boring.