Conflict of interest policies are standard agreements that protect both companies and their employees. A conflict of interest policy essentially prevents employees with decision-making duties from making decisions that are against the organization for which they work.
A basic conflict of interest policy must first define what constitutes a conflict of interest for that particular company and industry. Without this definition, employers cannot enforce the policy.
Conflict of interest policies rely on disclosure. The agreement requires affected parties to disclose all potential conflicts of interest.
A basic conflict of interest policy gives managers a lot of leeway in establishing conflicts of interest. It provides guidelines, but the ultimate decision as to whether a conflict of interest exists falls on directors, senior management and executives.