Conflict of interest guidance for managers

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Conflicts of interest are a common ethical issue for APS employees at all levels. Declared conflicts of interest, real or apparent, must be avoided if possible, or, if they are unavoidable, effectively managed, including by taking actions to ensure any risk created by a conflict is mitigated appropriately.

Managers at all levels have a duty—in addition to declaring and managing their own conflicts—to ensure that their staff avoid conflicts of interest, or declare and manage conflicts effectively on an ongoing basis.

This duty to effectively manage conflicts of interest applies not only to direct supervisors and line managers of employees, but to all employees with management roles or functions, including those leading and managing high-conflict risk activities such as recruitment panel chairs, procurement delegates, managers of grant programs, or project taskforce leads.

It’s essential to provide a culturally capable and psychologically safe workplace for individuals and teams to raise conflict of interest concerns at any time, and to suggest practical risk strategies and controls to include in their own management plans, or in team business processes.

Conducting regular conversations with personal candour and openness about the common circumstances in which conflict risks can arise for all of us in our roles—including via existing or new personal relationships; managing professional associations while undertaking high-conflict risk activities; or when offered gifts and benefits from an external entity—is a great way to do this.

Managers are responsible for ensuring their staff are aware of, and comply with, their agency’s conflict of interest policy and processes. In doing so they must:

  • Receive and assess written conflict of interest declarations from staff—including declarations of ‘no conflict’ where necessary at appropriate intervals, such as onboarding or transfer from another team, and on a regular basis, such as at the beginning of a performance cycle
  • Identify any material personal interests, or real, apparent or potential conflicts of interest they may also be reasonably aware of, but which may not otherwise have been declared by their staff
  • Agree with their staff an appropriate management plan for each declared conflict, based on a risk assessment, including where no risk management actions are necessary beyond declaration
  • Ensure any management plan clearly outlines the employee’s conflict of interest avoidance and management obligations, and what the employee will do to mitigate or manage the risk of conflict
  • Acknowledge in writing that, as the employee’s manager (or panel chair, delegate, etc.) they have agreed the management plan, or decision not to implement any risk management actions
  • Ensure all conflict of interest declarations and any management plans are recorded and stored in agency record keeping systems
  • Ensure that conflict of interest declarations and management plans are reviewed regularly, including on the occasions when staff duties change or new conflicts arise
  • Take appropriate and proportionate action where conflicts of interest are not effectively managed—including removing staff from participation in high-conflict risk activities, and considering whether performance management or conduct actions may be necessary to address non-compliance with conflict management plans where this poses a serious risk to the integrity or good reputation of the agency or APS
  • Communicate with their staff about their own declared conflicts and agreed management actions where relevant to their staff’s duties, functions and activities, to enable transparency and effective support.

Although individual employees are responsible for informing their manager of their declared material personal interests and any existing management plans when they change roles/supervisors, managers must ensure that new starters in their teams meet their obligations under the agency’s conflict of interest policy and provide them with support to do so.

This includes providing staff with the right templates and guidance materials particular to their agency (including for high-conflict risk activities), ensuring awareness of their obligations, including by facilitating training, and ensuring appropriate records are kept centrally and are regularly reviewed and updated. Managers should engage with the corporate team that manages the agency’s conflict of interest policy when they are unsure of their obligations in relation to their staff.

When reviewing an individual’s conflict of interest declaration and assessing risk and appropriate mitigation strategies for the management plan, managers should consider the following:

  • What is the nature of the personal interest?
    • Is it ‘material’, or remote or theoretical?
    • Is it significant to the employee (like secondary employment or a valuable financial investment)?
    • Is it unavoidable or pre-existing (like a personal or professional relationship)?
  • What is the employee’s role, or their specific duties?
    • Are they in a position that is highly visible or relates to an integrity function?
    • Do their duties involve high-conflict risk activities all the time, or only occasionally?
  • What are the agency’s functions, enterprise risks, and risk appetite ?
    • Is the employee’s personal interest or conflict an identified risk that requires specific controls to be applied (such as regulatory duties requiring strict information and external engagement controls)?
  • Is the conflict risk real or apparent?
    • Does the conflict actually impact the employee’s ability to perform their duties?
    • Could an outside observer reasonably perceive the conflict to impact the employee’s ability to perform their duties?
  • What is the likelihood of a conflict of interest arising?
    • Could the material personal interest affect the person’s ability to perform their duties right now, or at some point the future?
    • Does the risk increase if circumstances change?
  • What are the consequences of not managing conflict risk effectively (e.g. legal, financial, reputational, etc.)?
    • What are the adverse impacts or damage that could reasonably be foreseen to occur?
    • Can the consequence(s) be prevented, and, if so, how?

Integrity and regulatory agencies may have a lower risk tolerance and higher need for conflict of interest risk controls for all their employees, regardless of their particular roles or duties. Likewise, individuals and teams who manage high-conflict risk activities on a day-to-day basis—not just occasionally—would be expected to pay close attention to managing their conflicts of interest; and their managers would be expected to review the identification of personal interests and proposed management strategies carefully to effectively manage risk.

Decisions about appropriate management plans should be made in consultation between the manager, the employee, and other relevant areas of the agency if necessary, according to the risk assessment. In submitting a conflict declaration and management plan for their manager’s review, employees must turn their mind to what steps they will take to manage the conflict. In turn, managers have an obligation to ensure that the proposed management actions are practical, lawful, and compliant with agency policy and other legislation, can be supported by agency systems, and are able to be monitored and, if necessary, enforced through performance management processes or conduct actions.

The Department of Finance’s Resource Management Guide 208 on Managing Conflicts of Interest and Confidentiality includes helpful information about risk controls and strategies that can be used to manage conflicts of interest. The 6 Rs are six common strategies which can be used to manage conflicts of interest based on the level and likelihood of an assessed conflict of interest risk:

Register

Declare and document the material personal interest to create visibility and awareness. Commonly used in low-risk scenarios where the conflict is minor.

Restrict

This involves restricting an employee’s access to information or their participation in meetings, discussions and decisions. This approach can be used when a conflict is created due to a specific set of circumstances and unlikely to reoccur.

Recruit

Introduce a third party to provide oversight of a process, activity or stream of work. Examples include adding a probity advisor to an activity to ensure integrity standards are met, or bringing impartial/objective employees into a decision-making process.

Remove

Remove the conflicted employee from the task or reassign them to alternative duties. This approach is common when there is an ongoing conflict of a serious nature and it cannot be managed by one of the other ‘R’ controls.

Relinquish

The personal interest must be relinquished or divested to ensure the conflict is resolved. This is often used when an employee is holding a personal interest by choice and the conflict cannot be managed by other means.

Resign

The employee resigns from their position or specific role in order to resolve the conflict. This approach is only used in high-risk conflicts where no other viable management options are available.

For more information on each of the 6 Rs and circumstances when they can be applied, please consult the Resource Management Guide 208 on Managing Conflicts of Interest and Confidentiality.

Once a management plan has been put in place, managers must identify an appropriate review date so the plan can be assessed and amended if required—synchronising conflict declarations and management plan reviews to the performance management cycle or financial year are practical options. Any reviews conducted, or updates to plans, must be recorded and attached to the original conflict of interest declaration and management plan.

Keeping declarations and management plans in centralised agency record keeping systems is the best way for employees, managers and agency integrity teams to maintain records, and actively monitor, review and update declared conflicts and management plans over time.

Appropriate system access controls can be applied to centralised records to ensure personal privacy where necessary, but remember that transparency of individuals’ declared conflicts and management strategies can itself be an appropriate and effective risk control.

Managers should seek advice from a range of internal or external sources when they feel unsure about discussing conflicts of interest with their direct reports or teams, or if they have concerns when assessing conflict declarations and management plans. In the first instance you should seek advice from your own supervisor or next level manager, or the corporate team responsible for managing your agency’s conflict of interest policy. Other sources of advice include agency Integrity Champions, Ethics Contact Officers, and the Ethics Advisory Service.

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