Lead or Lag: Why Inclusive Companies Outperform in Uncertain Times
Diversity, equity and inclusion
Side gigs are on the rise, creating new challenges for HR professionals. Whether employees take on second jobs for financial reasons or personal fulfillment, their outside employment can sometimes lead to conflicts of interest.
In recent years, HR leaders have seen an increase in employees working side gigs ─ secondary jobs undertaken alongside primary employment. Amid inflation, layoffs and economic uncertainty, 18% of Americans admit to moonlighting to avoid living paycheck to paycheck, according to a recent survey by Quicken. When looking at Gen Z specifically, 44% of respondents said they had multiple sources of income and only half had told their full-time employer about their side hustle. While these additional income streams offer financial security and personal satisfaction, they also bring potential risks for employers.
What is a conflict of interest?
A conflict of interest happens when an employee’s personal, financial or professional relationships compromise — or even appear to compromise — their ability to make impartial decisions in their primary role. These conflicts aren’t always intentional or unethical, but they can affect workplace performance, compliance and an organization’s reputation.
Simply put, conflicts of interest arise when personal interests — whether family, friendships, financial incentives or social connections — interfere with professional responsibilities. Even if no wrongdoing occurs, the perception of bias can undermine trust and credibility.
Encouraging open communication and transparency
HR teams play a key role in fostering a culture where employees feel comfortable disclosing potential conflicts. Having a side gig isn’t inherently problematic — it’s about ensuring that external activities don’t interfere with an employee’s primary job.
Employees should ask themselves:
- Could this situation create a conflict of interest or even the appearance of one?
- Could this situation violate any company policies?
When in doubt, disclosure is always the best course of action. Transparency allows leadership to put safeguards in place that protect the employee and the organization. As the saying goes, “When in doubt, ask.” There’s no harm in seeking clarification but failing to do so can have serious consequences for individuals and the company alike.
The consequences of conflicts of interest
Failing to manage conflicts of interest can lead to:
- Reputational damage: Even the appearance of bias can undermine trust.
- Legal and compliance issues: Unaddressed conflicts may result in regulatory violations or legal disputes.
- Decreased employee morale: Perceived favoritism or unfair advantages can create resentment among colleagues.
- Financial loss: Misuse of company resources or confidential information can have significant financial consequences.
Practical steps for HR professionals
HR can’t control what employees do outside of work, but they can provide clear guidelines to prevent conflicts. To effectively manage conflicts of interest, HR teams should:
- Develop comprehensive conflict of interest policies: Clearly define what constitutes a conflict within your organization. Provide examples, such as prohibiting employees from using company equipment for side projects or engaging in work that competes with the organization.
- Establish transparent disclosure procedures: Encourage employees to disclose any secondary employment. Transparency allows organizations to assess potential conflicts and address them proactively.
- Foster open communication: Create an environment where employees feel comfortable discussing their side gigs. Understanding their motivations can help align external pursuits with company goals, turning outside experiences into internal assets.
- Monitor and address performance issues promptly: If an employee’s performance declines due to their side gig, address the issue through performance management processes to ensure their primary job remains the top priority.
