Managing conflicts of interest: we all need to lift our game

In a small country such as Aotearoa New Zealand, managing conflicts of interest is not optional – it is essential.

We have seen a number of high-profile media stories in recent months involving government procurement decisions and adviser relationships where conflicts of interest were not adequately declared or managed. These cases have reinforced a simple truth: even the perception of a conflict can seriously damage the reputation of individuals and organisations.

At the Institute of Directors, we know this issue well. Conflicts of interest are one of the most common themes raised through our complaints process. While our Conflict of interests practice guide sets out a clear framework – identify, declare and record, then manage – we regularly see key steps being skipped, particularly when it comes to recording conflicts and considering deeper relational conflicts.

Think beyond the obvious

In governance, we are trained to identify conflicts involving personal financial interests or family ties. However, in New Zealand’s close-knit governance and professional circles, relational conflicts can be just as significant – and are often overlooked.

A longstanding working relationship, close professional ties, or regular informal contact with a decision-maker may all give rise to perceived or actual conflicts. These are harder to spot, but no less important to address.

As directors, we must stay vigilant. That means asking harder questions, being prepared to recuse ourselves when appropriate and ensuring conflict registers are kept current.

Be thorough – and transparent

Let’s be clear: disclosure alone is not enough. Declaring a conflict in a meeting is a critical first step, but if that declaration is not recorded, and if the board does not actively manage the conflict, the risk remains – to the board’s integrity and to the organisation’s credibility.

The IoD’s practice guide sets out the standard we expect all members to follow:

1. Identify conflicts of interest early, including relationship-based ones
2. Declare and record the conflict in board minutes and relevant registers
3. Manage conflicts transparently and appropriately, which may include removing the conflicted person from discussions or decisions

Boards should also regularly review their policies and conflict registers, and foster a culture where declaring a conflict is seen as good governance practice, not a personal failing.

The stakes are high

Whether you are on a large public board or a small community trust, the expectation is the same: that you will act – and be seen to act – in the best interests of the organisation at all times.

Mismanaging a conflict of interest can have consequences that go well beyond the individual. In today’s climate of heightened scrutiny, even a perceived conflict can undermine public trust, attract media attention, and erode confidence in our governance institutions.

We are here to support our members to meet the highest standards. I encourage every board to revisit the Conflict of interests practice guide, and to have open discussions around the board table about how you are applying it.

Conflicts of interest remain one of the most persistent governance issues boards face, which is why we developed the Conflict of Interests Board Pack.

This resource is part of our board pack series, to be used at the board table to support focused, practical conversations on critical governance topics. It includes definitions, examples, case studies and key questions to help boards assess whether their conflict management practices are genuinely effective.
If you are not regularly checking in on how well your board is identifying, recording and managing conflicts – including perceived and relational ones – this pack is an excellent place to start.

One unmanaged conflict can take down a board. If you are not taking this seriously, you are the risk.