Nepotism: When it harms and when it helps

Nepotism: When it harms and when it helps



Nepotism is a common problem in the business world. The practice of hiring or promoting poorly qualified relatives for important positions can create disharmony in the workplace and contribute to the downfall of a successful business. To promote good employee morale and ensure the company’s future success, hiring managers should consider all other candidates’ qualifications equally, regardless of their relationship to the boss or other employees, to avoid charges of unfair nepotism.

Anti-Nepotism Policies
In the public sector, federal anti-nepotism laws regulate the hiring of relatives. Some agencies have narrow restrictions, not allowing public officials to appoint their family members or spouses to an office. Others may have broader restrictions, not allowing family members to work in the same department or even the same organization. In the private sector, there are no uniform anti-nepotism laws. Policies regarding the hiring of relatives vary greatly from one company to another. Legally, nepotism is a complex issue. While most states have anti-discrimination laws, courts may not view nepotism as a form of discrimination. Although federal laws do not prohibit nepotism in privately owned businesses, such practices can have a negative effect on a business

Perceptions of Unfairness
Studies show nepotism in the workplace creates an atmosphere of perceived unfairness and resentment by nonfamily employees when a family member is promoted or hired for a position for which he or she is not qualified. Other preferential treatment, such as a higher salary for family member employees than for others with similar responsibilities, or a leniency on attendance and vacation time, also contributes to disharmony. Workplace stress created by these practices can lead to low morale and loss of productivity. Employees who are “stressed out” and dissatisfied with their jobs are more likely to miss work or seek other employment.

Nepotism Issues Can Dampen Morale
Especially in service industries, high morale and motivation are vital to the success of the business. In such businesses, there is a strong correlation between employee morale and customer satisfaction. An employee who is a public representative of a business can sway the customer’s opinion of the company through attitude and actions, whether positive or negative. A disgruntled employee may speak against an employer, treat customers badly, or even sabotage business. However, a happy employee is more likely to treat customers well, try to do exceptional work, and even bring in new customers. While there are many reasons people may be unhappy in their jobs, the issue of nepotism is one easily resolved with fair hiring practices.

Less than half of family businesses survive into the second generation because objectively evaluating family member employees is difficult.

Human Resource Management Plays an Important Role
The HR manager plays an important role in reducing job stress caused by nepotism. Hiring practices in family-run businesses place a burden on HR managers to choose qualified employees. The role of HR is of utmost importance here. HR can play a vital role in the success or failure of a business by the decisions they make. Policies and practices need to be transparent so people not part of the family group understand why relatives get desirable positions. Good communication between management and all employees is essential. When family members are given sought-after positions, the reasons for the choice are understood and accepted by all.

Fair Decisions Limit Unfair Nepotism
Hiring managers must stand on their principles and make fair decisions to avoid charges of blatant nepotism. In some situations, anti-nepotism clauses are useful; human resource managers should not have relatives in the company because they have access to private information that might be disclosed, accidentally or purposely, to others. Distinctions between personal relationships and work should keep personal issues from arising on the job. When family members are hired, it may be a good idea to have the relative report to an unrelated supervisor, then promotions or demotions are given on merit. Top-level managers must support the decisions of HR managers to hire, discipline, promote, or fire any subordinate employee in the company regardless of family connections.

When Nepotism Works
Hiring relatives can work when they are committed to the business and protecting its brand identity. It may be the retiring CEO of a family-owned business wishes to pass leadership to a trusted family member who will uphold company’s values. In succession planning, choosing the best employee to replace a retiring CEO may affect the future of the business. However, an unqualified and inexperienced family member moved into a leadership position may contribute to the company’s demise. Less than half of family businesses survive into the second generation because objectively evaluating family member employees is difficult. Choosing a successor is a long process that requires careful planning, and it may be the best choice is not a family member at all.

To prevent nepotism from harming the company and keep employee morale and productivity high, hiring managers should follow guidelines when choosing whom to hire or promote. In companies where the owners’ family members are hired, relatives of non-family employees should be considered as possible job candidates. The same standards should apply to all employees regarding opportunities for advancement. When family members are brought into desirable positions in the company without previous experience, other employees may feel their commitment and qualifications were disregarded.

A common practice for many companies is to require the family member to gain outside experience and prove their worth before being brought into the family-owned business. When family members gain outside experience, it gives them credibility and they are more likely to be accepted by other employees when they gain positions of authority.

Nepotism causes many problems in a business when family members are given jobs for which they aren’t qualified or given special treatment. Anti-nepotism policies in the private sector are often left to management discretion. To promote harmony and productivity in a company, all employees should be evaluated according to skill, education, and experience for positions in the company without regard to family connections. HR managers must be allowed to select the best candidates without being pressured to choose family members or friends. Treating all employees equally will keep job stress and dissatisfaction to a minimum, and lessen the chances of losing valuable employees. Filling positions with the right people is the best way to ensure the success of any business.