Nepotism in the Workplace: Pros & Cons

The success of your company and the working environment can both be adversely affected by nepotism. Find out more about preventing nepotism.

Recognize the potential for unethical workplace behaviors and how to combat them as a leader if you want to give employees in your company fair and equal opportunities. One unethical practice to be on the lookout for at work is nepotism. Continue reading to find out more about nepotism, how it affects workplace morale, how to spot it, and other crucial subjects.

What is Nepotism in the Workplace?

Nepotism in the workplace occurs when a leader within an organization uses their influence to favor particular individuals based on personal relationships.

Typical examples include someone in a managerial or executive position using their power to:

• Hire or promote a family member or friend over a better-qualified candidate
• Give employees preferential treatment in day-to-day operations (choosing desirable projects, ignoring subpar work or going unpunished, allocating uneven workloads, etc.).)

Nepotism in the workplace carries a lot of negative connotations and is an unfair business practice. Companies may suffer serious repercussions if personal relationships are allowed to influence decision-making.

With underqualified employees and management no longer evaluating employees solely on merit, it typically lowers organizational performance and worsens work culture.

The overall output of a business is decreased when employees perform tasks they are unable to. Limiting opportunities for talented workers boosts staff churn and causes a talent drain. The moral of the larger workforce is lowered when certain employees receive preferential treatment.

Along with damaging the working relationship and trust between staff and management, nepotism also harms the working relationship between staff and favored employees. This may hinder collaboration among employees and discourage them from adding to the institutional knowledge of the company by preventing an open work environment.

Due to nepotism, it is impossible for new voices to rise to positions of authority in the system. Moreover, it contributes to societal inequality, helping to create an “old boys’ network,” where people maintain control amongst connections usually of the same class or race. In contrast, a meritocracy judges people only on the merit of their work, not who they know, helping to produce social mobility and a fairer society overall.

Even though it’s typically regarded as a bad business practice, nepotism in the workplace has its benefits in some situations. Nepotism is not a criticism we level at small, family-run companies that have been in operation for many generations. Parents frequently instill work ethic and company-specific skills in their children at a young age, which makes them the best candidates to carry on the family business.

This might be applicable in specific circumstances in the larger business world. People who are close to powerful people, for instance, might possess additional skills as a result of their proximity to them. To avoid any negative effects, the hiring decision must be based on the candidate’s qualifications rather than just their connections.

Types of Nepotism in the Workplace

There are two different types of nepotism:

• Reciprocal nepotism – when the person receiving favorable treatment does so for financial reasons, loyalty, improving the personal relationship, or due to cultural norms (e.g., nepotism is already prevalent).
• Entitlement nepotism – when the person receiving favorable treatment feels they deserve it just because of their personal connections.

Elitism and the notion that only a small segment of society possesses the inherent talents (quality, intellect, nobility, skills, intellect, etc.) are closely related to entitlement.) to be in positions of power. Elitism and entitlement are issues in many nations around the world.

For example, only 7% of people are privately educated in but they hold 39% of the top jobs, according to Britain. Additionally, there is a noticeable transition from fee-paying schools (7%) to Oxford and Cambridge graduates (1%) entering the top jobs in the nation. A startling 39% of Boris Johnson’s cabinet in the spring of 2019 followed this pipeline, which accounts for 52% of senior judges.

Although it only involves giving friends preferential treatment and excluding family members, cronyism is also sometimes referred to as nepotism. Politics is one area where cronyism can be found.

Signs to Watch for and How to Spot Nepotism

It’s not always a bad idea to hire a family member. When they act unethically and the family member in charge of keeping an eye on them doesn’t punish them, it becomes nepotism. Here are some signs to watch for to help you spot nepotism in the workplace:

They Are Under-qualified

Nepotism may be present if one of your managers or company representatives hires a relative for a position despite the relative’s obvious lack of qualifications. Make sure you speak with them to find out more about their justification for hiring an unqualified relative. It might be because they genuinely believe in their capacity for success in the workplace, but other, less benevolent factors might also be at play.

They Evade Punishment

Nepotism is evident if a manager’s relative consistently avoids consequences for tardiness, missing deadlines, or failing to follow dress codes. This is because the employee in a position of authority is treating their family member preferentially by not holding them to the same standards as the other employees in the department.

They Demonstrate Unprofessional Behaviors

It may be a sign of nepotism if a member of an employee’s family consistently exhibits unprofessional conduct, such as being rude to other staff members, using foul language, or contradicting their manager and family members. The reason for this is that the relative or other individual who has the authority to stop this unprofessional behavior decides not to do so out of loyalty to their relative.

Other Employees Have Complained to You Or HR

Last but not least, it is obvious nepotism that is occurring if your staff members come to you or HR with complaints about it. You should meet with those employees to find out more about what they saw and to reassure them that their opinions are valued.

Prior to drawing conclusions or acting prophylactically, be sure to keep a record of these events. Talk to the employee and the person who hired them to determine the best course of action if the behaviors persist.

Is Nepotism Illegal in the Workplace?

There are generally no laws against nepotism in the private sector, despite the fact that the legal framework regarding it varies across nations. However, discrimination against employees is prohibited in many nations (based on a variety of possible factors), and it may be possible to establish discrimination when nepotism takes place.

Nepotism and discrimination can overlap to some extent. While it can be challenging to demonstrate how one leads to the other, businesses that engage in nepotistic behavior run the risk of being sued.

Many nations have specific anti-nepotism laws pertaining to government employment, in contrast to the private sector. The Federal Civil Service cites laws and rules that forbid nepotism in the US as one example. This includes:

• Statute of limitations (18 U.S. Code – 208)
• Administrative laws (five U.S. Code – 2302(b)(7) and 3110)
• Regulations for ethical conduct by Federal employees (5 Code of Federal Regulations (C.F.R) – 2635.502)

Depending on the state, there are also statutes preventing lawmakers from hiring family members and creating a conflict of interest.

Why Does Nepotism in the Workplace Happen?

Someone in a position of authority who is willing to use their position to advance personal relationships over the long-term goals of the company is the main driver of nepotism in the workplace. They look to help a friend or family member rather than making an unbiased decision based on factors such as:

• Relevant experience in related roles
• Qualifications or education
• Having compatible personality traits to fit the team
• Sharing the values of the organization

Nepotism in the workplace is a sign that someone in a position of authority is willing to act unethically. For instance, a manager might want to do a favor in exchange for a benefit; they might want to elevate a close friend or ally at work who will support them in decisions and help them increase their level of control within the company.

In the workplace, nepotism frequently flourishes in a larger, toxic workplace culture where people prioritize their own interests. It takes strong leadership to supervise the management below in order to keep nepotism in check and guarantee that decisions are made in accordance with the right criteria. Additionally, employees must be able to report nepotism in a secure environment (without consequence).

Examples of Nepotism in the Workplace

Politics, business, and the entertainment industry are just a few of the industries where nepotism is still a widespread practice. Prominent examples include:

• Donald Trump has appointed his son-in-law and daughter as senior White House advisors. Jared Kushner and Ivanka Trump were able to profit from their positions in the administration thanks to the appointments, which also took advantage of gaps in US laws against nepotism for public officials.
• The head of the digital for the online editions of Rolling Stone, US Weekly, and Men’s Journal is his 23-year-old son, according to Rolling Stone co-founder Jann Wenner. According to reports, the recent graduate had only been employed by the business for six or seven months prior to receiving a promotion.
• Investors have criticized Rupert Murdoch for the hiring of his sons on multiple occasions. At the ages of 32 and 31, Lachlan and James Murdoch respectively assumed the positions of deputy chief operating officer and CEO of News Corporation.
• When he gave his former landlord of a pub a 40 million pound government contract for work related to Covid, former UK Health Secretary Matt Hancock was accused of favoritism. Hancock’s previous neighbor from the area reached out to him via a private WhatsApp message and was chosen despite having no prior experience manufacturing medical supplies.

Difference Between Nepotism and Referrals

Nepotism may be defended by some as a form of referral rather than conscious favoritism when it comes to hiring and promotions. The crucial distinction between nepotism and a referral is that the final judgment is made in light of the candidate’s skill set, knowledge, experience, and other pertinent factors.

Finding team members who have the potential to fit in well at a workplace can be facilitated by recommendations from current employees or other stakeholders. Nowadays, it’s more difficult for businesses to find applicants who have the right skill set for a position because talent acquisition is becoming more competitive. However, as employees advance in their careers, they build connections with people who share their skill sets and working styles, making them perfect additions to their current workplace.

Read more: What is Employee Retention? How to improve?

Although a recommendation from a member of the organization may increase the candidate’s visibility, it only serves to get them in the door and does not influence future decisions. Nepotism, on the other hand, happens when a personal connection results in a biased decision-making process.

Cons of Nepotism

1. Reduced Productivity, Morale, and Engagement

Poorly qualified employees who lack the necessary skills or experience to complete the task at hand have a negative impact on workplace performance. It is more likely that the hire will perform poorly, make mistakes, and slow down operations even though they may be a quick learner who naturally fits the job.

The company’s overall performance and output suffer when the best candidate is not hired for the position. The lack of performance brought on by nepotism is more pronounced and causes more issues when someone is employed in a position of authority and is in charge of other workers.

Even though other employees may be able to make up for this decreased performance by covering and taking on a greater workload, this will engender resentment among workers. Additionally, it could go the other way and result in a lower standard of work, with employees becoming demotivated because they feel their efforts go unrecognized.

Employee morale, engagement, and productivity are all negatively impacted by nepotism at work. A surefire way to sap employees’ motivation for work is to demonstrate that performance is not the determining factor in hiring, promotions, or daily operations. This has a number of unfavorable effects, such as lower-quality work produced, a lack of creativity and innovation, and a decreased overall capability for a company.

2. Special Treatment

The wider workforce may become resentful if some employees receive preferential treatment. The relationship between employees and management gets worse when the hypocrisy of the organization’s leadership is exposed.

3. Reduced Employee Development

If employees who put in a lot of effort and produce quality work see someone else getting the job because of a relationship lose motivation. No matter how hard they try, leadership artificially caps their development for no fault of their own.

Nepotism can deprive a company of the talent that could propel them forward and create the next high-performing leader with the right development.

4. Increased Turnover

Employee turnover and this are closely related. Nepotism in the workplace is a clear sign that a company is not treating its workers fairly. Why would a talented worker stay on at a company where nepotism diminishes their abilities?

When workers don’t feel appreciated and acknowledged for their work, they start looking for new opportunities. The talent pool becomes smaller as a result, which complicates future hiring.

When a business has trouble keeping its employees, word gets around. A company’s open positions may attract less qualified candidates if there are frequent staff additions and high staff turnover.

5. Poor Corporate Culture

A happy and productive team is difficult to maintain when nepotism is present, which is why it’s detrimental to a productive workplace.

This is especially true if leadership promotes company values that are at odds with their actual business practices, such as nepotism.

6. Reduced Diversity

The workforce’s diversity suffers from nepotism. People who are hired and promoted frequently share a background with those in positions of power. It is not only morally right but also strategically advantageous to increase diversity in the corporate world. Organizations hear a variety of viewpoints when people from various backgrounds participate in decision-making, which helps them learn new information and take into account previously unknown factors.

7. Worse Personal Relationships

Relationships between staff and management are ruined by nepotism. Employees who feel that management passed them over for someone they feel is deserving are less likely to trust their superiors in the future.

Nepotism results in staff leaving the company or, in the worst-case scenario, staying but actively disengaging, which contributes to a toxic work environment. An organization may experience serious problems if this attitude spreads quickly throughout the workforce.

8. Potential Lawsuits

Even though nepotism is not against the law, it can result in claims of discrimination and legal action. A worker who feels discriminated against or ignored due to nepotism may also have been deceived and have grounds to file a complaint or file a lawsuit.

A lawsuit for discrimination might be based, for instance, on numerous nepotism incidents involving members of the same race, religion, or gender.

Furthermore, nepotism flourishes in unfriendly workplaces where employees feel free to abuse their positions of authority. Nepotism therefore frequently indicates other unethical or even illegal business practices.

Pros of Nepotism

Even though hiring close friends or family members is not a good or efficient way to run a business, there may be some advantages.

1. Known Quantity

A manager gets a known commodity when they hire someone close to them. They are conscious of the person’s potential for improvement as well as their strengths and weaknesses. Selecting a close friend or member of your family can help reduce the possibility of unanticipated problems because there is only so much you can learn about a candidate during the hiring process.

2. Shared Values

Shared identity is something that businesses work to establish. When a company chooses to hire someone from the same background as an existing leader, it is more likely to find someone whose shared worldview is known to be consistent with the company’s mission.

3. Personal Connection

Someone who is personally connected to their boss may be more motivated to put in extra effort and advance their career there. They might even feel the need to overcompensate for how they obtained the position in order to convince other workers that they weren’t the only ones hired through nepotism.

How to Avoid Nepotism in the Workplace

Even though nepotism can seriously harm a company, it can be harder than you might think to keep it out of your workplace.

Tip #1. Define An Anti-nepotism Policy

Eliminating potential conflicts of interest in the future is made easier by putting an anti-nepotism policy in writing and making it available to all employees (often in the employee handbook).

For example, policies could:

• Prohibit family members from working in the same department
• Prevent situations where a family member reports to someone they are related to
• Ensure a family member does not have a direct say in a relative’s workload, promotion opportunities, or financial compensation

Tip #2. Leadership Training

Along with the expectation that all managers base their decisions on objective factors, the anti-nepotism policy ought to be included in leadership development programs.

In addition, training must include a precise definition of favoritism so that managers can recognize it when they see it in other employees and report it.

Tip #3. Define a Transparent Hiring and Promotion Culture

Promotions and hiring decisions must be transparent to all employees. By revealing the reasoning behind decisions, transparency can help clear up any concerns about nepotism.

For the final decision-makers to be impartial, this should involve a number of people, with the HR department also being involved. All hires and promotions must be approved by senior management after managers have given a justification for them.

Consider a situation where a close friend or member of your family is seriously considered for a position at a company. If so, the current employee who is connected to the candidate should abstain from making decisions about them.

The job description is the document that should direct the final decision during hiring. Perhaps more than anything else, having precise, accurate, and thorough job descriptions for every position within a company can help guard against nepotism. It clearly identifies when there is a significant discrepancy between a candidate and the job description. It also establishes the expectations and requirements for a position.

Summing It Up: Nepotism in the Workplace Should Be Prevented

In order to enhance the culture of your workplace, nepotism must be addressed. The problem with nepotism is that intelligent individuals who support it are themselves. Without the leaders’ understanding, it is difficult to resolve such a delicate matter. It will eventually become a part of the organizational structure and obstruct the workers in the organization. In order to create an engaging and employee-friendly workplace, you must address the problem and make the necessary changes.

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