Workplace nepotism is not in itself, against the law, unless other issues such as conflicts of interest arise. However, that’s not to say that it is always a good thing.
When people are hired solely on the basis of their relationship or connection to someone already in the organisation, it can be highly demoralising for the rest of the team and could result in performance issues, increased staff turnover, and grievances and tribunal claims in areas such as unlawful discrimination.
Nepotism goes beyond simply hiring a relative or friend. It refers to a situation where merit, qualifications, ability and experience are disregarded within the recruitment process. It can also result in unfair treatment and favouritism and other unprofessional behaviours.
In this guide, we consider what nepotism is in practice and what can be done to manage any detrimental impact with the workplace.
What is nepotism at work?
Nepotism is a form of work discrimination where those in positions of power, such as managers or members of the executive team, use their influence to hire family members or friends for reasons that have little to do with their qualifications, experience, or skills.
Though it is most often associated with hirings and promotions, it is not necessarily confined to those situations. For example, it is also considered nepotism when family members or friends of the managerial or executive staff receive special treatment or are held to a different standard than their fellow employees.
If family or friends receive desirable assignments or projects, preferred shifts, or additional privileges without having earned them, this is also considered nepotism.
However, it should be noted that there is a difference between nepotism and hiring close to home. Hiring family members or friends who are qualified for their positions and are the right fit for the job can actually benefit the company. This can help to build a close-knit team that works towards the same goals and objectives cohesively.
Types of nepotism
There are two types of nepotism in the workplace. One has to do with the hiring person, and the other has to do with the employee.
Reciprocal nepotism is when someone with a position of authority hires a family member or friend, and that person accepts the position based on certain factors: interdependence (typically financial dependency), the extent of the exchange, and cultural norms.
Entitlement nepotism is when the hired family member or friend feels a sense of entitlement simply because of their relationship with the boss. It leads to bad behavior and sometimes hostile situations. This is most common in family-owned businesses but can occur in any situation.
How to recognise nepotism at work
Nepotism applies when there is unethical behaviour involved in the hiring of that family member or friend, but not all situations are considered nepotism. For example, the following would usually be considered nepotism:
- Employee is underqualified. Someone is chosen for a position or promotion simply because they are a family member and not the most qualified. If the person hired is clearly not suited for the position they have received or given an opportunity over someone who is clearly the better fit, this is nepotism.
- Employee is held to a different standard. The family member is not reprimanded despite poor performance or bad behaviour. If the family member in question is constantly making mistakes, missing deadlines, showing up late, breaking the rules, etc., and not being reprimanded in any way, then it is likely nepotism.
- Employee receives special treatment. They may be given special treatment or adhere to different rules and regulations than other employees. This can be anything from shortened work hours to increased spending abilities to additional privileges. This could also be the family member or friend receives better work assignments, more ideal shifts, or sought-after projects despite not necessarily deserving them.
- Employee is let off easy. The workload is not distributed evenly. It is an example of favoritism when family members or friends are given less work than others of the same position.
- Unprofessional behaviours. If the family member or friend starts to demonstrate unprofessional behaviors such as being rude to other employees or talking back to their manager could be a sign of nepotism. This behavior is likely to continue because the family member/person with power is unlikely to stop the behavior out of favor for their friend or family member.
- Other employees have complained to Human Recourses. If your employees have addressed their concerns of nepotism with you or HR then it’s a sign of nepotism that should not go unnoticed. Meet with these employees and learn about what they have observed. Make sure to document these events before making assumptions or taking actions.
Risks of workplace nepotism
Workplace nepotism can lead to long-term damage to an organisation. Workplace nepotism:
- Can lead to discrimination claims or complaints. While nepotism itself is not illegal, it can still lead to legal trouble. It does not go unnoticed when employees are looked over for promotions or are not hired in favor of someone who is clearly underqualified. And, those who have been ignored or passed over can feel that there is discrimination in play. If someone feels they were treated unfairly, they can find grounds to complain.
- Can lead to higher employee turnover. When employees don’t feel they are being seen or feel that they are being treated unfairly, it is no surprise that things sour quickly. If employees see that underqualified people are getting hired or promoted in their stead or privileged employees are treated differently, they are not likely to stick around. Higher employee turnover does more than make it difficult to maintain a full staff. It does not go unnoticed when a company is constantly hiring employees. Higher turnover will lead to more difficulty hiring employees—and the employees they do hire may not be up to the same standard as they were previously.
- Can lead to lower morale, lower work quality, and lower productivity. It is hard to stay motivated in a job you don’t feel appreciated for. When you know that the boss’ kid will get that promotion or the project you’ve been hoping for, it does not leave you in the best frame of mind. With lower morale comes lower work quality and lower productivity. Again, this will impact the company in the long term, not just the individual employees. Lower productivity leads to higher costs. Lower quality leads to more difficulty retaining customers. And, lower morale leads to even higher turnover.
- Can lead to poor talent retention. High turnover is one thing, but if you promote those who are not qualified over those who are, it won’t be long before those talented employees move on. The talent pool will shrink until all that is left are the barely qualified. A shallow talent pool can only harm the company. Work won’t be near the same quality as before, and the company’s reputation can suffer.
- Can damage company culture. With lower morale and questionable morals, company culture won’t be nearly the same. Since company culture is so important to potential employees and often customers, this too can have a detrimental long-term effect.
How should HR respond to nepotism?
In companies large and small, success is dependent upon employing a highly skilled and competent workforce. HR can be a critical partner in this process, working with the leaders in the company to effectively respond and prevent nepotism. The best way to respond to nepotism is to proactively work to prevent it.
1. Examine the Culture
Take the time to understand the culture and values of the leaders at your company. One step to begin is by interviewing each of them to learn what they believe are the company’s greatest assets and where the company fits in the greater industry. As you build a relationship with these leaders you will be better equipped to promote fairness for all, without creating enemies in the workplace.
These leaders will often be hesitant with letting HR have a seat at the table out of fear of being told no. Take the time to get to know them to mitigate their fear.
2. Discuss the importance of legal compliance
Once you have proven you are there to support these business owners and not to control them, you can better advise them when certain circumstances arise.
Every business owner has their own way of doing things, but that may not mean they know how to avoid legal trouble. When circumstances arise, you will want to advise them of the options available to resolve the issue as well as potential legal and financial risk to the organisation.
3. Respond to nepotism
You have built relationships with the company leadership team, advised them on the importance of legal compliance and implemented clear policy and guidelines for managers. However, nepotism may still leak into your organization. When this happens, you have already built a strong foundation to more effectively advise and coach leadership to remind them that the goal is to build an excellent workforce that is highly competent and skilled.
4. Introduce objective hiring
Every position should be filled with the candidate best fit for the job, not based on the relationship with the business owner or leadership team. If a family or friend of the business owner is the best fit for the job, then that is another story.
In a written policy or guidelines for all hiring managers, articulate employment law (i.e. Title VII, ADA, ADEA and EPA) and how to best create interview questions that focus on job competency and cultural alignment with the mission and values of the company. You will help the company build a high-quality workforce where experience and skills are more important than nepotism.
5. Introduce an anti-nepotism policy
Whether you need to update a current policy or you are creating a new policy to combat nepotism, covering nepotism within company policy can help to provide certainty and clarity across the organisation as to the expectations and standards to be met when hiring and promoting.
Last updated: 4 April 2023