Nepotism

Nepotism is a term that refers to workplace favoritism, where a person in a position of power shows favor toward family members employed by an organization. The word comes from the Latin word nepos, which translates to nephew. While similar to favoritism, nepotism is a narrower concept because it directly refers to family members.  

Nepotism in the workplace has numerous negative effects, including but not limited to:

• Bias in decision-making
• Unfair treatment
• Reduced employee morale
• Resentment
• Exclusionary practices

When nepotism is in play, qualified team members and candidates may be prevented from achieving their true potential. Equally concerning, nepotism has the potential to undermine trust in a leadership team’s quality when the management positions are filled with family members. 

In the U.S., laws restrict nepotism among public officials. Members of Congress and the president are not allowed to appoint, promote, or recommend any relative to a department or agency over which the appointee exercises control or authority. However, nepotism is unregulated in the private sector. In some cases, nepotism instances are pursued legally through complaints of unlawful discrimination or allegations of impropriety. 

Nepotism Examples

The most common example of nepotism involves a parent giving a coveted position in a company to their adult child. Another frequent form of nepotism is hiring a spouse or domestic partner. However, nepotism is at play when a manager or company owner hires any family member. 

In addition to filling a job position, family members of the person in power may receive special treatment or privileges not offered to other employees. For example, employees related to the owner of a company may be allowed to take time off without going through the official channels. In some cases, the favored employee may even receive higher pay than an unrelated person working in the same position.

Nepotism can go beyond simply hiring a family member to fill an open position or creating a position for that person. For example, nepotism can come into play when awarding valuable contracts or bestowing honors and special perks.

In rare instances, smaller organizations may benefit from nepotism. For example, a small family-owned business might hire family members to reduce employee turnover or build a legacy. In general, family members often show more loyalty to a family business. However, even small family businesses can fall prey to the negative consequences of nepotism, especially if the business also employs people who are not family members. Additionally, refusing to hire outside of the family excludes applicants who might bring a broader experience to a business or introduce new ideas.