How to Prevent Nepotism in the Workplace

What is nepotism?

Nepotism in the workplace means favoring family and friends over others for opportunities. Such chances include hiring, promotions, desirable project assignments, preferred shifts, merit pay increases or any openly available opportunity. While not illegal, nepotism is one of the more destructive practices managers can introduce in a workplace.

“If you are a hiring manager and you look at a job description and you say, ‘Well, my niece could do this,’ and you don’t ever post it and just hire your niece, that’s a classic example of nepotism,” said Erica Salmon Byrne, chief strategy officer and executive chair of Ethisphere.

Under that example, both the hiring manager’s niece and the company are disadvantaged, Salmon Byrne said. The niece “is going to have to now work with colleagues who think she doesn’t deserve her job because she didn’t have to go through the same process everybody else did.” Plus, Salmon Byrne said, the company misses out on talent they might find elsewhere that might be much more qualified.

Hiring a family member to fast-track filling a role might be tempting. But, “what if there’s somebody out there who you could find in a month that would be five times better than your niece?” Salmon Byrne said. “Isn’t that worth taking the time to run the process properly and find the best person for the role? Because so much of what we’re doing today, it’s about the people.”

Before turning 30 years old, nearly one-third of Americans will work at the same company as a parent. This stat is according to a Harvard Magazine article citing research from Opportunity Insights, Harvard’s economic mobility research and policy institute. In these roles, young adults earn more than 20 percent more than they usually would, according to the research. And, according to a YouGov poll, one in four Americans say they’ve missed out on a job opportunity because someone else used personal contacts to fill the position.

Nepotism is harmful for many reasons, including the following:

• Limits an employer’s opportunities: It cuts off a company’s ability to build teams authentically. It also thwarts promoting top talent, developing workplace collaboration, expanding shared knowledge and retaining employees overall.
• Destroys organizational leadership: The corrosive act of nepotism often places the wrong people in leadership or subject-matter-expert positions. Poor leadership can hurt your company’s reputation, lead to destructive decision-making and spark turnover contagion.
• Gets excellent employees hurt: Nepotism prevents qualified employees or candidates from pursuing professional growth and mapping their career paths properly. They can’t collaborate to produce the best services, products and policies for their organization.
• Discourages “speak-up culture.” Healthy workplace cultures should promote an environment where every employee feels comfortable sharing their opinion and reporting misconduct when they see it. But, nepotism inherently damages their ability to do so, said Salmon Byrne. “Think about sitting in a meeting with the boss’s nephew, and the boss’s nephew has an idea, and you think it’s a really crappy idea,” Salmon Byrne said. “You’re like, ‘I don’t know what you’re thinking, dude.’ But are you really going to raise your hand?”
• Potentially damages your brand reputation: Nepotism can result in bad press and damage your company’s reputation, said Bud Caddell, founder and CEO of NOBL. “I think why nepotism gets called out so much, or why we saw the ‘nepo baby’ trend in culture pop up, is because it’s the most visible form of favoritism,” Caddell said. “It’s the most obvious form where merit doesn’t meet progression, or it’s an unfair advantage in the organization.’”

How can you prevent nepotism in the workplace?

Set clear expectations through policy, practice and a strong company culture. It’s the only way to show all your employees that nepotism is not part of your company or its identity. Here are some recommendations to help you identify nepotism and avoid the practice within your business.

1. Develop an active anti-nepotism policy.

Create an anti-nepotism policy, add it to the employee handbook and make it part of your leadership training. These policies don’t necessarily need to ban hiring of family members outright, but they should install guardrails that encourage disclosure of conflicts of interest. This way, any appearance of favoritism can be managed, Salmon Byrne said.

For example, strong anti-nepotism policies prohibit related individuals from working in the same department or company. More specifically, they prevent one family member reporting to another.

“It’s not like great, big, giant, enormous policies, but just some written policies that say, ‘Hey, when you come to work here, we expect you to put the company first,’” Salmon Byrne said. “‘That means that you can’t act in a way that appears to preference your interests over ours, and here are some ways that can happen.’”

2. Maintain detailed job descriptions to guard against nepotism.

A job description, including the job title, can support anti-nepotism policies and practices. So, maintain an accurate and detailed job description for each role. It’s one of the best ways to keep team expectations grounded, leadership in check, and an open and communicative platform for all to see. Job descriptions should detail the hard and soft skills, experience and attributes employees need to qualify for any given position within the company.

3. Conduct manager (or leadership) training to avoid nepotism.

Leadership training addresses the concerns of nepotism more than any other step. A direct callout of the practice should include a clear definition and a description of what it looks like. Also included should be a statement that all managers are responsible for avoiding the practice and speaking up when they notice it.

During employee training, Salmon Byrne recommended using examples of situations where nepotism led to bad outcomes in a peer company.

“Use that storytelling to explain to your employees why you have this policy in the first place and why it’s important that they follow it,” Salmon Byrne said. “And then make it really, really easy for them to tell you when they have a conflict, because so many conflicts can be mitigated by disclosure.”

4. Create a transparent, communicative hiring and promotional culture.

If the hiring process and promotional selection system are openly visible to all, it improves the chance of unity and trust-building within the organization. It’s essential that the company’s hiring and promotional processes are not mysterious. Murky practices will increase the questioning and anxiety around actual or perceived favoritism.

5. Develop an HR or senior management approval process for hires and promotions.

To fortify the phalanx against nepotism, your HR department should be involved before you or any managers make final hiring or promotion-related decisions. Hopefully, your HR staff has the neutrality and authority to help govern these employment actions. Senior managerial approval is another good step in the hiring process for specific positions and promotions.

“You can build an objective standard that people have to meet, like a scoring criteria that a hiring committee has to stick to, so it’s not just one person’s opinion and people can’t jump to the front of the line,” Caddell said.

What are the types of nepotism?

Generally speaking, there are two types of nepotism: reciprocal and entitlement nepotism. Although they are both unjust, they serve different purposes; plus, the motives behind them are slightly different.

• Reciprocal nepotism: Reciprocal nepotism is when a family member accepts a position because of financial considerations, loyalty issues, a desire for a better family relationship or cultural norms (i.e., nepotism has been allowed previously).
• Entitlement nepotism: Entitlement nepotism is when someone feels a sense of entitlement for a certain job or promotion because their family member works at a company. This occurs most often within family-owned businesses.

What are examples of nepotism (or favoritism) in the workplace?

There are many subtle acts of nepotism in the workplace that some would see as blatant favoritism. These scenarios can also occur when family-related nepotism is not present. Poor leadership styles and destructive practices by anyone in the company can lead to the same undesirable outcomes.

Here are some examples of nepotism in the workplace:

• Workload distribution: The employer or manager does not distribute the workload equally; some employees have heavier or less desirable workloads than others.
• Critical feedback channels: Important work-related information is only shared with particular employees.
• Rapid upward mobility: Nepotism may involve moving an undeserving employee through each level of the organization. This makes it appear they have worked their way up fairly, but in reality they’re on a fast track to their desired role in the company.
• Manager-employee closeness: The boss hangs out with the same people or person day after day and does not spend time with others. Though this is not technically against the rules in most cases, team members often get the message that they’re not equally valued.
• Bad habits overlooked: A particular employee arrives late to work each day, has a high rate of workplace absenteeism or repeatedly makes mistakes without correction. However, others are reprimanded when they exhibit the same behavior.
• Project selection: Specific employees have input on their projects or work selection when others do not. This is common with desirable work shifts or hours.

How nepotism affects the workplace

Nepotism — or even perceived favoritism of a family member or other employee — can cause anger, frustration and dissatisfaction among other team members. It will eventually lower employee morale. Employees will have less incentive to reach performance goals if they feel the path to promotion — or any future opportunity — is undermined by nepotism.

Nepotism “erodes trust at a foundational level inside the organization where it doesn’t feel like merit matters anymore,” Caddell said. Although nepotism can have countless adverse effects on the workplace, these are some of the most severe consequences:

• Reduces diversity: While nepotism is not technically illegal, the practice can result in illegal behavior or outcomes. The beneficiaries of nepotism tend to come from the same background as the offending manager. This undermines your team’s diversity, equity, and inclusion efforts and causes your business to miss out on varying perspectives. “Anytime we’re selecting from our own peer group of who to hire or who to promote internally, they tend to look like us, they tend to be like us — ‘birds of a feather flock together,’” Caddell said. “Nepotism just reinforces homogeneity inside the organization, so you don’t have that diversity of backgrounds, of viewpoints of social status, because you’re just selecting from your group.” White men from high-income families benefit from nepotism far more than do women, people of color and people from low-income families, according to the Harvard research.

You may also run afoul of anti-discrimination laws and leave your company vulnerable to lawsuits.

• Drains the internal talent pool: When a conscious or unconscious bias — such as race or gender bias — leads you to hire only certain people, you shrink your resource pool (i.e., genuinely qualified candidates or employees). In doing so, you weaken your organization’s future by losing out on top talent, damaging the culture and eroding employees’ trust in company leadership.
• Impedes employee retention: Good employees want to develop their careers and advance in the workplace. For this reason, even occasional nepotism can cost you top talent. If your best employees feel underappreciated, they will eventually leave your organization in favor of companies that can offer them advancement and skill development. “If you don’t feel like your boss respects you, you’re not going to stick around,” Salmon Byrne said.
• Corrodes company culture: Companies that dabble in nepotism won’t develop an ethical business culture. You can’t build trust in your company when management unfairly advances specific employees and ignores more qualified ones. “It can affect overall morale and performance inside the organization,” Caddell said. “Even though you might think that the person that you’re related to or close to is a high performer, it could have damaging effects to the entire culture.”
• Lowers productivity, creativity and work quality: Ultimately, nepotism or unjust favoritism will corrode business productivity, creativity and quality output. When leadership and other key positions are filled with anyone other than your top talent, the results will eventually show.
• Creates discord among employees: When a particular employee is treated differently, other team members notice and feel angry. They may take this anger out on the individual verbally, refuse to collaborate with them or even try to sabotage their work.
• Erodes trust in management: When managers act unfairly, they lose credibility with their team. They’re more likely to get pushback or lackluster performances when trying to delegate responsibilities. “It’s very hard to create a trusting environment with nepotism in place,” Caddell said. “And without trust, you’re not going to get high performance from your teams.”

Erin Donaghue and Jennifer Dublino contributed to this article.