Is Nepotism Bad for Business? The pros and cons of hiring family and friends.

Nepotism has been a hot topic these days with everything going on in the White House. But the truth is that nepotism has been a staple in countless political, religious and business decisions for centuries. 

Is nepotism bad for business? Let’s closely examine nepotism in business to maximize on the pros of hiring family members, while minimizing and even eliminating the cons.

What is Nepotism? 

Nepotism defined is the description of a, “variety of practices related to favoritism; it can mean simply hiring one’s own family members, or it can mean hiring and advancing unqualified or under-qualified family members based simply on the familial [or friendly] relationship.”

The majority of people hear the word nepotism and have a negative association with the term. Being a business owner, you want your staff to respect and admire you as their leader. It’s a tough job to try and balance your office morale when giving special treatment to some and not others.

If you do choose to hire a family member or friend, be sure to reduce favoritism as much as possible.   

Is Nepotism Legal in the U.S.?

Short answer, nepotism is legal in the United States for businesses in the private sector. But we’re not experts in law; we’re not lawyers. We’re experts in customer service and business communication. So we turn you over to the Law Offices of Bacon & Wilson to help you understand what is legal and illegal about nepotism:

“First, if an employer hires friends or relatives to the point where they fail to consider people of other races, creeds, sexes, or ages, they may be violating Title VII of the Civil Rights Act of 1964. Secondly, if an employer creates workplace conditions that effectively force out an existing employee to make room to hire a relative, the employer may be liable, and therefore, must pay damages to the forced out employee. These discrimination claims may arise when a private employer has six or more employees.”

Seek advice from an attorney before hiring a family member or friend if you’re concerned with the legal ramifications associated with nepotism. 

Statistics About Nepotism in the U.S.

Studying business statistics surrounding nepotism will help and strengthen your decision-making capabilities. Here are a few popular stats that’ll shed some light as to how other American families approach their nepotistic hiring practices: 

• • “About one in five [American] firms (19.3%) are family-owned.” – The Small Business Administration (SBA)

• • “More than one-fifth of employed American men who grew up in the same household as their fathers wind up in the same workplace as them by the time they turn 30.” – The Atlantic

• • “Although U.S. laws do not specifically prohibit hiring one’s relatives, studies show that between 10% and 40% of U.S. companies maintain formal policies prohibiting such a practice.” – Encyclopedia.com

• • “An American male is 4,582 times more likely to become an Army general if his father was one; 1,895 times more likely to become a famous C.E.O.; 1,639 times more likely to win a Pulitzer Prize; 1,497 times more likely to win an Academy Award; 8,500 times more likely to [enter and advance into] the political world.” – The New York Times

Is Nepotism Good or Bad for Business? 

Like most professional and personal issues go, nepotistic practices need to be examined and considered on a case-by-case basis. We help by gathering some of the most popular pros and cons of hiring within the family.

Pros of Inviting Family Members and Friends to Join Your Organization:

• • Your family has a genuine and personal desire to see your business succeed.
• • You know your family member’s personality and history; allowing for great communication.
• • Your family member or friend will feel so grateful for the opportunity, they’ll give you 110% while on the job.
• • You have a deep history and can trust your family member with important and confidential information.

Cons of Hiring Family Members and Friends to Positions in Your Business: 

• • Emotions can sometimes leak from personal lives to professional roles; the lines can easily become blurred.
• • Your non-familial employees may think you’re playing favorites; negatively affecting the office morale.
• • Your family member may have feelings of entitlement; depending on how they acquired the position within your organization.
• • If the business relationship fails horribly, you run the risk of developing ‘bad blood’ within the family for future generations.

Tips to Creating a Fair and Mutually Beneficial Professional Relationship with Family:

• • Have a solid job description typed up and defined before considering qualified candidates. Make sure your family member or friend is capable of handling the duties or, has the wherewithal to learn how to perform the role required. 

• • From the onset, discuss all expectations, requirements and potential complications that might occur down the line. Define your employer/employee roles before finalizing the hire of a family member or friend. Have an honest discussion about an exit strategy and make a mutually beneficial plan. This hypothetical termination talk can help you each set boundaries and assurances.  

• • If you’re mentoring or grooming a family member to take over the business, be strategic and mindful of your decisions. If they have little to no experience in the field, start them in at the ground level. You don’t want a negative nepotism reaction to happen when your professional staff feels overlooked.   

• • Be clear about the opportunity for growth at a rate that is fair. Some family member employees may feel entitled to a faster growth rate than their peers. If that is the case, let them know that your expectations will be higher for them in return for faster growth. If you have decided to treat your family member like any other new hire, discuss how important equality amongst your staff is to you.      

• • If you’re concerned that your current staff will respond negatively to your hiring selection, distance yourself from the family member. If possible, have a non-family member supervise your new employee. Allow an impartial and neutral supervisor to manage your new hire on a day to day basis.  

What Do You Think About Nepotism?

Is nepotism bad for business? Here at A Courteous Communications we don’t think hiring a family member or friend is bad. Our entire staff is like one big family. That being said, we do have actual family members and friends who have been in our staff for decades. We have mothers and daughters that work alongside each other. We have friends that were hired way back in the 80’s that are now in management and C-Level positions. It works for us.

Hiring family members and/or friends may not work for every business though. We want to hear from you! Write a comment on our Facebook Page Here and let us know your personal views and experiences with nepotism.