What is nepotism in the workplace?

Nepotism in the workplace is a type of favouritism shown toward family members, specifically. Merriam-Webster dictionary identifies the Latin root of the word as nepos, meaning nephew. 

Nepotism can involve any relative, including those related by marriage. Nepotism occurs when those with the power to recruit or promote within a company ignore more qualified candidates to hire or advance a family member instead. Nepotism at the workplace also occurs when employers treat the employee-relative better than other employees. Some examples of this are:

• ignoring the relative’s habitual lateness
• assigning less work to the employee-relative than to other employees
• promoting an employee-relative over other, more deserving employees
• not addressing the relative’s poor work performance

Other examples exist, but their prevailing theme is preferential treatment of family members over other employees.

Types of nepotism

Defining nepotism is straightforward, but not its application. Sometimes where it occurs changes others’ perception of it. For instance, a practical difference exists between nepotism in a small business versus in a large corporation.

A small business employing family members is often expected, even standard. For instance, the owners of a family-run restaurant may hire their children as members of staff even if they are not fully qualified. 

The parents intend to teach the children the business for the day they eventually inherit it. This is nepotism, but it makes sense that parents would want the children to learn the business by working in it.

Even so, if the parents/owners promote relatives unfairly, other employees recognise the injustice. Small business owners can avoid accusations of impropriety if relatives work their way up instead. 

For example, if someone owns a family restaurant, a son might start as a waiter, move on to become the host and from there the manager and ultimately the owner. This not only helps the children know the business from the ground up but also diminishes the appearance of nepotism.

Nepotism within a larger organisation seems less tolerable. When those in managerial positions hire unqualified family members, there is no ownership to pass on to the relative, unlike in a family business. 

Employees recognise favouritism as the main reason for recruiting the person. Employees want to feel as if they have a merit-based opportunity to move up in the company. If they sense favouritism towards a relative, they may rightly feel that the manager is being unfair.

How to spot nepotism in the workplace

If your manager hires a family member, is that always a problem? Not necessarily. It depends on whether the manager has favoured the relative unfairly. Be attuned to these examples of nepotism:

The employee-relative is underqualified

If company officials recruit family members who are clearly unqualified for a position, this could indicate nepotism. In such cases, speak with the supervisor to learn more about the reasons for hiring the family member despite the lack of qualifications. For instance, you may learn that the supervisor believes the family member qualifies because of transferable skills and certain personal characteristics. A conversation will help employers determine if the reasons are valid or unethical.

The relative exhibits unprofessional behaviour

A supervisor’s relative may behave unprofessionally at work. They may be rude to other employees or customers or be insubordinate because they know the company won’t fire them. This shows that the employee doesn’t fear losing their job, which may indicate nepotism.

The employee-relative evades punishment

If managers aren’t reprimanding employee-relatives for unprofessional behaviours, this may be evidence of nepotism. This may be particularly obvious if the manager points out such behaviour in other employees.

Again, communication is important: speak with your managers. Doing so will uncover any unethical behaviour as well as alert them that such favouritism is unacceptable.

Other employees have complained to you or HR

Lastly, if your employees address their concerns about nepotism directly to you or HR, this is an obvious sign of nepotism that you must address. Meet with those employees to learn more about their observations. Let them know they are heard and valued.

Keep a record of these events before making assumptions or taking preemptive actions. If the behaviours continue, speak with the employee and the person who recruited them to determine the appropriate next step.

Negative effects of nepotism in the workplace

Nepotism doesn’t occur in a vacuum. It can hurt employers, employees and the entire company. A few of the negative effects of hiring unqualified family members can be that it:

Creates an unhealthy work environment

Employees may feel undervalued if they notice family favouritism at work. Imagine a loyal employee who regularly arrives to work early, performs the job well and gets along with coworkers. Now imagine that employee’s reaction when an expected promotion goes to the manager’s undistinguished family member instead.

Such behaviour fosters resentment and hostility. The ripple effect of nepotism can turn a once-healthy workplace toxic.

Reduces employee morale

Nepotism can reduce employee morale by making employees feel the deck is stacked against them. Employees may wonder why they should try to do their best if being the boss’s relative is the main criterion for promotion. Their belief in the company’s mission can fade. This may lead to employees giving the bare minimum rather than their best effort.

Increases employee turnover 

Poor morale caused by nepotism has consequences: it can increase employee turnover. You may lose valuable members of your workforce. Talented employees who notice nepotism may leave the company to go somewhere they feel will treat them more fairly.

Replacing good employees isn’t cheap: hiring expenses — e.g. recruitment, job board fees, background checks, etc. — and training new employees can be costly.

Contributes to decreased productivity

Qualifications matter. Unqualified employees cause productivity to suffer. When managers recruit or promote ill-equipped relatives, they are likely to make more mistakes than other employees, which someone else then has to correct; this slows productivity.

Putting a number to the cost of lost productivity is difficult, but the reality is that an unqualified employee’s salary may be just one part of the wasted money from nepotism.

Decreases employee respect for leadership

Respect for managers is important for employee engagement. When those with recruitment and promotion power make poor decisions, such as hiring unqualified relatives, they risk losing employees’ respect. Bitterness, insubordination and less dedication to the job a just a few consequences of lowered respect for company leaders.

Frequently asked questions about nepotism in the workplace

What is the difference between nepotism and cronyism?

Both nepotism and cronyism are about unfairly favouring someone in the workplace. Nepotism refers to favouring a family member, whereas cronyism is favouring a friend or an acquaintance.

Is nepotism always wrong?

Technically, nepotism is always wrong, but ‘nepotism’ and ‘hiring family members’ are not synonymous.

Merriam-Webster defines nepotism as ‘favouritism (as in appointment to a job) based on kinship’. Per that definition, then, nepotism is wrong because it is based on choosing someone for reasons other than merit.

However, the hiring of family members in and of itself is not always wrong. For instance, if a company hires a husband and wife, it isn’t wrong as long as no overt conflict of interest exists (e.g., one is in a position of power over the other). Even in that situation, though, negative effects of nepotism can manifest if an employee is overtly unqualified for the position.

Is nepotism illegal?

Nepotism is not technically illegal under current law. The UK government states that it is ‘against the law to treat someone less favourably than someone else on the basis of a personal characteristic such as religion, sex, gender reassignment or age’. 

However, as this does not cover favouring a relative over other candidates, it is not something that an employee can raise during a tribunal. If preferential treatment is given to an employee over another employee with a protected characteristic, this may count as discrimination. 

While nepotism is not illegal, allowing nepotism in the workplace may cause low morale among other employees. This is because they may feel unsupported and as if there are fewer career progression opportunities. It may also give businesses a bad reputation among candidates, meaning that in the future they are less likely to apply for roles.

It is possible to get ahead of potential problems associated with nepotism by including it in your equality and diversity policy within the employee handbook. Consider factors like including a code of ethics that specifically addresses nepotism, and adding whistleblower protections and anonymous reporting channels.