How To Avoid Nepotism In A Family Business
How To Avoid Nepotism In A Family Business Photo by Dimitri Houtteman on Unsplash

Avoiding nepotism in a family business can be challenging. Nepotism is the act of providing or giving opportunities to family members or friends based solely on a personal relationship. Nepotism in business has a history that runs deep and worldwide.

In some countries like China and India, nepotism is widespread and is regarded as a positive act. According to Robert Jones, a professor of Industrial-Organizational Psychology at Missouri State University, "Nepotism is a natural part of the human endowment."

In the western world, nepotism generally has a negative connotation, particularly if the favored person is not qualified. However, it is not entirely a harmful practice to hire a relative that has been groomed to handle the family business. But the way people respond to nepotism at the workplace depends largely on the qualification, experience, and the level of transparency in the hiring process.


Ways to Avoid Nepotism

It's normal for small and big business owners to hire family members, providing several advantages. However, the potential for nepotism and conflicts of interest, whether real or perceived, can harm the workplace. Here are ways to avoid nepotism in a family business:

Treat all employees fairly

Hiring family or friends does not mean they get a free pass or have all the work placed on their shoulders. All employees, even family, and friends should be treated equally and fairly. All employees should adhere to company standards. Personal relationships should not influence workplace decisions.

Create an anti-nepotism policy

It is not out of place to use the company's culture and applicable laws to form an anti-nepotism policy for a family business. Employers can even create policy situations dealing with family member employment, work responsibilities, and compensation. An anti-nepotism policy will include family members such as spouses, partners, parents, siblings, etc. An anti-nepotism policy will help the company function well, meet set targets, and profit while avoiding unnecessary conflict.

Address personal relationships

Some workplaces may not allow other close personal relationships, such as individuals in a romantic relationship, to work together, or even at the same company. If a company does not have this type of policy in place, one should be established. Creating a personal relationship policy will help prevent conflicts of interest, such as supervisor-employee relationships and avoid any act of nepotism.

Remove from situation

Whenever there is a situation with the potential for nepotism, always consider which options are best to help resolve it, even if the best option is to remove oneself from the equation. For example, if an employee, a cousin, is caught taking home company items for personal use, it may be best to let the other company executives handle discipline. Removing oneself from either a positive or negative situation will help to avoid claims of nepotism.

Don't take shortcuts

When hiring a family member, take them through the typical hiring process, including all steps such as conducting an interview, background checks, and a drug screening. Do not exempt family or friends from a specific screening process. Any potential hire must go through the same process from application to induction and confirmation of employment.

Don't rely exclusively on referrals

Relying solely on employee referrals when deciding who to select for an interview may increase nepotism in the workplace. This will create a barrier to equal employment opportunity for groups not represented in the workplace. That doesn't mean that some of the referrals will not be considered, but it should not be more than 10-20% of the selected candidates for interview.

Review employment decisions

More than one individual should review all employment decisions relating to hiring, promotion, discipline, and compensation. This will help to remove all forms of nepotism and reduce any conflict of interest. Always make decisions based on genuine business needs and make sure the same standard applies to all employees.


Final Verdict

Having an effective anti-nepotism policy in place will help employers avoid perceptions of favoritism. Also, be objective with factors like an individual's qualifications, ability, and performance history as the basis for hiring, promotion, compensation, and other employment decisions. Providing a level playing field to employees will promote growth on their part and the companies.