What is nepotism in the workplace?
Nepotism is an unethical and unfair workplace procedure that occurs when someone in a position of power hires a close friend or family member for a role for which they are underqualified. The hiring decision is made based on the personal relationship between both parties rather than the applicant’s skills, qualifications or experience.
It can also mean giving preferential treatment to a family member or friend when it comes to promotions, salary increases and other opportunities in the company, or allowing them to behave poorly without repercussions that other staff members would experience.
Types of nepotism in companies
There are two different types of nepotism in the workplace that are largely recognised as problematic. Let’s take a closer look:
1) Entitlement nepotism
We speak of entitlement nepotism when a decision-maker’s friend or family member feels entitled to be hired for a certain role purely based on their relationship with the manager or board member.
2) Reciprocal nepotism
Reciprocal nepotism happens when a higher authority hires a friend or family member, and this person accepts based on aspects such as financial dependency, a better family relationship or cultural norms, e.g. instances where nepotism was deemed acceptable in the past.
How to spot nepotism
There are a few signs to look out for when trying to spot workplace nepotism. Here are some examples:
Unqualified staff
If an employee is clearly underqualified for their role and unable to perform the required duties successfully, it may be worth looking at their application and the hiring processes that were followed when they were recruited.
Tailored job ads and interviews
A perhaps more surprising form of nepotism is creating a job ad that is specifically tailored to a relative’s skills and qualifications, or giving an acquaintance the answers to interview questions beforehand. This gives the applicant an unfair advantage over genuine candidates.
Top performers being overlooked
In most businesses, employees who perform well sooner or later benefit from positive performance reviews, pay rises and promotions. If you notice that top performers are regularly overlooked when it comes to opportunities, and seemingly less qualified or underperforming colleagues are chosen instead, this may be a sign of nepotism.
Lack of punishment
An employee who continuously engages in poor behaviour, shows up late or misses deadlines without a care in the world should arouse suspicion. Usually, such conduct has immediate consequences in the form of warnings or disciplinary measures. If someone regularly misbehaves but never seems to suffer any consequences, it may be worth investigating why that is.
Direct complaints
If you receive direct complaints about suspected nepotism, always follow up to get to the bottom of it. A hiring manager might have engaged in unethical behaviour without your knowledge, so it’s your responsibility to find out if there is any basis for any nepotism reports you receive. Taking action and investigating these claims will show your employees that you are serious about ethical conduct, and they will have increased trust in your and your company’s policies.
Related: 10 Recruiting Strategies for Hiring Great Employees
What is the impact of workplace nepotism?
Everyone wants to feel valued and appreciated at work. When staff are constantly passed over for promotions or opportunities they deserve, it often starts to build resentment. This is especially the case when staff members perceive that only those close to people in positions of power are receiving the opportunities.
Loss of respect
Workplace nepotism can lead to employees losing respect for their superiors and no longer trusting their managers’ decision-making abilities. And if staff don’t trust their superiors, they’re more likely to question their decisions or be reluctant to follow instructions. This can impede processes and make collaboration difficult – and the business will find itself in a very challenging situation.
Higher staff turnover
Once employees lose trust in their employer, it’s highly likely that they will consider leaving the organisation. As neglected staff go on to seek out better opportunities elsewhere, this can result in higher staff turnover for the company.
Lower productivity
It goes without saying that motivated employees are generally happy to go the extra mile for their employer. Disengaged staff members, on the other hand, will likely not put as much effort into their work as they would in a healthy work environment. As a result, productivity suffers, which has a negative impact on the business.
Loss of credibility
Nepotism can even undermine a business’s credibility with its customers or external partners. Workplace nepotism studies have shown that businesses that evidently choose friends and family who are not qualified for particular roles over those who truly are best suited for them lose credibility with those they’re doing business with. These decisions can ultimately erode a company’s reputation.
Related: New Hire Onboarding Checklist
Is workplace nepotism illegal?
Nepotism as such is not illegal in Australia. A business owner is certainly entitled to hire their son or daughter, or a family friend, for a role, no matter their qualifications.
However, although nepotism isn’t illegal in the private sector in Australia, management boards are legally required to disclose any potential conflicts of interest. This means that if a new employee or member of the executive team is a relative of someone in a position of power in the company, they need to be upfront about it.
Keep in mind though that if nepotism or other favouritism is based on discrimination, then it may be breaching Australian anti-discrimination or human rights laws, such as:
- Australian Human Right Commission Act 1986
- Age Discrimination Act 2004
- Disability Discrimination Act 1992
- Racial Discrimination Act 1975
- Sex Discrimination Act 1984
So, to avoid unlawful discrimination claims, make sure that all your hiring decisions are above board and don’t contravene any of these regulations.
How can you avoid workplace nepotism?
Once nepotism has taken place, it can be difficult to remedy it and restore your staff’s faith in you and the company. So, it’s always better to prevent nepotism in the first place. This can be done through a number of measures:
Transparent recruitment
Vacancies should be advertised widely, and decision-makers must be impartial. If a friend or family member applies, there should always be a third party involved in the interview and recruitment process.
Job advertisements should include clear selection criteria so that even if a friend or family member is successful, it is obvious that they are properly qualified for the role.
Fair treatment
Make a point of ensuring that all staff are given equal access to development and progression opportunities. You want your employees to feel confident that they are all treated fairly and equally and that nobody is favoured. Not only is this the ethical thing to do, but it is also sure to boost employee morale and productivity.
Awareness and training
All staff should feel they can speak up about issues of favouritism and nepotism in the workplace – without being negatively impacted. HR management and senior leaders need to provide the avenues to do this, as well as clear training around how staff can make reports about unfair practices in the workplace.
Investing in relevant training for both executives and other hiring managers will pay off in the long term because it will help everyone make sound decisions and avoid potentially costly issues down the track.
Robust policies
Avoiding nepotism is largely based on effective HR management. Your business should have clear guidelines in place that spell out how relatives or close friends can work together, especially when someone is managing a staff member they’re personally close to. This will help alleviate concerns for other staff and will also set clear expectations, so the hired friend or relative doesn’t come into a new role expecting any preferential treatment.
It’s also advisable to have a solid conflict of interest policy in place that ensures that any potential problems are disclosed and tackled early on in the decision-making process.
Related: How to Develop an Effective Code of Conduct for Your Business
Now that you’re aware of the potential pitfalls of nepotism, you can make confident hiring decisions and rest assured that your staff have trust in your leadership team.
When you’re ready to recruit your next staff member, head to our Indeed Hire page for employers to get the ball rolling and find your perfect candidate.
