What is nepotism?
Nepotism refers to the practice of giving preferential treatment to family members in professional settings, often at the expense of other employees who may be more qualified. This favouritism can take many forms, from hiring and promotions to assigning high-profile projects or desirable shifts based on personal connections rather than merit.
People in positions of power in a company may also allow family members to behave poorly without repercussions that other employees would experience. When family members are consistently treated more favourably than other employees, it can create an environment of unfair treatment and resentment, undermining trust and collaboration within the team.
Types of nepotism in companies
At its core, nepotism is the act of favouring family members in the workplace, especially when it means overlooking more qualified candidates. There are two main types of nepotism: entitlement nepotism and reciprocal nepotism. Both can erode trust and hinder the growth and development of talented employees who lack such personal connections.
1. Entitlement nepotism
Entitlement nepotism is when a decision-maker’s relative feels entitled to be hired for a certain role purely based on their relationship with a person in power, such as a manager or board member.
2. Reciprocal nepotism
Reciprocal nepotism happens when a decision-maker hires a family member, and this person accepts based on certain factors, such as interdependence (usually financial dependency), a better family relationship or cultural norms that permit such practices.
Family businesses are particularly susceptible to both entitlement and reciprocal nepotism, which is why it’s important to be mindful of implementing fair hiring processes.
Hiring family fairly
Hiring relatives is not always considered nepotism, especially if they are the most qualified candidates and the recruiting process is fair and transparent. Having family members in the workplace can offer unique advantages, such as strong loyalty and shared values. However, when the hiring process is biased or unqualified family members are given preferential treatment, it crosses the line into nepotism.
To prevent such practices, it’s worth implementing clear anti-nepotism policies that outline how relatives can be considered for roles. It’s also important to have a transparent hiring process, use detailed job descriptions to define role requirements and involve multiple people in the decision-making process. These measures can help to ensure that all candidates are evaluated based on their skills and experience, and that hiring decisions are made in the best interest of the company and its employees.
Is workplace nepotism illegal?
There are no laws explicitly outlawing nepotism in Australia. A business owner is certainly entitled to hire their relative for a role, regardless of their qualifications.
However, although nepotism isn’t illegal, 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.
Furthermore, if nepotism or other forms of favouritism are based on discrimination, then it may be in breach of 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.
Implementing an anti-nepotism policy and fair recruitment practices can help to prevent legal issues and ensure compliance with these laws.
How to avoid workplace nepotism
Once nepotism has taken place, it can be challenging to remedy it and restore your employees’ faith in you and the company. That’s why it’s important to take steps to prevent it from happening in the first place. You can tackle nepotism head on by implementing the actions outlined below.
Transparent recruitment
Vacancies should be advertised widely, and decision-makers must be impartial. If a 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 family member is successful, it is obvious that they are properly qualified for the role.
In larger organisations, establishing a diverse hiring committee to implement fair hiring practices can also help to ensure transparency, fairness and equal opportunity employment.
Fair treatment
Make a point of ensuring that all employees 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 unfairly favoured. Supporting merit-based opportunities and reducing the risk of favouritism is the ethical thing to do, and it can also help 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.
Leadership training should include anti-nepotism policies and fair hiring practices, as well as the definition of nepotism and favouritism. It’s also worth making other staff aware of the company’s anti-nepotism measures to promote a transparent and equitable workplace culture.
Investing in relevant training for both executives and other hiring managers can pay off in the long term by helping everyone to make sound decisions and avoid potentially costly issues down the track.
Robust policies
An important aspect of avoiding nepotism is effective HR management. Your business should have clear guidelines in place that describe how relatives can work together, especially when someone is managing a staff member they’re personally close to. This can help alleviate concerns for other employees and it also sets clear expectations, so the hired relative doesn’t come into a new role expecting any preferential treatment.
Including an anti-nepotism policy in your employee handbook or code of conduct can help you to manage nepotism effectively. This promotes transparency, clarifies rules and establishes clear procedures for handling conflicts of interest within your organisation.
It’s also advisable to have a solid conflict of interest policy in place, which ensures that any potential problems are disclosed and tackled early in the decision-making process.
How to spot nepotism
There are a few signs to look out for when trying to spot workplace nepotism. Try to observe patterns of favouritism in hiring, promotions and assignments, especially when employees lack the necessary qualifications. Here are some examples.
Unfair promotions
If you notice that certain employees are promoted despite lacking the required experience or skills, this could be a sign of nepotism. If you suspect nepotism, further investigation is warranted.
Employee complaints
When employees raise complaints about nepotism, it is important to follow up and address their concerns through the proper procedures. 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.
It is also important to train managers to handle personal relationships professionally to prevent biases when responding to nepotism complaints.
Underqualified staff
If an employee is clearly underqualified for their role (as is often the case with employees hired due to nepotism) and unable to perform the required duties successfully, it may be worth investigating whether they are related to the person who hired them and reviewing their application, as well as 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 them the answers to interview questions in advance. This gives the applicant an unfair advantage over genuine candidates.
Top performers being overlooked
In most businesses, employees who perform well eventually 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, especially if certain employees are repeatedly favoured due to personal connections, 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.
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, resentment often starts to build. This is especially the case when staff members perceive that only those close to people in positions of power are receiving the opportunities.
Nepotism can lead to decreased productivity and damage the company’s reputation, as employees may lose trust in leadership and outsiders may view the organisation negatively. Here is a closer look at the impact of workplace nepotism.
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 employees 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.
Higher staff turnover
Once employees lose trust in their employer, they may consider leaving the organisation. Neglected employees going on to seek out better opportunities elsewhere, coupled with the reputational damage caused by nepotistic practices, can create hiring challenges for businesses.
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. Productivity suffers and, as a result, so too do the business’s operations and profitability.
Loss of credibility
Nepotism can even undermine a business’s credibility with its customers or external partners. The reputational damage caused by nepotistic practices may lead to these external stakeholders being less willing to do business with the company. Loss of credibility can also expose the company to legal risks if nepotism results in discrimination or violations of equal employment opportunity regulations.
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. If you’re just starting out, learn how to hire your first employee for your business with our comprehensive guide.
