In 2014, a study conducted by the American Census Bureau found that by age 30, about 22% of sons will be working for the same employer at the same time as their fathers. That figure is far too high to cite mere statistical coincidence and for employers, it incites questions about workplace nepotism and the potential of its silent influence within their own organisations.

Workplace Nepotism vs Referrals

Workplace nepotism refers to when individuals in positions of managerial or executive power within an organisation, use their influence to hire, promote or offer opportunities to family members and/or friends for any reason that’s not purely related to their knowledge and experience. It’s important to note here that workplace nepotism is very different from referrals which are only recommendations, and based sincerely on one’s skillsets and employee-related qualities.

This applies even if the referral is of a relative or friend – nepotism specifically refers to cases in which the individual who benefits, lacks the skills and/or qualifications for the role and is being unfairly advantaged over candidates who are a better fit for the opportunity. In contrast, whilst a referral may offer visibility to the candidate, it only gets them through the door and does not become a decision-making factor from then on.

Workplace nepotism itself is not necessarily illegal because there are no outright laws against it, particularly if an organisation is not a public employer. However, it is a form of workplace discrimination that can still pose a host of problems for employers. Staying aware of how nepotism operates, the forms it can take and its impact is necessary for any employer that wishes to avoid unethical workplace behaviour and ensure just and equal opportunities within their business.

How can workplace nepotism take form?

Whilst the manner in which workplace nepotism manifests can vary depending on a company’s organisational structure, recruitment and promotion processes and the personnel in current positions of authority, there are patterns that make it easier to identify its occurrence.

The following are some examples of how workplace nepotism can take shape in a company:

  • Providing a relative or friend with all the questions and/or answers for an employment or promotion interview beforehand
  • Lack of disciplinary action and greater leniency extended toward family/friend employees
  • Hiring a relative and/or friend for a role that is yet to be advertised and they are not qualified for
  • Giving friends or family in the company preference when it comes to training and development opportunities
  • Creating job or hiring criteria with a relative/friend in mind
  • Having lowered standards and expectations for work from employees who are relatives/friends
  • Family/friend employees earning more for the same role as other employees

Consequences of workplace nepotism

The consequences of nepotism are unavoidable – sooner or later, the undeserving beneficiary’s lack of knowledge will show, whether this is due to poor performance or other employees having to fill the gap in work quality. When this happens, especially on a repeated basis, it can start to hurt the company’s finances and workplace culture. This can occur through varying different means of which some examples are described below:

1. Toxic workplace culture

Hiring, promoting or generally favouring a family member or friend will inevitably create tension with existing employees who’ve worked hard at their roles but have been overlooked instead. Workplace nepotism can cause feelings of resentment and anger to arise between workers which are counterproductive to good teamwork and healthy employee relations. This in turn will negatively shape employee outcomes, decrease employee satisfaction as well as harm the brand reputation of the company.

2. Increase in employee turnover rates

If workplace nepotism leads to employees feeling as though they are not recognised for their work or will not be given room to grow due to opportunities being biased towards certain workers, they will feel more inclined to leave. Favouring individuals who are underqualified on the sole basis of your relationship with them only serves to communicate to other employees that it doesn’t matter how hard they work because their efforts will not reap many rewards. In order to be appreciated and treated fairly when it comes to growth opportunities, they will turn to other organisations instead to progress their careers.

3. Lack of diversity

Workplace nepotism can negatively shape an organisation’s attempt to diversify its workforce. When one favours the hiring of family members and/or friends, it is likely they are from the same background as the person making the decision. In a world where corporate diversity is particularly valued, this can be detrimental to the growth of the company.

4. Decreased productivity and/or poor work performance

A person who’s in a role they don’t have the skills or knowledge is a waste of a company’s valuable time and resources. Their colleagues will end up having to pick up their workload and have to find a way to juggle their own responsibilities alongside this, creating a reduction in productivity as well as impacting the level of quality in the work produced. This can in turn create resentment that will quickly build towards the underperforming employee and those in management positions who are forcing the team to pull the extra weight.

5. Possibility of legal consequences

Whilst nepotism is not outrightly illegal, workplace discrimination can still result in legal consequences for an organisation. If an employee thinks that they’ve been denied a role they deserve in favour of a relative or a friend, an employer can be found guilty of workplace discrimination

Is workplace nepotism all bad?

Workplace nepotism is an inefficient and damaging practice that must be avoided in corporate settings. However, when it comes to working with close friends and/or family members, there are some advantages that may actually enable better results for an organisation. Knowing what these are can help employers recognise how multifaceted nepotism is and why, when there is a good work-related reason, one may be drawn to hiring someone they already know.

The following are a few reasons why an individual could want to hire a family member/friend (note that if this person is adequately qualified and skilled, this is not considered nepotism):

  • As someone selecting a person you want to be doing important work for you, a family member or friend can be beneficial in the sense that you are already well aware of their strengths and weaknesses and the ways in which their contribution could benefit the company. This knowledge is not acquirable when meeting new candidates in a traditional recruitment process so familiar options can be more desirable.
  • Finding employees who share the same core values and represent the company’s vision is a key priority in recruitment. A family member or friend is likely to share similar beliefs to the individual exerting their influence, and hence better reflect the company’s values.
  • A person whose been hired because of their ties to someone higher up may be more likely to work harder as a result of their connection to the organisation and their desire to prove their value. They have an extra incentive to do their best because their efforts also reflect on the employee who utilised their authority on their behalf.