Nepotism In The Workplace And The Consequences Management Essay

Nepotism can be defined as the practice of making employment decisions on the basis of relationship. It can also be defined as hiring or promoting a relative or friend, even if there are other qualified candidates for the position. Nepotism in the workplace is not uncommon, since this is a practice that does not have any universal law attached to it. However, in recent times, states have passed laws to reduce this practice, since it has many ethical issues involved in it. This paper will seek to define nepotism and it would to the international, regional and local organizations where we have seen suspicions of nepotism. It will be difficult to prove that nepotism does in fact occur in any organization; however, based on the link between persons hired and their relations, we have suspicions of the occurrences of nepotism. Nepotism is both seen in the private and public sector. However, based on research, it is more prevalent in the public sector.

This paper will also show how nepotism can be detrimental the company on a whole, because there are many consequences which result in nepotism. Some consequences that will be examined include, family conflict in the work place, low staff morale, loss of competent employees, use of the job to carry out unethical acts, use of position to serve their own interest and to the detriment of the company and breach of confidentiality.

Nepotism is evident in family owned businesses for the obvious reasons. Families would want to pass the business from generation to generation and this means that the profit will stay within the family and will be inherited by family members.

Consequences of Nepotism

Although there are consequences of nepotism a pro of this act can create stability and continuity in the organization and this will refer to more family owned businesses. Continuity because if it family owned, the business will continue by passing from generation to generation. Stability because, there will be succession planning which can result in the company being successful. On the flip side of the coin, the consequences out weigh the pros of nepotism. It creates dissatisfaction among employees. When employees are dissatisfied they may have a feeling that their hard work and dedication are not accepted or recognized by the organization. Nepotism can also result in the company losing proficient employees. This can in turn affect the organizations goods and services. Nepotism can also cause fraud in the organization. In addition, family members may bring their conflict into the workplace. Employees may not be able to separate home and work life. This is most seen in cases where husbands and wives work together and may find it difficult to work together. This may cause a decrease in the morale among staff members. A total breakdown in communication can result because of this, which will trickle down to other employees within the company.

Inequity of employees is another issue resulting from Nepotism. Because of this factor, employees tend to show their dissatisfaction by low production of work which has attributed to issues in the work place in terms of upholding discipline among employees. Discipline is an issue because employees believe that since there is no justice in the organization there is no need to follow any policy or procedure. Breach of confidentiality is another consequence of nepotism. This will occur because of the lack of loyalty among employees.

Employees may see this as an opportune time for them to practice unethical acts, because they believe because they were hired by a close or relative any practice is appreciated in the organization and they may use this to their advantage to get involved in any kind of unethical behaviour.

Where nepotism is prevalent

For obvious reasons nepotism is common in family owned businesses and this can be viewed in the more positive terms. Nepotism in family owned businesses can result in continuity in that the business will be passed on from generation to generation. There may be no ethical issues involved in the hiring family members within a family owned business.

Nepotism is prevalent in the government offices. For example in the United States of America, Vice President Cheney’s wife and his son-in-law Phillip Cheney were hired by President George Bush and were given high level position with the government. The positions given were Assistant Secretary of State and Chief Counsel for the Office of Management and budget respectfully (Congress, USA Today, 2007). President Bush was highly criticized for this, because many believe that were more qualified individuals who fit the job.

In Cuba Fidel Castro was President of Cuba for over forty years. His brother Raul Castro is now President and has been in the position from since 2008 to present. Raul was given the position of President without any elections by the people of Cuba. Because of the autocratic leadership style displayed by Fidel and his brother Raul. Many see this as an act of nepotism.

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In relation to Grenada, we have seen evidence nepotism in the government sectors, in that persons have been employed because of their affiliation and relation to government officials.

Research was conducted on some private owned companies in which we saw, a father, wife, daughter and son-in-law were employed within the same organization. Staff members are of the opinion that these individuals were hired because of the family relation.

Test Violation

The regulations test

This test deals with the reaction of your colleagues, if someone made a decision in the presence of an employee, for example to employ your sister-in-law to take up the position of manager of sales. There will be no suspicion or concern, if the business is a small family run business. Since the decision would work and be perfectly understandable considering family owned businesses are normally passed from generation to generation and the continuity relies on the emotional ties within the family. However within any government organization, if the same decision was made some colleagues may start feeling insulted. They may start thinking if there is a fraud plot in the making, and will surely voice their opinion and this will create dissatisfaction.

Front page Test:

What would it look like if we read about it in a newspaper, blog, and twitter? What if the headlines read “President of Wal-Mart promotes his nephew as C.E.O.” This will no doubt create suspicion in the minds of stakeholders. Also if there is some level of shame or awkwardness about the news, one can assume there is some level of nepotism involved.

Exception test:

This test seeks to answer two questions.

1. What if everyone did it?

If every business owner decided to employ persons that are related to them or persons that are friends, that would cause many implications, for example the skills or qualifications that may be needed at a particular time, a friend or a family may not possess them, which will result in inefficiency. Also that would mean that the main requirement to obtain a job would be on economic terms “who you knew”, as opposed to being judged on ability or merit.

2. What if they did it to us? There is no doubt that if someone was denied a job because he is not a friend of the employer’s son, but had all the qualifications and skills necessary to carry out the job would be considered to be nothing short of ludicrous. And this would be impossible for anyone to sit and make sense of.

Ethical Approach

The utilitarian approach

This approach deals with proving the greatest good with the least possible harm. As it relates to nepotism this approach is greatly violated, since nepotism is specifically linked to benefiting only the family members or to close friends of a particular individual and normally causes dissatisfaction to the majority of stakeholders. For example, in a firm where the present Vice President may be contradicting the decision made by the president of that organization, the President may seek to get the Vice President fired so that his friend may become the new Vice President so that the decisions now made by the President can get the go ahead quite easily. (this only benefits the President and the new Vice President)

Justice and fairness approach:

This approach deals with the question, “Are we recognizing the rights of those affect?” There is no doubt that each employee should be treated equally; there should be no sign of favoritism in the work place. Therefore it would not be ethical for an employer to grant a job to a fishing buddy instead of promoting an employee that is skilled, competent and filled with experience that can confidently fill the vacant position. It is important to note in this case, there will be a chain reaction involved because another employee may be looking forward for the person above him to be promoted, so he will then fill the new vacant position. Therefore when someone on the outside is used to fill the position, there will be a chain reaction of disappointment within the organization.

Types of Nepotism

Credentials nepotism: This form of nepotism is sometimes concealed but could be very dangerous to both an individual and an organization. In this situation people are given more credit for attending a class and passing but cannot apply what they have learnt. In short credential nepotism means giving someone more credit because they are certified (Young, 2008).

“They were with us through thick and thin” nepotism: This form of nepotism is for the most part perverse and could create a lot of chaos. New performers in an organization tend to realize that old performers (those who have been with organization from inception) are given preferential treatment by management. This clearly shows that old employees are not held to the same employee accountability standards as the new ones (Young, 2008).

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Referral nepotism: Referral is an employment which is said to be natural. In this case, management asks high performers within the organization to recommend someone for a job opening that needs to be filled. Management hiring someone who turns out to be a poor performer but is tied to a high performer through friendship could lead to chaos in that trying to terminate that poor performer without upsetting the high performer is almost inevitable (Young, 2008).

Contribution nepotism: This is a situation where persons within an organization receives preferential treatment because of a one-time contribution that made the organization more successful even though their subsequent performance has been poor or unsatisfactory (Young, 2008).

Connection nepotism: is a connection which comes about by virtue of a shared experience such as attending the same school, attend the same church, from the same community, are members of the same sports club or were in the same fraternity. Connection nepotism is inclined to turn a blind eye to low employee performance and poor job fit (Young, 2008).

Favoritism: The different types of nepotism mentioned above results in favoritism which is considered to be a killer of the morals o employees (Young, 2008).

Ethical Issues Involved

Illegal employment discriminations/ inequality

Employment discrimination transpires when an employee or applicant is singled out by an employer or their representatives based on factors such as gender, race, age, sexual orientation, religion, disability and several other reasons. For example, an employer who hires only relatives of a particular gender and race oppose to hiring persons who are not relatives and are of a different races and gender (, 2010).

Wrongful termination

Illegal discharge

Constructive discharge

Wrongful termination is the termination of employment because an employee is a certain age, religion, nationality, gender or sexual orientation. For example, an employer dismisses an employee to hire his or her relative because they share the same religious belief and are of the same race. In this instance, the employer has engaged in illegally discharging employees based on the issue of religious beliefs and race (, 2010).

Constructive discharge is a form of wrongful discharge which occurs when an employee relinquishes his or her job because of nepotism in the workplace which makes working conditions unbearable (, 2010).


A person, organization that has a direct or indirect interest or involvement in an organization is known as a stakeholder. A stakeholder can affect or be affected by the actions objectives and policies taken by the organization. Different stakeholders are entitled to different considerations since they are not all equal (Gitman, 2009).

The key stakeholders who are affected by nepotism are employees, families, management, companies and institutions, shareholders, society and customers.

Research has shown that nepotism has a negative effect on job satisfaction, job turnover and Human Resource Management. Any undesirable decision made by any organization impacts heavily on management. Nepotism paralyzes and exposes a company or institution as it undermines their competence, intentions and level of fairness. This could lead to reduce revenue, production, quality of goods and services and company ratings (Arasli, Bavik, & Ekiz, 2006) .

The stakeholder who is mostly affected by nepotism is the employees. The employees as stakeholders are those who ought to see the direction in which the business is heading. They are the ones who are supposed to point to little changes that have been made that aroused their suspicions. Nepotism is considered to be a practice which is inequitable to workers who are more competent and qualified. Nepotism directly affects an employee level of job satisfaction in such a way that management does not recognize their commitment and effort made to the organization (Arasli, Bavik, & Ekiz, 2006). Nepotism created dissatisfaction, makes workers feel offended, lowers employees moral and also low level of discipline (workers who sense unfairness question whether rules should be followed or not) in an organization. This could lead to workers producing unsatisfactory output, breach in the organizations confidentiality and lack of loyalty among employees. Nepotism could also lead to company’s reputation being tarnished since unsatisfied workers could use negative word of mouth to express their dissatisfaction. Company could suffer from reduced revenue, profits and may increase fraud (Bush-Bacelis, 2010).

The negative effects of nepotism on the employees could be reflected on their families and subsequently societies. Low morale, poor job satisfaction, job turnover are issues which arise from the work place and could contribute instability within the home. Nepotism could affect a family psychologically (e.g. disgruntled parents taking it out on children) and financially (quitting job because of nepotism, therefore not being able to provide for family). Nepotism could lead to discrimination among community members and those who have suffered from the repercussions of nepotism tend to dislike those who benefited from it, race, sexual orientation and religious beliefs (Morris, 2005).

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A shareholders main goal is to maximize their return on investments. With an issue such as nepotism which could lead several negative effects which have been mentioned above, investors would become very interested in the issues at hand. This issue could determine the amount of return a shareholder receives on his or her investment. Unhappy share holders may seek to replace management and might even consider taking their investments elsewhere. Executives especially Human Resource Personnel should definitely avoid such situations and should always take into consideration the feelings of the shareholders when making decisions (employment decisions) within the company (Morris, 2005).

Customers are primarily concerned with price, quality, or services of product. Customers recognize and evaluate quality based on the behaviour and tone of voice and in particular the attitude of the employees who serve them. Poor service and repugnant attitude could lead to a customer changing their buying habits or choosing another place which provides better service.

Dissatisfied and furious customers would lead to decrease in profits, increase job turnover and reduction on returns on investments. Therefore, management has to place job satisfaction for employees at the top of their list so that employees could better serve customers which would lead to increase revenue, profits, production and quality (Bush-Bacelis, 2010).

Nepotism, although could benefit an organization but it could easily destroy it. Family members could bring in conflicts into the work place which could hamper the effective functioning of the workplace hence changing the company’s main purpose from production of quality goods and services and profitability to love and nurture of one another. Nepotism could create disagreements within an organization that could lead to hatred among employees and management. Loss of valued personnel who contributed significantly to the day to day operations and success of the company could be a severe repercussion of nepotism in the work place. This could to a company’s inability to maintain its main goal which is profit and quality of goods and services (Ezhel, 2010).

Ethically Correct Actions

If Human Resource decides to employ family members either that of Executives or any other positions, they should ensure that they meet the following requirements;

Appropriate education for job

Work experience between 3-5 years outside of the company

Pay and performance should be determined by the position which is being filled.

Implement and enforce federal laws relating to nepotism. Anti-nepotism laws have only been implemented in some parts of the world like the United States and it needs to be enforced in places where it is not part of their culture. Anti-nepotism laws will be useless in countries like Saudi Arabia since it is part of their culture (Bush-Bacelis, 2010).

Implement and enforce anti-nepotism policies which will differ based on the country. Certain states in the US have implemented policies that prevent qualified couples from working under the same company while some believe that it is merely discrimination (Bush-Bacelis, 2010).

Managers should try to go all out to not to play favorites and must also ensure that managers under them do the same (Young, 2008).

Human Resource Personnel could start periodic employment surveys (every quarter) which would seek to help employees voice their concerns about potential or actual nepotism acts within the organization (Young, 2008).


Nepotism is an issue that can be very difficult to control once there are relatives or family members who hold key positions in organizations and who have influence of who is hired and who is not hired. In a small population like Grenada, it will be a difficult task to alleviate the problem, since ‘everybody knows everybody’ in Grenada. The term ‘pull string’ will always be an issue in our society.

Even in the more developed countries, it could be a difficult issue to combat, since there are also family members and friends employed in high level positions who can be very influential in the recruitment process. However, if policies and procedures are implemented, the practice of nepotism can be decreased, and person will be hired for their qualifications and skills as opposed to being hired because of a friendly or a family relation.

It is important that organizations avoid the practices of nepotism. Based on our research conducted, nepotism could be very detrimental to an organization and could cause a loss of profit and this could also tarnish the reputation of the organization.

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