Nepotism

Nepotism refers to the practice of people, usually executives and managers, giving relatives preferential treatment in EMPLOYMENT. Such people are in a position to heavily influence various employment-related decisions, such as hiring, firing, promotions, COMPENSATION AND BENEFITS, and discipline. A relative may be a blood relative, such a grandparent, parent, sibling, niece, nephew, uncle, or aunt; or a relative through marriage, such as a husband, wife, brother-in-law, or sister-in-law. Nepotism is usually regarded as legitimate in family-owned businesses. Nepotism can occur in the public and private sectors. In the public sector, officials may give preferential treatment to their relatives in employment-related decisions. For example, a public official who approves a bid for a government contract submitted by her husband’s firm is engaging in nepotism if other firms had submitted lower bids for the contract. In the private sector, members of MANAGEMENT may give preferential treatment to their relatives in hiring or promotion decisions. For example, a senior manager of a CORPORATION who hires her brother for a position in the corporation is probably engaging in nepotism if her brother is less qualified for the position than other candidates who applied for the job. A manager who engages in nepotism may be subjecting his organization to inefficiencies or ineffectiveness in business operations, because he is not basing business decisions on criteria that would ensure that the organization’s RESOURCES are maximized. For example, a manager of a corporation who hires his brother instead of a more qualified candidate has failed to maximize the organization’s HUMAN RESOURCES because he has failed to hire the best possible candidate for the position. In order to reduce problems associated with nepotism, such as the appearance of favoritism, some organizations have implemented antinepotism policies. Generally such policies prohibit department leaders from hiring their immediate family members for positions that are supervised by those department leaders and limit the ability of family members in the same organization to work together. Organizations must exercise care in crafting and implementing antinepotism policies so as to avoid lawsuits alleging violation of privacy rights, unlawful restraints on marriage, or employment discrimination. States differ in their treatment of antinepotism policies, and thus organizations with operations in more than one state should draft antinepotism policies with regard to the legality of such policies in each of the states in which they operate.