1. HRM Challenge 1
Human Resource Management Challenge
Nepotism in the Workplace
Amélie Bonin
Benedictine University
Human Resource Planning
MGT 570
Tracy Elazier, Ph.D.
December 19, 2010

2. HRM Challenge 2
HRM Challenge
Nepotism in the Workplace
Amelie Bonin, Benedictine University, Lisle, IL
The following paper will discuss the challenges brought by the exercise of nepotism in the
workplace. Although some researchers believe that nepotism is declining in the age of giant
corporations, my research led me to believe that nepotism is still alive and flourishing within
the corporate world. Nepotism in the workplace is without any doubt a chocking subject but
one thing remains for sure: nepotism has flourished throughout the world for generations.
While many censure nepotism on the one hand, they practice it as much as they can on the
other. Its advocates as well as its opponents present interesting arguments regarding the
practice of nepotism. Whatever our opinion is, the practice or idea of nepotism opens the door
to important discussions an organization should have in terms of its policies and its practice and
perception of equity and fairness. Because this subject may color the entire organization and
can significantly impact not only general business management, an organization’s culture but
also employee morale and productivity, I consider this human resources challenge as an
important one to consider as it also affects directly the HR practice in regards to a company’s
policies, succession planning and performance evaluation. While I may not have any
professional experiences dealing with nepotism as an HR professional, I have experienced the
practice of nepotism in my early professional career. Consequently, because of my preference
for shocking subjects that require people to take a stand, the impact of nepotism in the
workplace has always fascinated me.

3. HRM Challenge 3
A Definition of Nepotism
At face value, nepotism involves favoritism in the treatment of subordinates on the basis of
kinship ties or affinities (Chervenak, McCullough, 2007, p.42). However, from the working
man’s perspective, nepotism has a very negative connotation has it also involves hiring
someone that is grossly incompetent. While nepotism seems to have always existed, it is
important to differentiate the old nepotism versus the new one. The old nepotism can be
explained by having involved a family hiring their family members (children are a good
example) outright or pulling strings in their behalf. However, the new nepotism operates from
the bottom up: it is voluntary and not coercive as it brings from the initiative of the family
member and not the interest of the parents. In other words, it seems more natural than planned.
While it is not considered nepotism in the classic sense, it is called nepotism because it
involves exploiting the family name, connections, or wealth in order to open doors. The method
may be different by the result is the same (Bellow, 2003). Political dynasties such as the
American political class with the Bush, Gore and Kennedy families, business heirs with
organizations such as Johnson& Johnson, Ford or Motorola, professional and elite families
such as the ones evolving in the movie, television and sports industries and the ones producing
generations of doctors or lawyers are great examples of the practice of nepotism in all areas of
life.
Different Standpoints on Nepotism: Nepotees versus the employee base
Evidently, nepotism at the workplace (or anywhere else for that matter), brings out question of
fairness and equity in the recruitment and selection process. And that is if we assume there is

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indeed one. The practice of nepotism also elicits revulsion and anger toward those who practice
and profit from it. According to Bellow’s (2003) article, nepotism is a serious matter because it
bears on the formation of elites in a democracy. While a century of sociology studies has
concluded that elite classes are a practical necessity for any society, the real question is, what
kind of elite should we have? An open, meritocratic one that is constantly refreshed or a closed
and exclusive one that withdraws into caste like isolation and seeks continuous privileges?
However, the literature suggests that it seems that more and more Americans feel that there is
nothing wrong with pulling strings for a relative or giving someone a break as long as this
person is qualified. In other words, this statement seems to say that hiring a relative is or is not
nepotism depending on the individual’s performance. Indeed, heirs or successors, even with
having the advantages of open doors and connections, walk on very thin ice in our society.
While other employees of the organization tend to give them the benefit if the doubt, they also
hold them accountable to very high standards. In fact, the first sign of failure will confirm to
employees that nepotism equals inefficiency and lack of performance. Nepotees often feel like
they need to work harder and smarter than anyone else to be accepted by others. In such cases,
nepotism appears to be a problem only when the beneficiary is judged as unqualified. While
nepotism will always exist in different shapes and forms, Business Managers need to learn to
practice it in a way that it can make it a positive force. If history shows everything is that
nepotism, in itself in not necessarily good or bad. It is the way that it is practiced that matters.
Development and Discussion
Nepotism at the Workplace
While it is hard to identify the percentage of positions obtained via the practice of nepotism, the

5. HRM Challenge 5
literature presents some interesting results in terms of recruitment strategies. Indeed, amidst
discussing Australia’s Howard Government’s “Work Choices” legislation which came into
effect in 2006 to provide changes to the regulation of employment conditions and industrial
relations on recruiting intentions, the newspaper The Mercury in its article titled Business
nepotism a family affair (2007), affirms that six out of 10 small businesses fill vacancies by
recruiting friends and family of current employees. The article adds that businesses with twenty
of fewer staff fill their gaps with words-of-mouth from those already in their ranks.
Furthermore, in another study, Werbel and Hames (1996) report that only ten percent of all
firms preclude husbands and wife working in the same organization. They also found that most
companies (no percentage provided) reported some restrictions such as prohibiting “paired
employees” from working in the same department or chain of command. However, some
exceptions occurred in firms where employees were both employed by the company before
getting married.
Obviously, nepotism has multiple faces. Hiring or not family members, friends or spouses
cause organizations to rethink their management strategies. Indeed, hiring dual career couples
working in the same organization or friends working within the same department can present
some interesting challenges and credibility issues to the organization and the individuals they
are hiring. I have shared with many people my experience working for two family owned
businesses and all working for such organizations seem to agree that the working environment
often suffered because of people not feeling the need to act professionally with others as they
are part of the same family or they were friends. While many employees from the same family
or sharing friendship with one another were trying to hide it, privileges and opportunities for

6. HRM Challenge 6
advancement were higher for those individuals as they were more prone to be included in
closed door meetings.
Weighing the advantages and disadvantages of Nepotism
Bellow (2003) in its article titled In Praise of Nepotism discusses the history and meaning of
nepotism from medieval to modern times. The author provides many examples of nepotism
cases throughout history while weighing its advantages and disadvantages. Overall, the author
explained his balanced view on nepotism by transforming the old nepotism concept in a new
and more acceptable form, one that can satisfy nepotistic impulses without violating the
American social impact. Also, Bellow (2003) introduces the opinion of Economists who
believe that nepotism is an obstacle to healthy changes in organizations and that it results in
waste and efficiency. The author also discusses another school of thought that believes that the
practice of nepotism may be a rational practice as it can reduce the cost of extensive talent
searches. In resume, Bellow (2003) firmly believes that nepotism is not a natural or God given
law but an artifact of our social and cultural history. On a personal level, while I agree that
hiring friends or family members is a good way to promote important values of trust and
solidarity, it is certainly not the only way to come up with a trustful and professional
workforce. I feel like it is a big responsibility for one to refer a friend or family member for a
role. The performance and attitude of this person is a direct reflection of our own. Having said
that, many employers prefer such references because they know how important it is to the
referee and its professional image and credibility at the workplace. However, a friendship or
blood connection does not equal an individual possessing the required skills, knowledge and

7. HRM Challenge 7
experience for any roles they desire to obtain.
The study of Abdalla, Maghrabi and Raggad (1998) regarding the perceptions of Human
Resource Managers toward nepotism seems to present all the advantages and disadvantages of
the practice of nepotism at the workplace. The study discusses its consequences not only on the
organization but on its employees, clients and overall reputation. It is without saying that this
study touches all the important points to consider when faced with the option or not to practice
or encourage nepotism. The study also has a cross-cultural aspect by discussing the perceptions
people from Arab countries have toward nepotism. Here are some advantages and
disadvantages presented as part of the study:
Advantages of Nepotism
o Allows consideration of all potential employees who might be effective
contributors to the organization versus arbitrarily excluding a large pool of
potential employees because they are related to other employees.
o Tends to foster a positive family-oriented environment that boost morale and job
satisfaction for all employees.
o Sharing of company confidential information to spouse that is part of the
organization.
o Provides at least a semi-balance of sustained entrepreneurship in an age of
corporate takeovers.
o It keeps companies alive by developing a pride of ownership and family ties.
Disadvantages of Nepotism
o Psychological malaise from the Nepotee due to tension from other employees.
o Lower morale for employees that feel like promotions and rewards are given
unjustifiably to a friend or relative.
o Exposes family conflicts (tendency to get mixed up with business decisions) and

8. HRM Challenge 8
sibling rivalry.
o High turnover due to block in advancement for other workers.
o Other’s uncertainty if promotion or hiring was done based on actual
performance or kinship.
o Companies with a reputation for practicing nepotism may not attract ambitious
professionals.
In resume, the authors found that nepotism seems to represent more disadvantages than
advantages; that it affected the functions and policies of Human Resource Managers while
directly affecting HRM’s in all of the studied American organizations. In conclusion, Human
Resource Managers in developed and less-developed countries tend to be less positive about
the advantages of nepotism. In contrast, they tend to be more negative about the disadvantages
of nepotism. In other words, cultural differences between HRM’s seem to affect their
perception toward nepotism. While this study is very interesting to read, I fell like it also
presented some very interesting but irrelevant points in trying to present advantages for the
practice of nepotism. In fact, the authors introduced different advantages of nepotism presented
by the literature by adding that nepotism engenders a family competition that insures to the
benefit of the company and surprisingly, the idea that nepotism keeps difficult younger
generations off the streets (!). These two opinions seem very weak to me. Having worked in a
family business and being able to put myself in other’s shoes (if I were the Nepotee), I must
say that family competition certainly does not engender a comfortable working environment
for the others when family members do not get along well with each other. Family competition
does not automatically mean a healthy competition spirit but can also be translates as bringing
to the office some personal issues from home. In terms of keeping younger generations off the
street, I may ask: Why would an organization want to hire difficult employees that may be hard

9. HRM Challenge 9
to train and that may not blend well with an organization’s culture, policies and unwritten
rules?
Another perspective: Ethically Justified Nepotism
In their article about a possible ethically justified nepotism, Chervenak and McCullough
(2007) explore the world of nepotism in academic health centers and discover why some
nepotism may be ethically justified. While the authors affirm that the first concern raised by the
practice of nepotism is incompetence, they argue that ethically justified nepotism is not an
oxymoron when there is a legitimate organizational interest at stake. In other words, if a
distinction is made among applicants on the basis of legitimate organizational interests and not
only on personal interests, nepotism can be justified. The authors then suggest a two step
approach for nepotism to be justified: step one: the individual offered a role must be fully
qualified even if others applicants are more qualified (as it often happens) and step two: the
decision reason for the offer is for advancing the legitimate interests and therefore mission of
the academic health center. Considering the very traditional management styles present in the
healthcare industry, I am not impressed by this simplistic approach in trying to legitimate
nepotism in hiring. Being aware of this policy and its requirements, anyone can “work the
system” and make it do what it desires. I consider this article very weak and not very
innovative. It is definitely an accurate portrait of a very conservative world that is known for its
share of nepotism in the recruitment of professionals and in medical faculties’ admission
process for students with relationship to other medical professionals.
Nepotism and HR’s responsibilities toward the organization
In their study about reconsidering nepotism, Werbel and Hames (1996) introduce the impact

10. HRM Challenge 10
nepotism has not only on general business but also on human resources management. Indeed,
the text suggests that many employers are modifying their human resource management
policies and practices to accommodate the increasing number of dual-career couples in the
labor force. In fact, employers need to revise their policies as their workforce changes: firms
employing two individuals that were hired before getting married and policies having an impact
on recruiting employees that need to relocate causing a spouse to lose his/her job would need to
be considered. Consequently, if a firm has strict anti-nepotism policies, once married, one of
employee would need to go work elsewhere and in reference to the second situation, the
organizations recruitment process may be harder for a company that does not provide any
option for a spouse to find employment within its ranks. On the other hand, employers may
experience difficulties managing dual-career couples when they are employed by the same
company as the perception of equity and fairness may come to play.
In response to those issues, strong policies need to be created. While states with laws
prohibiting marital status discrimination may make such anti-nepotism policies illegal, the
authors suggest that permitting paired employment in conjunction with other human resource
management policies would be one way to address this aspect of workforce diversity. Asking
questions such as under what circumstances should paired employment be permissible? may
help create policies that will limit having one spouse in the same chain of command or in the
same department as the other spouse. Therefore, transfer policies may need to be promulgated
to avoid such situations. In other words, if paired employment is permissible, efforts need to be
made to minimize the risks associated with nepotism.
Werber and Hames (1996) suggest that performance appraisals could be used to reduce group

11. HRM Challenge 11
dynamics issues by addressing interpersonal relationships and ability to work as a team as part
of the evaluation. Indeed, if paired employment creates problems with group dynamics, the
interpersonal relationships and teamwork dimension should be used to correct those problems.
Consequently, the authors assume that the ability to make fair and objective personnel
decisions should not be to compromise on an individual’s job performance and the organization
management style and expectations. While I agree with the use of performance appraisals and
the creation of specific policies in regards to the presence of a more ethical nepotism, I feel like
an organization should protects itself by standing up very clearly on nepotism by openly
accepting all of it or not at all. Otherwise, an organization may expose itself to legal problems
(discriminations cases) if as an example, one employee argues that his/her spouse is qualified to
occupy a role in the same organization. I believe that keeping a grey are in such as subject is
too dangerous in terms of the consequences it has on employee morale and productivity. Also,
the literature has confirmed that a lack of trust by employees can have serious impact on an
organizations reputation and ultimately on its survival.
Negotiating Nepotism: How to deal with it
In his article on how to negotiate nepotism, Hutcheson (2002) discusses his own personal
experience working for a family business. Because the author believes that nepotees are often
very unproductive and overpaid and that the sour relationships they spawn becomes a serious
drag on an organization’s morale and profitability, the author believes in creating a written
employment policy for family businesses that will keep the business efficient and family
members on the same page. Overall, this article states that unclear professional guidelines are
ripe ground for friction and inefficiency. Another article also suggests that human resources can

12. HRM Challenge 12
promote fairness and consistency within companies that allow nepotism: Grenshing-Pophal
(2007) admits that it is difficult for HR to establish, clearly communicate and apply
consistently policies and practices when employees and perhaps even top management are
related. Because nepotism has an impact on virtually all functions of HR, including hiring,
performance evaluation, compensation and succession planning, the authors suggests to avoid
disconnect between HR and the leaders of the organization by making sure they are no
surprises and that everything is handled in a transparent and consistent way. In fact, the article
mentions that problems arise when employee suspect favoritism or if the criteria for selection
and promotion decisions appears to be different according to whether the person is or is not a
family member or friend of the owner or Manager. In an effort to make nepotism easier to
manage, the author presents three steps:
o First step-Do not play favorites: If nepotism is allowed within the organization,
establish the same human resources criteria and expectations for all employees.
o Step two-Require family members to get outside experience: This will benefit all parties
involves in the process.
o Step Three-Provide management support: All Managers in the organization need to
know that they will be supported in their decision to promote, transfer, fire or discipline
family members or friends as they would for any other employees.
Finally, in his article about how to stop nepotism at its beginning, Morrissey (2006) discusses
her own negative experience working for the family business. Based on her experience, she
suggests the following guidelines in trying to “turn the issue of nepotism from a hot-button
topic into a non-issue by following some simple guidelines”(p.162):
1. Formalize job duties: Like any other employee, match their skills set to the
requirements of the position.
2. Make sure family members stick to their skill sets.

13. HRM Challenge 13
3. If it is a family business, run it as such: it is important that employees understand the
entire culture of the organization.
4. Prove yourself: The nepotee is there to enhance and improve the organization, not to
replace any other employee.
5. Be upfront and honest: Talk about short and long term goals by keeping employees
consistently informed about what is going on within the organization.
6. Not every family member is suited to be President or CEO: a namesake does not
guaranty a free pass to the top of the corporate hierarchy.
7. Ensure that family members assert themselves gradually: Learn to understand the
business before expecting to earn the right to tell someone he/she did something wrong.
8. Do not sweat it if the family business is not for everyone: Family members should not
be pressured to work in the family business.
9. Maintain high performance expectations for family members: Make sure everyone is
treated equally.
10. Learn from the experience of others.
11. Be professional and provide opportunities: Make sure that family members maintain a
professional and caring management style with all employees.
On a personal note, while the three mentioned articles present some interest guidelines for
nepotees, businesses and the human resources function on how to minimize the potential
negative effects of nepotism at the workplace, I still believe that whatever may be done
management wise to make it less threatening; nepotism will always keep its negative
connotation. Human beings being emotional and rational creatures all at the same time, it
seems understandable for me that employees feel threatened by a family member or friend of a
higher level employee. The first reaction might be in a distrust and disappointment in the
organization while time may tell that the best way for an employee to feel comfortable with
nepotism is by making sure that he/she is appreciated and recognized by the nepotee. In other
words, nepotism resulting in nepotism seems to be the only way an employee could feel

14. HRM Challenge 14
protected.
Application
Personal recommendations on Nepotism
As it relates to the organizations I worked for that practiced nepotism versus the roles I
occupied in them, my job requirements, expectations and status unfortunately did not allow me
to have a say in any creation or amendment of company policies. In those cases, I have been a
witness to acts of nepotism and I saw first hands the negative (and slim positive impact?) it had
on organizations. As an employee, I was part of the ones that had to adjust to nepotism the best
I could. Unfortunately, the companies I worked for shared the fact that management did not
believe in open communication or any type of employee feedback or suggestions on the
organization’s business management. They all believed in a top to bottom decision making
process.
Surprisingly, all these organizations, a global pharmaceutical company, an automobile
dealership, a food and beverage music distributor and a luxurious resort, even if quite different
in their strategies and mission, offered the same characteristics: they all practiced a quiet, fast
track, “in the closet” nepotism. Individuals were hired and introduced to the organization as
other employees but everyone knew he/she was a family member or friend of management.
While the literature has introduced some interesting guidelines for organizations desiring to
continue hiring people with kinship tights to other employees, research is very evasive in terms
of ways to manage nepotism when it goes wrong. As an example, how is a termination
managed when the other spouse works for the organization? If a couple divorces, should they

15. HRM Challenge 15
still be allowed to work within the same department? How would an employee transfer be
managed if the other spouse works in the same company? Because the bottom line for all
organizations is workforce productivity, would these difficult situations cause a potential
decrease in productivity and per extension, affect employee morale and workplace ambiance?
The main question may also be: to what extend are paired employees more or less productive
than their counterparts? Overall, the literature needs to dig deeper and play devil’s advocate by
considering all the possible consequences of the practice of nepotism when real life intervenes
and tough decisions need to be made.
Summary
My experience as well as my interest in the literature regarding the practice of nepotism leads
me to believe that while people will always feel threatened by nepotism, the best ways to make
it less of a negative impact is definitely to have or maintain open communication channels and
not try to hide things. Creating defined job duties for nepotees as well as having them utilize
their skills by putting them in the right position to secure success is key to a more ethically
practiced nepotism at the workplace.
In other words, by managing them the same way as other employees and not employing them
as watchdogs will diminish the idea of favoritism other employees might have towards such
newcomers. I also believe that hiring nepotees with at least some experience in the company’s
industry of business is very important not only for the organization and the nepotee but also to
facilitate his/her introduction and acceptance from others within the organization. After all,
whatever their skills and experiences are, all hires need to be able to add value to the business

16. HRM Challenge 16
process. In doing so, people get acknowledged and respected by others in the organization. For
a nepotee to come to work with a bad attitude and a sense that he/she has a God-given right to
be part of the organization as opposed to feel privileged to be part of it will certainly cause
conflict.
The practice of nepotism does not only affect employee morale, productivity and daily business
practice. It also has a direct effect on succession planning strategies. In fact, as per Bellow
(2003), succession planning is a vitally important concept: according to the U.S. Small
Business Administration, only thirty percent of family-run companies today succeed into
second generation. An even smaller fifteen percent survive into the third. Having said that,
many experts believe that the main reason is a lack in orderly succession plan. Considering a
majority of American companies are family run, this survey portraits the reality such
companies are now facing.
Finally, being aware that the selection and hiring process needs to be aligned to the business
strategy and the organization’s values is the principal concern hiring Managers should have
when welcoming people in their ranks. Therefore, standardizing all processes for all individuals
part of the organization and being open and honest about what is going on within the
organization will most certainly help employee relations, workplace ambiance and overall
productivity.

17. HRM Challenge 17
References
(n.d). Business nepotism a family affair. Mercury, The (Hobart), Retrieved from Newspaper
Source database.
Abdalla, H.F., Maghrabi, A.S., Raggad, B.G. (1998). Assessing the perceptions of human resource
managers toward nepotism. International Journal of Manpower, 19(8), 554-570. Retrieved from
Business Source Elite database.
Bellow, A. (2003). IN PRAISE OF NEPOTISM. Atlantic Monthly (10727825), 292(1), 98-105.
Retrieved from Academic Search Premier database.
Chervenak, F. A., McCullough, L.B. (2007). Is Ethically Justified Nepotism in Hiring and

18. HRM Challenge 18
Admissions in Academic Health Centers an Oxymoron? The Physician Executive, 42-46. Retrieved
from Business Source Elite database.
Fisher, C. D., Schoenfeldt, L.F., Shaw, J.B. (2006). Human Resource Management (6th
ed.).
Cengage.
Hutcheson, J. (2002). Negotiating Nepotism. Financial Planning, 32(2), 75. Retrieved from
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Morrissey, H. (2006). How to Nip Nepotism in the Bud. Franchising World, 38(10), 161-163.
Retrieved from Business Source Elite database.
Grensing-Pophal, L. (2007). All in the Family. HR Magazine, 52 (9). Retrieved from HR Magazine
Source Database.
Werbel, J., Hames, D. (1996). Anti-Nepotism Reconsidered: The Case of Husband and Wife
Employment. Group & Organization Management, 21(365). Retrieved from Business Source Elite
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