How To Recognize and Avoid Nepotism in the Workplace

Imagine a small family-owned company where the owner's nephew is hired as a manager, despite having minimal experience in the field. The nephew is given a salary and responsibilities that exceed his qualifications. In spite of a lack of skills and underwhelming performance, the nephew receives little to no reprimand and boasts of the raise he received after just three months. Meanwhile, other employees who have been with the company for years and have demonstrated exceptional performance are overlooked for promotions or raises. 

This situation is a classic example of nepotism in the workplace – the nephew's familial relationship, rather than his skills and experience, is clearly influencing his employment opportunities and benefits, potentially at the expense of other deserving employees.

Using real-world examples and expert advice, this blog post explores the signs, consequences, and strategies for avoiding workplace nepotism. From implementing clear policies to fostering a culture of fairness, we'll provide actionable tips to help you create a nepotism-free workplace.

What is Nepotism?

Nepotism is the practice of favoring relatives or friends and appointing them to positions of power, especially in business and politics. In the workplace, it often manifests as hiring, promoting, or giving preferential treatment to individuals based on their familial or personal relationships rather than their qualifications, performance, or merit.

Signs of Nepotism in the Workplace

Identifying nepotism in the workplace can sometimes be subtle, but there are a few key indicators to watch for:

• Unqualified hires: If individuals are hired for positions they are clearly not qualified for, it could be a sign of nepotism.

• Rapid promotions: If employees are promoted quickly without a clear justification based on performance or experience, it might indicate nepotism.

• Favoritism: If certain employees consistently receive preferential treatment, such as more favorable assignments, more significant bonuses, or greater flexibility, it could be a sign of nepotism.

• Lack of transparency: If hiring or promotion decisions are made without a clear and transparent process, it could be a red flag for nepotism.

However, not all instances of hiring or promotion of family members are necessarily nepotistic. If individuals are truly qualified for their positions and the hiring or promotion process is fair and transparent, then it is not nepotism. 

But when these factors are not present, it can be a sign of clear nepotism, which can be damaging to a company in a multitude of ways. 

Why Should Nepotism Be Avoided?

Nepotism can have far-reaching consequences for employees and companies overall. Here are some key reasons why it's important to address and avoid nepotism:

• Undermines Meritocracy: Nepotism undermines the principle of meritocracy, where individuals are rewarded and promoted based on their qualifications and performance. This can lead to a loss of morale and motivation among employees who feel their hard work and achievements are not being recognized.

• Creates a Toxic Work Environment: Nepotism can foster a toxic work environment where employees feel resentful and undervalued. This can lead to decreased productivity, increased turnover, and a decline in overall company morale.

• Damages Company Reputation: Nepotism can damage a company's reputation both internally and externally. Employees may lose trust in the fairness and transparency of the organization, while external stakeholders may question the company's commitment to ethical practices.

• Legal Implications: In some cases, nepotism can have legal implications. For example, if an employer discriminates against qualified applicants or employees based on their lack of familial connections, it could violate equal opportunity laws.

• Limits Talent Acquisition: Nepotism can limit a company's ability to attract and retain top talent. If individuals believe that personal connections are more important than qualifications, they may be less likely to apply for jobs or stay with the company.

How to Avoid and Address Nepotism in the Workplace

Addressing nepotism before it leads to negative connotations is vital, but it can also be a sensitive and challenging topic. To help you navigate nepotism in your company, we sought advice and feedback from HR and business leaders on how they avoid and address nepotism in their own organizations.

From implementing merit-based hiring policies to leading by example and training for fairness, here are fourteen valuable strategies to handle and avoid nepotism, shared by those who've faced it head-on. 

1. Promote Fairness with Clear Policies

“As an HR leader, I emphasize the importance of our clear policies, such as anti-nepotism measures and conflict-of-interest disclosures, in promoting fairness. Our anti-nepotism policy clearly states the company's stance on hiring and promotions based on familial or personal relationships. During onboarding, we also inform new hires about this policy and ensure it is easily accessible to all employees. Additionally, we require employees to disclose any potential conflicts of interest, including relationships with other employees. This helps us monitor and manage any potential issues proactively.

Bonus tip: We always use structured interviews and standardized evaluation criteria for all hiring and promotion decisions. For example, our interview panels consist of diverse members who score candidates based on predefined competencies and skills, minimizing bias. Thus, our employees are aware that their career progression is tied to their achievements and contributions, not to personal relationships.”

Yulia Pavlova, HR Professional, Key Partnerships Manager, aqua cloud

2. Introduce Mentoring for Equitable Growth

“To address nepotism, I proposed initiating a mentoring program that matched all new hires, regardless of their backgrounds, with seasoned staff members. This demonstrated that everyone had to prove their abilities and allowed all employees to learn on the job.

My advice to people coping with nepotism is to concentrate on including family members in a disciplined growth process. Clearly defining expectations and providing encouragement will help you turn a potentially poisonous circumstance into a chance for development. Maintaining team morale and confidence will depend on all HR procedures being transparent and fair.”

Justin Crabbe, CEO, BlackJet

3. Protect Whistleblowers to Deter Nepotism

“Our organization has not experienced nepotism, and I attribute this to our whistleblower protection. According to HR Acuity, most employees hesitate to report nepotism for fear of retaliation. 30% of them would rather leave the organization than report it. Companies should promote whistleblower protection to guarantee anonymity and investigation of reports. 

Last year, a report exposed a case of favoritism where a manager promoted a friend whose performance was not as excellent as that of others. The whistleblower accused the manager of overlooking more deserving candidates. As part of our whistleblower protection, we kept them anonymous and followed through with an investigation that led to the addition of new policies in the promotion process. Knowing a functional system is in place to catch nepotism sends a strong message throughout the company. It helps avoid and handle cases of nepotism since employees are empowered to speak up, and the culprits are more cautious as they understand the consequences.”

Serhii Antoniuk, CEO, LITSLINK

4. Prioritize Meritocracy and Inclusive Culture

“I have a long history of dealing with workplace nepotism.

I was first exposed to nepotism early in my career when a family member of a top executive was employed, even though they didn't have the required qualifications. As a result, there was a high turnover rate among top performers and a poisonous work atmosphere.

I advise creating explicit recruiting procedures, ensuring all applicants meet the requirements, and including several stakeholders in the employment process as ways to combat nepotism. Objectivity and transparency are essential. In light of the potential effects on the group and company, deal with any suspicions of nepotism quickly and fairly.

Meritocracy is our top priority at Fuel Logic LLC, and we ensure every employee has an equal opportunity. Our inclusive culture and diverse workforce serve as living examples of the importance of justice and equity in the workplace.”

Eliot Vancil, CEO, Fuel Logic

5. Enforce Transparent Hiring and Address Issues

“During my tenure as Chief of Staff at a Fortune 500 company, I encountered instances of nepotism that had noticeable effects on the team. For example, I observed situations where family members of senior executives were given preferential treatment in hiring and promotions, even when they lacked the qualifications and experience. This led to frustrations among other employees who felt overlooked despite their hard work and qualifications.

To handle this, we established clear, transparent hiring policies based on merit and qualifications. These policies were communicated and enforced consistently across all levels of the organization to ensure fairness. When nepotism was suspected, I would address it directly with the involved parties privately and professionally to understand the full context and to take corrective action if needed. Promoting a culture of fairness and accountability was also crucial, ensuring that employees felt safe to voice their concerns without fear of retribution. Regular reviews and audits of our hiring and promotion practices also helped maintain compliance with the company's standards.”

Michael Ashley, Founder and Finance Expert, Richiest

6. Advocate for Skill-Based Hiring Systems

“Businesses can avoid nepotism by using a skill-based hiring system. Nepotism thrives when 'who you know' becomes more important than 'what you know.' It eventually leads to incompetence and unfair promotions. Hiring based on recommendations and shared CVs enables nepotism, as 78% of resumes were found to be misleading, while 46% contained lies. 

Skill assessment tests are a great way to verify the truthfulness in the resumes. They prove that the candidate possesses the skills they claim to have and make it harder to favor someone because they are known to you. It creates an even ground for hiring and ensures you hire the right candidate, whether they are friends or family.”

Lev Tretyakov, CEO and Sales Director, Fortador

7. Navigate Nepotism with Strategic Departures

“I strive to ensure that the working environment I cultivate for my team and colleagues is one of fairness, equality, and integrity. Unfortunately, I have experienced workplaces where this hasn't been the case, which has made me feel frustrated, helpless, and even angry.

It can be difficult to deal with in small organizations, as the usual actions of documenting instances, showcasing performance metrics, and discussing with HR do not always yield results. Should this prove to be the case, it may be best to cut your losses and explore opportunities in other departments, or even other companies.

It is not in an organization's interest to allow nepotism, as they stand to lose experience, skills, and commitment from their workforce, from both those who experience it and those who witness it.”

Laura Grant, Marketing Manager, BlueSky Solutions

8. Double-Check Recruitment Practices

“During one of the recruitments at my previous company, we were looking for a marketing specialist to join our digital team. As the head of marketing, I participated in some of the interviews during the latter stages of the recruitment process and spoke to many interesting candidates from various regions. 

One of the candidates performed much worse than the rest; he lacked some rather basic knowledge considering the position he had applied for, and I was surprised that the initial task had been done almost perfectly by him. During the live interview, he struggled with my questions. Not wanting to cause chaos in the company, I approached the HR person and asked what they thought of the candidate, and they told me they had no idea who that was, but they had a great resume, superb skills, etc. 

I decided to do some digging and found that the candidate and the HR person knew each other. Therefore, he performed so well on his own and struggled so much in the interview with me. Obviously, the candidate was rejected and blacklisted from our future recruitments, and the recruiter who had helped him get so far into the process got into serious trouble for nepotism and a potential NDA violation. 

My best advice is to trust your colleagues but double-check everything when it comes to recruitment. Such an employee can be a pain in the neck for many months, as they clearly lack the skills and ultimately will be fired anyway, but preventing it can be huge for your company.”

Martin Kanaan, Head of Marketing and Business Development, Makolab

9. Avoid Favoritism with Performance Metrics

“I am pleased to say that I have not personally witnessed nepotism in our organization. Nepotism, or any kind of favoritism, can be very damaging to an organization’s culture because it creates inequity. Any time that some people have more opportunities or leeway than others, this will leave some employees feeling resentful and drive disengagement and negativity in the workplace. It’s not just detrimental to engagement but also to productivity. Employees have less external motivation to excel in their role when accolades, promotions, raises, etc., are given because of who people are, rather than what they’ve done to add value to the organization. 

I will say that there’s nothing inherently wrong with organization leaders hiring people they know, for example, people they met as fellow students in university, or colleagues from past jobs. As long as the individuals are legitimately qualified for the position, that’s just networking. I don’t see it as becoming nepotism unless the individual is given a role they’re not qualified for ahead of someone who is qualified simply because they know someone in a position of authority. This can be a fine line to walk, so you definitely need to tread carefully as a leader if you bring someone onto the team that you have a personal, pre-existing relationship with, so that you don’t send the impression of favoritism. 

We strive to have a fair, equitable, and inclusive workplace at Airswift, and have systems in place to avoid favoritism in all its forms. One strategy that can help is to base all employee raises, promotions, or bonuses on measurable metrics related to the employee’s workplace performance. This brings more clarity and transparency to the process for both management and team members and also ensures that people are being compared based on their skills and accomplishments, not their popularity or prior relationship with leaders.”

Rob Boyle, Marketing Operations Director, Airswift

10. Introduce Panel Interviews and Compliance Audits

“First, having clear hiring policies and rules, strictly based on merit and qualifications, ensures that every decision was supported by objective criteria and well-documented. We introduced a panel interview procedure; the idea is that whenever somebody came for an interview, he or she would be judged by different people, which would greatly reduce personal biases.

I also put a very strong emphasis on open communication and the safety culture linked to voicing concerns without retaliation. This was accomplished through the establishment of anonymous reporting channels and making sure that reports received were promptly and fairly investigated.

In addition, compliance audits concerning our recruitments and promotions became the norm. These compliance audits helped us to act against biases most likely to arise and improve our adherence to the policies. We trained our management to identify practices bordering on nepotism and reinforced principles of fairness and equity in all decisions under the personnel umbrella.”

Lucas Botzen, HR Expert & CEO, Rivermate

11. Maintain Merit-Based Hiring Environment

“We believe in maintaining a fair and merit-based environment because our team is connected by vision and skills, not blood. 

We have developed clear anti-nepotism policies within our company that ensure all employees understand the importance of merit-based hiring. This helps to set the bar high and foster a culture of fairness. Our hiring process is 100% transparent and mainly focuses on skills, experience, and the potential of candidates. We use standardized interview questions and evaluation criteria to ensure that all candidates are carefully assessed on an equal footing.”

Fred Winchar, Founder, Certified HR professional, MaxCash

12. Lead by Example and Train for Fairness

“To deal with nepotism, the leader needs to lead by example—reveal their commitment to fair play and impartiality by her every action. A robust whistle-blower policy and ensuring avenues for employees to air their grievances without fear of repercussions could help keep nepotism at bay.

By implementing comprehensive orientation and ongoing training programs on ethics and unbiased decision-making, we can foster a culture that values merit-based progression. This not only deepens our approach to combating nepotism but also instills a sense of optimism and empowerment in our employees.”

Sunaree Komolchomalee, Head of Human Resources, Cupid Digital PR Agency

Final Thoughts

Nepotism in the workplace can have detrimental effects on company culture, employee morale, and overall performance. While it may seem tempting to favor family or friends, prioritizing merit and fairness is crucial for creating a healthy and productive work environment.

By implementing clear policies, promoting transparency, and fostering a culture of fairness, companies can effectively combat nepotism and ensure that all employees are treated equitably. This not only benefits individual employees but also contributes to the overall success and sustainability of the organization.