What is nepotism?

Nepotism can actually be bad for certain organizations if the family members or friends are grossly unqualified. This can cause turmoil among the staff and can have operational and profit-related repercussions as well. While nepotism can take many different forms and be done in different ways, there are two common types of nepotism:

• Reciprocal nepotism

  Reciprocal nepotism is a kind of nepotism in which a high-level professional hires a family member, and that family member takes on the role for one or all of the following reasons:

  • They are financially dependent upon the relative that hired them

  • The specifics of the extent of changes the job offer represents (better salary, workplace loyalty, better family relations)

  • Cultural norms at the company or even within the specific industry (this refers to when a specific company or industry has allowed or even rewarded nepotism in the past)

  Reciprocal nepotism is somewhat rampant in certain sectors of the economy. This normally is confined to senior-level roles, such as executives, or consulting opportunities.

• Entitlement nepotism

  This type of nepotism refers to the family member or close friend being hired feeling and acting on a sense of entitlement, just because they are related or extremely close to a senior employee at the company.

Nepotism can have many bad effects on a business. Here are some of the most common negative effects of nepotism:

• Makes for an unhealthy and uncertain working environment

  Nepotism can make regular employees feel undervalued and insecure in their roles. It can also cause them to worry about their own positions and their futures at their companies. Seeing family members or friends receive preferential treatment also often results in a strong level of animosity among the staff.

• Decreases employee morale

  Nepotism can also have a profoundly negative effect on employee morale at a company. This decreases job satisfaction rates and overall employee opinions of the company. Often resulting in diminishing employee performances and a lack of dedication.

• Nepotism can cause high employee turnover rates

  If nepotism is very prevalent at a company, then the employees may think that their hard work and loyalty to the firm are not going to pay off in the long run. Thinking they won't be able to advance their careers as far as they would like, they may opt to leave the company for an organization where they feel the advancement opportunities are greater.