Nepotism: Family and Employees
Nepotism
Is hiring your nephew good for your company?
What are the hidden costs and benefits?
What policies should public companies follow?
By Ron Prokosch
The word “nepotism” in the business community originally referred to the hiring of relatives of the owner of the business.
Today, this word has been extended to refer to the existence of employees within any organization that are related to each other either by blood or marriage. Is nepotism a cost or a benefit for an organization? How does it impact morale, loyalty, employee satisfaction, and a firm’s ability to service their customers? These are critical questions that nearly every business must address. Researchers and business leaders agree that there are both costs and benefits to nepotism. However, there is disagreement on its overall impact on the bottom line of a business.
Research on the effects of nepotism has been opinion-based, rather than fact or incident based, and therefore views on the subject vary.
Nepotism pros and cons
The support for nepotism generally presents the following points:
• Lower recruiting costs: Nepotism allows firms to inexpensively identify a pool of candidates for positions (i.e. relatives of current employees). Firms that encourage hiring of relatives let their own employees do much of the recruiting for the company. However, where the objective is to hire the most qualified person for the job, limiting your market focus may not accomplish this objective.
• Lower training costs: Family members usually know a great deal about the company they are joining, and are more likely to be satisfied with what they find. It has been said that newly hired relatives are more dedicated to learning the job in order to “make their relatives proud”.
• Lower employee turnover: It is suggested that family members are often the most dedicated employees. At several of the large businesses with whom we spoke, relatives of current employees are sought out because
Is hiring your nephew good for your company?
What are the hidden costs and benefits?
What policies should public companies follow?
By Ron Prokosch
The word “nepotism” in the business community originally referred to the hiring of relatives of the owner of the business.
Today, this word has been extended to refer to the existence of employees within any organization that are related to each other either by blood or marriage. Is nepotism a cost or a benefit for an organization? How does it impact morale, loyalty, employee satisfaction, and a firm’s ability to service their customers? These are critical questions that nearly every business must address. Researchers and business leaders agree that there are both costs and benefits to nepotism. However, there is disagreement on its overall impact on the bottom line of a business.
Research on the effects of nepotism has been opinion-based, rather than fact or incident based, and therefore views on the subject vary.
Nepotism pros and cons
The support for nepotism generally presents the following points:
• Lower recruiting costs: Nepotism allows firms to inexpensively identify a pool of candidates for positions (i.e. relatives of current employees). Firms that encourage hiring of relatives let their own employees do much of the recruiting for the company. However, where the objective is to hire the most qualified person for the job, limiting your market focus may not accomplish this objective.
• Lower training costs: Family members usually know a great deal about the company they are joining, and are more likely to be satisfied with what they find. It has been said that newly hired relatives are more dedicated to learning the job in order to “make their relatives proud”.
• Lower employee turnover: It is suggested that family members are often the most dedicated employees. At several of the large businesses with whom we spoke, relatives of current employees are sought out because