Credit: David Porter

Relationships with Nepotism

“Oh yeah, I was this close to getting a chair in the Polish Philharmonic, and I nailed the audish, but I didn’t get it. You know who did? Yo-Yo Ma’s cousin, little nepotiz” Jack Black character Dewey Finn from School of Rock

For some reason, nepotism has been on my mind lately. Perhaps the lingering effects of the summer solstice. It reminded me of working with several successful businesses that taught me a few things about the topic.

Should companies explicitly address nepotism or ignore it?

The answer is that it’s useful to acknowledge and address its existence and provide clarity to all employees on leadership’s point of view. This is as important for the boss’ children, siblings, cousins, and friends as it is for other employees. Taking a defined and transparent approach is respectful and reduces the negative chatter around the appointment of family and friends.

By definition, relatives are part of the team in a family-owned business. The challenge for owners is to find roles that match the task with the talent of the individual. This is no different than what’s done with other employees — find the right person for the job in terms of attitude and aptitude and hold them accountable for their performance. In situations where a family member is chosen over a non-family member for a role, questions inevitably arise about the choice. In addition to the pressure of the job, the family member takes on the added burden of other employees questioning their abilities and right to the post. This is an occupational hazard of being a family member.

As a teenager, I worked for my brother in his restaurant. While the team was supportive, I still felt the need to do everything I could to prove I deserved the opportunity. I showed up early, stayed late, volunteered for extra shifts, asked questions to learn the job, and was welcomed as an equal a short time later. In my experience, most family members feel the pressure to do more than others due to an existing work ethic, the fear of disappointing a parent or sibling, or the feeling that they are undeserving of the job. And that occurs even if they are model employees.

If it’s true, as I believe, that each of us shows up differently at work each day, it’s doubly true of a family that works together. Drawing a bright line between what happened at home that morning or during last night’s family dinner is difficult. Managing that dichotomy requires a level of discipline and self-control that is difficult to maintain, but necessary to avoid adding stress to the work of serving customers.

Nepotism shows up as favoritism to friends and family members. How the topic is handled depends on factors like company values, culture, leadership abilities, and type of organization.

Family-owned businesses

Anyone considering a position in a family-owned business should take the time to understand the dynamics of leadership, culture, and interpersonal relationships. How much of the environment is driven by the family dynamic rather than the professional one? Are there inherent conflicts and interpersonal struggles? Does the family handle these outside of the workplace or openly engage at work? Is the culture positively or negatively confrontational? Are issues raised and handled quickly or do tensions remain unresolved? Is there high staff turnover? Are there undiscussable issues when it comes to friends or family? Is the atmosphere in the place energy-sustaining or energy-draining? Is the tension apparent to customers?

Privately-held businesses

These businesses are not necessarily family-owned, but may have friends and family working with each other. A best practice is to write a simple nepotism policy that clarifies how family members work together. Many organizations encourage friends and family to work together as it demonstrates a healthy culture that integrates personal and professional roles. Many of the best employees I’ve hired came from existing employees recommending friends or family for positions.

In these cases, it is a good idea to separate family (and perhaps friends) from direct reporting relationships to avoid the appearance of a possible conflict of interest. This isn’t always possible in smaller businesses, but helps avoid potential issues with favoritism which can undermine working relationships. At a minimum, leader awareness of appearances helps avoid issues with the broader team.

Publicly-traded businesses

The level of governance required in a publicly-traded company generally drives the adoption of a nepotism policy to protect the interests of shareholders and other stakeholders as well as provide arms-length protection for senior leaders and employees. Adopting a clear policy that demonstrates objective hiring policies, clear lines of authority, avoidance of direct reporting lines, and purchasing guidelines with related parties is a good place to start.

In my experience, there is a self-correcting process in place within high-performing companies that mitigates the effect of favorited family or friends being hired for positions for which they are not qualified. Whatever the relationships, the success of the business usually takes precedence over other things. Ultimately, getting in the door is one thing and delivering results another. A bad hire of a family member or friend often takes longer to address than other bad hires, which distracts leaders and owners from the business. Further, the credibility and effectiveness of the hiring manager is called into question if the mistakes happen with family or friends. This lesson, once learned, tends not to be repeated.

Confronting others is one of the toughest things we do as leaders, and a personal relationship makes it even harder to act. Avoiding this pain often leads us to establish hiring and promotion policies that reward merit rather than personal relationships.

Hiring Family and Friends

As a leader deciding on a role for family or friends, thoughtful consideration should be given to several questions:

1. What happens if things turn pear-shaped? Do I have the appetite to fire a family member or friend? And if I do or don’t, what are the consequences to my relationship and my company?

2. Would I hire this person independent of my relationship with him?

3. Can I be candid in managing this person’s performance or do I need to pull punches because of our relationship? Is it fair to other employees looking to me to lead and hold myself and them accountable for results?

4. Have I created the kind of culture that will allow this family member or friend to be successful?

5. Does this hire contribute to the organization being dramatically more successful? If so, is the added responsibility of making this decision the best thing for the candidate and the company?

6. Have I done the right thing up to now? For existing family or friends on the team, would I hire them again today if I had the chance?

Takeaway: The decision to work with family and friends will receive scrutiny from your employees and other stakeholders. Creating transparency in policy-setting, hiring, and managing will help mitigate concerns. Early consideration of the risks and benefits of adding family and friends to your organization can save everyone significant time and frustration in the long run.