Nepotism: An Organizational Windfall or Landmine? From the White House to Your Favorite Mom-and-Pop Nepotism: An Organizational Windfall or Landmine? From the White House to Your Favorite Mom-and-Pop

Nepotism: An Organizational Windfall or Landmine? From the White House to Your Favorite Mom-and-Pop

Nepotism (noun): the practice among those with power or influence of favoring relatives or friends, especially by giving them jobs.
 
The last political cycle demonstrated just why a policy on nepotism is crucial to any well run organization, including the Presidency of the United States. In the White House, daughter works for dad, son-in-law works for father-in-law, and so forth.
 
The same may be inevitable in your organization. What if two relatives end up working in the same department? What if two employees already working together decide to marry? What if a husband supervises his wife?
 
Not only are policies a good idea to prevent interpersonal conflict and limit any impact to decision making or productivity, but they are key to defeating a discrimination claim. For instance, what if your policy provides that spouses cannot work in the same department, but two employees decide to marry? Keeping in mind that some courts have previously found that discrimination on the basis of marital status is the same thing as discrimination based on sex, who should change departments?
 
A carefully thought out policy, consistently applied, can go a long way to provide guidance and defeat claims of discriminatory treatment. As an initial matter, employers should consider the advantages and disadvantages of having relatives work together. For sure, there are significant benefits to allowing nepotism in hiring and promotions, including: 
 
  • Saving costs on recruiting and training;
  • Helping to reduce employee turnover; and
  • Creating more accountability because of familial pressures to do a good job.
On the flip side, there are serious pitfalls to allowing relatives to work together, such as:
 
  • Spoiling employee morale by bypassing an otherwise stellar employee;
  • Inhibiting company growth if strong candidates are passed over for a relative;
  • Discouraging corrective action by managers either directly or by their perception that they cannot take action; and
  • Lessening the focus on ethical obligations and priorities. 
With these considerations in mind, a relevant policy should cover the rationale for the policy, so managers can fully appreciate and understand the hiring parameters, the definition of “relative,” whether there are any limitations or exceptions, and who is tasked with administering the policy. 
 
In order to reap the potential benefits of nepotistic hiring and encourage employee morale, consider taking the following protective steps:
 
  • Make the applicant undergo the formal hiring process;
  • Inform the applicant that a relative will not influence the hiring decision;
  • Do not provide any assurance of hiring to the familial applicant; and
  • Avoid having a relative involved in the interview process.
Once relatives are employed by the company, there are several steps an employer can take to lessen the disadvantages of nepotism and increase the organizational advantages including:
 
  • Telling the employee the importance of the company rules;
  • Reminding the employee that s/he will not receive special forgiveness in case of any rule-breaking; and
  • Openly discuss and clearly convey the company values to all.
Nepotistic hiring can offer great organizational opportunities if implemented with transparency and consistency. Strengthening employee loyalty and building a cohesive workforce are just two examples of yields when nepotistic hiring is accomplished pursuant to a thoughtful policy, consistently applied. There should be room in every organization for good candidates.

To obtain more information, please contact Catherine Strauss or any member of the Ice Miller Labor, Employment, and Immigration Practice for further guidance.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances. 
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