Nepotism in the workplace: what is it and how can it affect the working environment?

Life isn’t always fair. We see examples of favoritism everywhere, from the so-called “teacher’s pet” to the nephew of a police officer who is always getting in trouble yet never faces any consequences. But when it happens in the workplace, it could be an example of nepotism, which can lead to employee dissatisfaction and leaves companies vulnerable to allegations of unscrupulous conduct. It’s important to get a clear picture of what nepotism is, how it affects the company culture, what it looks like, and how to prevent or rectify it.

In this article, we’ll discuss the concept of nepotism in the workplace, including:

• What is nepotism?

• The two types of nepotism

• What does nepotism in the workplace look like?

• How nepotism damages a workplace

• 5 Ways to deal with nepotism in the workplace

What is nepotism in the workplace?

Nepotism is a form of favoritism shown toward family members or others connected to people in power. The word “nepotism” comes from the Italian, “nepotismo,” which means “nephew” and dates to 1655–65. (So it’s not a recent phenomenon!) Nepotism happens when those in charge hire or promote a favored person within a company while passing over more qualified candidates. 

Some examples of nepotism in the workplace include: 

• Ignoring the person’ habitual lateness or sloppy work

• Allocating a lighter workload to the favored employee

• Giving the family member a promotion over more qualified co-workers

• Paying the family member a high salary than their peers

Is nepotism illegal in the workplace?

In the private sector, nepotism isn’t illegal per se, but it is considered unethical, and if it appears discriminatory in any way, it can leave a company vulnerable to lawsuits. For example, Title VII of the Equal Employment Opportunity laws “prohibits employment discrimination based on race, color, religion, sex, or national origin.” If an employee can prove that a relative or other "connected" person was hired to discriminate against someone in those protected groups, they might be able to sue.

However, nepotism is illegal in many government jobs. For example, in Illinois, there is a nepotism in the workplace law that states, “A State Agency Head may not appoint, hire, promote, advance, or advocate for the appointment, hiring, employment, promotion, or advancement, in or to a position in any Governmental Body, any individual who is a Relative of the State Agency Head.” And there’s also a federal law, at 5 U.S.C. § 3110, that bans the hiring of relatives as well. While it still happens, it’s against the law and generally not something that is flouted in the workplace, as it greatly goes against the concept of federal jobs being merit-based.

What are the two types of nepotism?

When considering nepotism in the workplace, it’s important to distinguish between the two types that might manifest. While both create a difficult power dynamic in the workplace, they are distinct.

Reciprocal nepotism 

This type of nepotism happens when a person in authority hires a family member, who accepts the position based on financial dependency, the scope of the exchange, and cultural norms within that environment (i.e. this is a regular and expected occurrence at this company).

Entitlement nepotism 

This type of nepotism occurs when a friend or family member feels entitled to a job because of their “connection” to the boss. This type of nepotism happens frequently in family-run businesses — for example, the owner of a company hiring her niece, a recent college graduate, for a management-level position.

However, hiring family members can be acceptable in certain circumstances. If the owners of a family-run business wish to hand over the company to their children, for example, they can avoid any appearance of impropriety by having the children start at the bottom and work their way up, allowing them to be fully prepared to "take the reins" when the time comes. And appearances of nepotism in larger companies can be avoided if the boss is not the relative’s direct supervisor or doesn’t have any say in the family member’s salary, promotions, or workload.

What nepotism looks like in the workplace

If your boss hires their nephew, is it cause to sound the nepotism alarm? Not necessarily. It’s only nepotism if there are concrete examples of that relative receiving clear favoritism. So what does that look like?

• The relative is obviously unqualified or underqualified for the position.

• The family member behaves unprofessionally and doesn’t fear reprimands or firing.

• The connected employee receives promotions over clearly more-qualified colleagues.

• The favored hire earns more than more-experienced employees.

These occurrences, while harder to spot in larger organizations, nonetheless demonstrate poor leadership and clear evidence of nepotism, leading to lower morale and productivity in the workplace.

The negative consequences of nepotism in the workplace

When employees feel that a particular hire is the result of nepotism, it can create a toxic environment with diminished morale. If employees believe they “just can’t win” against a favored employee, they may question why they should continue to do their best work. There is likely to be a decrease in productivity as well. When executives hire someone who isn’t qualified, there will be a higher level of errors that will need to be corrected, which slows down the workflow. Hiring unqualified relatives can cause staff to lose confidence in company leadership as well, resulting in lower engagement, insubordination, and resentment.

Nepotism can also increase employee turnover. If workers feel like they’re being treated poorly, they may leave for better opportunities elsewhere. And this can be expensive — according to the Society for Human Resource Management (SHRM), the average cost to replace an employee is almost $4,700. Many experts estimate the total cost to be three to four times the position’s salary!

Dealing with nepotism at work

While it’s tough to watch other, less qualified employees be granted favor in the workplace, seemingly because they’re related to the boss, it’s important not to fly off the handle. It may not be what you think. But if it does seem that you’re working for a company where nepotism is an obvious and blatant issue that is affecting your job satisfaction and professional development, here are five things you can do:

1. Take a moment to reflect. Just because someone is related to the “big boss” doesn’t automatically mean nepotism. That relative may actually be qualified for the job. So before you point fingers, make sure you have the whole story.

2. Stay professional, even if you’re planning to leave the company. You can’t be responsible for someone else’s actions, only your own. Continue showing up on time, developing your skills, and doing your job.

3. Keep a record of your job performance. Don’t make your career path all about someone else. Document your achievements, utilizing hard data when applicable.

4. Be careful who you talk to. If you need to discuss a nepotism situation with someone, Human Resources may not be the right place to go. Look for someone higher up in the company who has no connection to the relative and bring your documentation to them. This supporter may be able to help you figure out how to voice your concerns while avoiding repercussions. 

5. Take good care of yourself. Whether it's talking to a therapist, spending time with family, or performing your favorite leisure activities, your personal well-being should be a top priority. And remember, nepotism isn’t something that’s being done to harm you personally, so stay focused on the “big picture.”

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Key takeaways

1. Nepotism is a form of favoritism shown toward family members or others connected to people in power. 

2. There are two types of nepotism: reciprocal and entitlement.

3. Signs of nepotism include underqualified hires, unprofessional behavior, undeserved promotions, and higher salaries.

4. Ways to deal with nepotism in the workplace include staying professional, documenting your own job performance, and tending to your personal well-being.