Categories: Managing Family BusinessUncategorized

Avoiding the Pitfalls of Nepotism — A Quick Review

In my last two posts, I discussed nepotism – how it can hurt a family business and the good kind of nepotism that can actually help a business.

Nepotism is the practice of showing favoritism toward one’s family members or friends in economic or employment terms, for example, granting jobs to friends and relatives, without regard to merit. Such practices have damaging effects on businesses, eroding the support of other employees, reducing the quality and creativity of management and diminishing the importance of competence and high-level performance.

The kind of nepotism that I have seen work in many companies is one in which business owners take advantage of relationships with respected employees and colleagues to help find and hire employees with a similar work ethic and values.

Here is a quick review of how to avoid the pitfalls of nepotism and use relationships in your favor:

Teach your children values that are eternal: honesty, integrity, dependability, respect for others, being industrious and doing one’s best in every endeavor.
Never deny your children the opportunity to learn and understand the connection between effort and reward.
Make competence and proven, sustained, high-level performance your criteria for employment of any individual, including family members.
Understand your own values and capture every opportunity to have discussions with others about those values and how they inform your decision-making, the way you run your business and the way you live your life.
Get applicant referrals from employees and colleagues whose work ethic and values you respect. This is the good kind of nepotism.

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Family Business Matters has extensive experience assisting family businesses. With many decades of experience, we understand the wide variety of challenges that families face as they work together to build, grow and sustain a thriving family business generation after generation. Through conferences, continuing education programs, family business retreats, speaking engagements and private family business consulting services, Family Business Matters has assisted more than 450 family-owned businesses around the world chart their way through family business issues of all shapes and sizes.