Although hiring family and friends is not always unethical, favoring them over more qualified employees can lead to business problems. When unfair nepotism in the workplace affects your company, highly motivated employees may leave, and the productivity and morale of teams will take a hit.

Throughout this post, you’ll find tips on how to both spot subtle signs of nepotism and deal with it effectively.

What is Nepotism in the Workplace?

Nepotism in the workplace is favoritism shown to relatives in the form of extra privileges. These privileges apply to hiring, promotions, work schedules, pay raises, and so forth.

Sometimes, nepotism is associated with favoritism or cronyism. It is necessary to make a distinction between them. Accordingly, cronyism and nepotism are both forms of favoritism in the workplace. However, they have distinct dynamics and relationships of various kinds.

While nepotism usually involves family connections, cronyism occurs around personal friendships or relationships beyond the family. In a professional setting, it appears when people in power positions favor their friends, allies, or associates.

What are examples of nepotism in the workplace?

One of the famous examples of nepotism in the workplace is probably Rupert Murdoch’s case. Shareholders are suing Rupert Murdoch’s News Corp for alleged nepotism in buying his daughter’s TV production company for more than 400 million pounds.

Nevertheless, nepotism can appear in a variety of situations at work that are not that evident or prominent. Here are some examples that illustrate what nepotism might look like in the workplace:

  • Nepotism in the hiring process. Decision-makers show preferential treatment by overlooking standard hiring procedures for their family members.
  • Promotions and nepotism. Family relatives may be fast-tracked for career advancements without the same level of performance or experience as another colleague.
  • Salary and nepotism. Nepotism shows up in unequal compensation programs, where close relatives of a manager receive higher wages or variable compensation options that are more generous.
  • Project selection and nepotism. Employees with personal connections might escape challenging or undesirable tasks that are part of their job responsibilities.

Is nepotism in the workplace illegal?

From a legal standpoint, it’s generally okay to hire family members. Some private companies’ top management are family members. There is no violation of any law. It can also be otherwise, too. For instance, specific government jobs have rules that say you can’t hire or give special treatment to your relatives.

Generally, problems can arise if favored treatment or bias starts influencing a company’s employer policies and decisions, which may affect everyone. There’s a law named Title VII, which states you can’t discriminate against people based on things like their race, religion, color, national origin, or sex. The employee can take legal action if they believe that the company is discriminating against them. 

5 Signs of Nepotism at Work

Here are some five signs to spot nepotism in your company.

  1. Unexplained favoritism. Regular and unfair favoritism towards specific employees, especially if they are relatives of senior management, is a red flag. Usually, such behavior results in preferential treatment regarding assignments, promotions, or other opportunities.
  2. Lack of transparency in HR processes. In situations where decisions occur behind closed doors on unclear criteria, personal relationships may influence them.
  3. High concentration of relatives. There may be nepotism going on if there are a lot of family members in key positions in the organization. It could raise questions about fair employment practices if a large percentage of employees are related to or closely connected to each other.
  4. Rapid advancements without proven performance. Nepotism likely takes place when people with personal connections are hired and promoted in their careers without demonstrating any merit or relevant experience. 
  5. Secrecy in decision-making. The practice of making decisions about hiring, promotions, and other significant matters discreetly and without clear communication may be a sign of nepotism, too. 

How Nepotism Impacts Your Workplace

Nepotism in the workplace can negatively affect a company’s psychological climate, even though hiring friends and family can be legal. Here are some workplace effects of nepotism.

Create a Toxic Culture in the Workplace

As a result of preferential treatment for family members in the workplace, other employees may feel overlooked. Nepotism, therefore, can cause tension among employees as they perceive inequitable treatment. Because of this strain, work relationships can deteriorate. In addition, workplace stress increases, which can result in an overall dysfunctional and unhealthy work culture.

Limits Employees’ and Company’s Potential

Typically, nepotism prevents qualified employees or candidates from hiring or advancing their careers. For example, not hiring the most suitable candidate for the job reduces the company’s performance and output. 

In another case, when someone in charge neglects employees other than family members, it reduces the company’s and dedicated employees’ potential. Since their employers do not recognize them, they cannot work at their full potential, which hinders development. Hence, companies lose the ability to build strong teams; and attract and retain top talent. 

Tanks Employee Morale 

Nepotism can also have a negative impact on employee morale. A promotion to a manager’s relative who misses deadlines and acts disrespectfully is likely to disappoint and irritate employees who do not have a close family relationship with their manager.

Employees may question the worth of putting in their best effort if close family ties seem to be the deciding factor for promotions. By believing this, employees may lose their sense of connection to the company’s mission, resulting in them delivering the bare minimum rather than giving their best.

Enhance Employee Turnover Rates

In addition to negatively affecting morale, nepotism can also lead to an increase in employee turnover. A valuable employee may choose to leave a company where nepotism prevails.

The replacement of skilled employees will be costly for the company. These expenses include recruitment costs, job board fees, and training new employees. 

Low Trust in Leadership 

The correlation is that a manager who behaves unfairly becomes untrustworthy to their team. When they attempt to delegate responsibility, they may face pushback or see disappointing results.

Also, the destructive practice of nepotism can result in the wrong people being in leadership. The lack of authority in your company can harm your reputation, lead to poor decisions, and cause a high turnover rate. 

How To Handle Nepotism in the Workplace

Putting an end to nepotism in the workplace requires tackling the problem holistically. Here are some broad strategies, along with examples, for managing and diminishing the impact of the nepotistic culture.

Make a Comprehensive Assessment of the Situation

As soon as you notice any signs of nepotism in your company, research the facts to ensure it exists. You can, for instance, meet with alleged persons engaging in nepotism one-on-one. After that, collect feedback from your employees so that you have a thorough overview. When you use employee feedback and observations in the workplace, you can identify the root cause of a problem.

Empower Employees to Report Nepotism Anonymously

Employees may hold back reporting favoritism in the workplace because it often takes place at management levels. Instead, provide them the ability to disclose nepotism safely and anonymously, encouraging them to speak up. You can detect and address relative-related workplace favoritism after analyzing results from employees.

💡Use anonymous and swift feedback tools, like, to let your employees speak out about nepotism, discrimination, and bias freely and without fear of reprisal.

Develop Transparent Anti-Nepotism Policies

Clearly define the company’s position on nepotism and develop transparent no-nepotism policies. In these guidelines describe in detail the criteria for hiring, promotions, and other employment decisions to maintain transparency. For instance, guidelines may emphasize hiring decisions based on merit, skills, and qualifications rather than personal relationships.

Additionally, make sure you set up a clear communication channel for sharing these policies within your team. It should be easy for employees to voice their concerns and opinions. This way, you can address perceived biases and foster an environment where everyone feels heard.

Engage the Whole Team in the Hiring Process

Another easy way for nepotism to affect hiring decisions is through senior employees who do not directly understand the role they are hiring for. It is important to avoid the monopolization of the process by one manager.

It is difficult to fill all roles democratically since everyone on the team cannot participate in the hiring process all the time. Still, let colleagues, supervisors, and managers be more involved in decision-making. 

Adopt Transparent and Fair Promotion Criteria

When there are clear criteria for every promotion, everyone knows that only employees who do a great job gain promotions. This company’s promotion criteria should include an employee’s performance based on measurable results. 

A promotion policy usually cuts down on favoritism and improves fairness by making sure everyone knows exactly what expectations are. It is important for employees to know how to perform and what they need to do to receive recognition. According to data, around 69% of employees say they would work harder with more appreciation from employers.

Implement Training and Awareness Programs 

One of the best ways to reduce the impact of nepotism is to educate employees and managers about its effects. Ideally, to accomplish this, workshops and training sessions will be most beneficial. Case studies and scenarios help demonstrate the consequences of biased decision-making, for example. In addition to raising awareness about fair employment practices, these programs can promote a more inclusive workplace environment. 

Developing a Thriving Company Culture To Prevent Nepotism

As a rule, a company’s values determine employee interaction, decision-making, and perceptions of fairness. Therefore, nepotism in the workplace can be avoided if a solid workplace culture is nurtured. 

Here’s how a solid organizational culture works to prevent nepotism:

  • Clear values and ethics. Strong cultures often have well-defined values and an ethics code. Values can explicitly imply fairness, equality, and avoiding favoritism based on family ties.
  • Focus on meritocracy. A culture that values meritocracy prioritizes skills, qualifications, and performance over personal relationships. This mindset fosters a fair and equal environment that prevents nepotism.
  • Transparency in decision-making. Having a transparent culture means that decision-making processes are open and easily understood. Employees’ level of trust in the company’s decision-making process is directly proportional to their level of understanding of that process.
  • Employee empowerment. In cultures of empowerment, employees are encouraged to express their concerns without fear of retaliation. As a result, we can catch problems with nepotism early on and fix them before they escalate. 
  • Diversity and inclusion Cultures that value diversity foster an environment where people’s skills and contributions matter more than close relationships. All employees feel a sense of belonging in such a culture, boosting teamwork.

Track any Changes in Teams’ Mood with

Overall, companies need to take steps to prevent nepotism to maintain a productive, inclusive, and positive workplace culture. Transparency, transparent policies, and an equal-opportunity environment are all critical to curbing nepotism.

One of the best ways to identify nepotism in the workplace is to keep an eye on employee morale regularly. Check employees’ moods whenever there are any changes at the workplace, such as unfair hiring, job assignments, and promotions.

Your company can improve workplace satisfaction or keep things running smoothly by collecting the most employee feedback. Employee satisfaction surveys like will help you gauge current conditions and monitor changes more effectively. Managers can then receive detailed statistics and offer effective help when they notice a decline in an employee’s indicators.

Ready to unleash the potential of well-managed employee satisfaction? Book a free demo to learn more about Beams.