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Whether it’s a sibling, child, cousin, niece, or nephew, working with a family member can be appealing for so many reasons. 

As human beings, we’re all hard-wired to want to see our family succeed and help each other out when a relative needs it. Families hold similar values and can often get behind the same goals to drive success within a company.

That’s what prompts so many Americans to start family businesses or hire relatives. While there are benefits, working with family can cause many to skirt the line of nepotism.

How can you avoid this potentially harmful practice, and navigate many of the other challenges of working with family?

What Is Nepotism?

Nepotism has a long-standing history in most of the world’s cultures and even the animal kingdom. The word originates from the Latin root nepos, which means nephew. It comes from Catholic priests, who would often appoint their illegitimate sons and other family members to prominent church positions. Often, these priests would call their sons “nephews” to avoid suspicion. 

In U.S. society, “nepotism” can be a bit of a dirty word. The same is true in many cultures that value individualism. However, nepotism can be a good thing. In Confucianism, an ancient Chinese philosophy, family loyalty held great importance.

Concern for the well-being of the state held similar weight, so nepotism and respect for the government served as crucial balances to one another. These values helped to avoid corruption on either side. Many of these ideas permeate the culture even thousands of years later.

In the United States, we usually define nepotism as hiring family members in business or politics without considering their abilities. It’s easy to spot when someone’s relative gets a job despite having no education or experience. It gets muddier when family members work in the same field and have the right qualifications on paper.

There are actually three types of nepotism:

  1. Self-determined When a relative accepts a job offer from a family member because it is in their field and aligns with their career goals.
  2. Coercive When a person takes a job offered by a relative because they have a family obligation or feel forced to. For example, when a child is pressured to take over the family business, even though the child has little interest.
  3. Opportunistic  When a job offer is given and accepted because it is easy for both family members.

4 Consequences of Nepotism in the Workplace

While there are many benefits to working with family, it’s a problem when it falls into nepotism. If a family member is not 100% qualified or perceived as less competent, it can have ramifications throughout your business.

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1. The Wrong Person for the Job

When your family member doesn’t have the skills or experience, you might keep a more qualified person out of the company. Even a well-qualified relative may not have the same work ethic as another candidate.

Hiring a family member who isn’t eligible for the job or can’t compete with other contenders can be bad for business. One study found that firms that appoint CEOs based on family ties perform 14% worse than other companies within the first three years of the appointment.

2. Legal Fallout

Navigating nepotism can get tricky because there is no federal-level law against it. While many states have laws against it in public positions, it is legal in the private sector. However, if employees feel there is undue favoritism in the workplace, they have options for recourse. 

A discrimination lawsuit can arise if the employer consistently hires family members of the same race, sex, ethnicity or religion at the expense of other applicants. It might also be possible for employees to sue on the grounds of a hostile work environment. If an employee quits because nepotism has made the workplace intolerable, that worker may have a case for constructive discharge, a form of wrongful termination.

3. Lowered Employee Morale

If fellow employees or direct reports see a family hire as incompetent, it can reduce employees’ confidence. An unqualified team member or boss makes everyone else’s jobs more difficult, and those effects can spread quickly. Your workplace may experience more conflict as employees pick up another’s slack or have less respect for a manager.

Even if you hire a qualified family member, your employees may feel that you play favorites. Since favoritism can harm employee relationships, family hires could cause division in the office and lower morale. Apart from affecting the well-being of your workers, this could lead to lower productivity, as well.

4. Unrewarded Productivity

Hiring a family member instead of promoting a well-qualified internal employee can send the wrong message to your team. It can tell staff members that hard work isn’t the number one factor in hiring decisions. You may see productivity go down as a result. If staff members believe they won’t be able to further their careers at your company due to nepotism, you may soon find yourself losing your best employees.

Pros and Cons of Working With Family

While nepotism can cause adverse effects, working with family can also have successful outcomes. Most people do not bat an eye at the existence of family businesses or their tendency to hire family members. You can probably recall some people you know who have worked with family members and may have even been in that position yourself.

Still, anyone who has worked in a family business or a corporate workplace alongside a family member can tell you it comes with unique challenges. Consider some of the advantages and disadvantages such an arrangement can have. 

1. Pro — Family Members Work Can Well Together

In the absence of dysfunction, families make excellent teams. Siblings grow up dealing with conflict in a healthy, appropriate way and can become experts at it by the time they enter the same workplace. Children can potentially have more respect for parental employers than non-relatives might have. Any two family members, whether nuclear or extended, have the advantage of knowing each other for many years. All of these can have positive outcomes for a business.

Team members being unable to work together is one of the leading reasons why startups fail. The better your employees can cooperate, the more secure your business will be. As long as family hires don’t create more conflict, they can ensure your company succeeds.

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2. Con — Conflicts Can Take on New Dimensions

When families work well together, they really work. Still, as the saying goes, closeness breeds contempt. When a disagreement occurs, it can have larger proportions.

For example, work tension can affect home life and cause both family members more stress. There might be an inability to escape from workplace pressures when away from the office. The difficult decision to fire a relative for legitimate reasons can harbor years of resentment and conflict within the family. 

On the other side, disputes within the family can carry over to the workplace. Stressful situations can come to a head when another family member dies or family emergencies arise, affecting your ability to work well with the relative. Working in the same office as an ex-spouse after divorce can cause you both more stress. Family quarrels can create conflicts of interest if one party attempts to retaliate against the other in the workplace.

Even if no interpersonal disagreements occur, scheduling conflicts can result. Family members may leave the workplace in disarray by taking vacations together or when family emergencies arise.

3. Pro — You Know the Strengths of the Person You’re Hiring

Hiring or partnering with someone you don’t know can always be a bit like playing the lottery. Anyone can present a polished resume, provide glowing references, nail an interview, and still be a poor fit for your company. There are many risks, like employee theft or a lousy work ethic, you can avoid by hiring someone you already trust.

You’re also more likely to understand an employee’s strengths and weaknesses. You might have evidence of their strong suits going back to their middle school report cards. With extensive knowledge of how a relative will succeed, you can place them in a position where they can offer your company the most benefits. When hiring strangers, it may take some time to test them out before you can put them in the best role for their particular skills.

4. Con — You Must Take Precautions to Avoid Nepotism

While there are no federal laws against nepotism, your state or municipality may have regulations to consider. You’ll have to take some time to familiarize yourself with those laws and may even consider consulting with a professional to do things by the books. 

Even if there are no legal restrictions, you may have to deal with other ramifications of nepotism. You’ll have to adhere to any company policies and take steps so that staff will feel comfortable with a family employment relationship. Having a family member work under a non-relative or requiring specific experience before hiring can be helpful.

How to Hire a Family Member the Right Way

Many argue that family businesses and mom and pop shops are the backbones of America. With a total of 5.5 million family businesses across the U.S., they make up 57% of our country’s Gross Domestic Product (GDP) and employ 63% of the workforce. You and your relative can absolutely find success together by approaching the situation the right way.

Here are a few steps you can take.

1. Set Clear Expectations

Writing a clear job description before making a hire has many advantages. You have in writing which tasks you expect the family member to take on and what qualifications you expect them to have.

Many family-owned businesses expect their family members to gain outside work experience before joining the firm. Those expectations also allow you to demonstrate to fellow team members and employees that a new hire is qualified.

Having specific requirements and expectations for a position can prevent bad hires, regardless of whether they’re family. Since it’s an effective method for ensuring you hire qualified people in general, it’s a useful technique for family hires. This assurance will help your other employees feel better about it and make sure you benefit the company.

employees working in an office together

2. Hire According to Experience

If considering a family member for a future leadership role, ensure you give them a starting position and salary appropriate for their skills. Make sure they receive rigorous training if you plan to groom them for future management or partner roles.

Fair compensation and proportionate responsibilities will set the family member up for success and ensure the staff feels comfortable with the arrangement.

Remember that your goal is to hire the best person for the job. You should only consider a family member if they have the skills and experience you need. If another candidate is better qualified for the position in question, don’t let your bias lead to passing on them.

3. Evaluate Performance Fairly

Performance evaluations help employees grow and receive the right compensation for their output. Subjecting family members to these reviews as you would your other employees will help you avoid preferential treatment. It’s critical not to be overly harsh with family employees, as well.

If you don’t think you can put aside family favoritism, consider having someone else perform evaluations. Regardless of who’s in charge of formal reviews, you should consult other workers about your new hires’ ongoing performance. That applies to all employees but is especially helpful in avoiding bias with family members.

4. Consult a Professional

When hiring a fellow family member, you likely have many questions about whether it’s a good idea, or how you can eventually pass power down to the next generation. Working with family is possible, and family business coaches can be a helpful resource to work out the kinks and drive a successful business. 

Is Working With Family Right for You?

Whether you’re considering hiring or working under a relative, the decision to work with family can be very personal. Once you find a way to avoid potential legal snags, many workplace or family conflicts can arise. Still, for many, a family that works together becomes stronger. 

You must weigh the pros and cons and take the right steps to work with family smartly. When you do, you and your whole company will reap the rewards.

Written By
April Miller writes about technology, careers, and lifestyle topics. She is an avid dog-lover and a staff writer for ReHack.com

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