Family Ties: Handling Nepotism Within Your Business

Chuck Williams

By: Chuck Williams - Dean, Butler University College of Business

Category: Business Growth

Nearly 95 percent of American businesses are family-owned or controlled. Ranging in size from two-person partnerships to Fortune 500 companies, these businesses contribute about half of the nation’s Gross Domestic Product.

Continued Below...


But what happens when someone new from the family wants to join the business or take on a new role in the company? How can an owner/manager bring aboard or promote a family member without non-family employees feeling that the relative gets special treatment from the boss?

Unfortunately you can’t avoid those feelings when nepotism is involved, according to two research studies about the effects of family connections in the hiring process conducted by College of Business Associate Professor Margaret Padgett and Associate Professor of Psychology Kate Morris. But you can take steps to minimize the negative reaction among non-family employees.

Each study involved almost 200 MBA and upper-class undergraduate business majors. Each participant was given packets of material describing the hiring process for a new employee (resume, interviewer ratings, an explanation of the decision-making process in selecting a candidate). Participants were asked to imagine that this new person would be their boss.

As you might predict, candidates thought to have won the job because they were related to the people running the business were perceived unfavorably. Nepotism hiring also made study participants feel less committed to the business and view their own chances of promotion as less likely.

Padgett and Morris’ first nepotism study was inspired by their previous research on gender-based preferential selection — specifically attitudes towards women who were given preferential treatment in the hiring process because of their gender.

In the first study, published in 2005, the professors were surprised to learn that participants felt far more negatively about candidates hired through nepotism than through gender-based preferential selection.

For the second study, expected to be published in 2010, they tested if the qualification level of the nepotism candidate would affect those feelings of unfairness. The research scenarios included a family business hiring or promoting a family member who was a) the most qualified candidate b) equally qualified to other candidates or c) meeting the minimum requirements for the job in question without being the most qualified.

Family members perceived as being the most qualified job candidate still drew negative feelings of nepotism — although to a decreased degree compared to the other scenarios.

In addition, study participants theorized that a family member who was successful at his or her job after a few months in the position would likely owe that success to good relationships with upper management (i.e., Mommy and Daddy) rather than abilities and work ethic. This would seem to indicate that nepotism attitudes linger long after the new employee has proven herself on the job.

With such strong feelings about nepotism in the workforce, how can you promote your son or daughter or bring your nephew into your family-operated business? Based on their research, Padgett offers these tips:

· Emphasize, to the point of going overboard, the experience and specific talents that the relative possesses that makes him or her uniquely qualified for the job. This emphasis on qualifications will say to other employees: “Yes, we do care about merit and work ethic here.”
· Bring the relative into the company at a lower level first. This accomplishes two things: Your relative learns about different aspects of your company, making her more qualified as she works her way up the corporate ladder. Also, your workforce comes to know the person and see his abilities and work ethic up close.
· Stress to the relative being hired that a humble, eager-to-learn and ready-to-work attitude will earn points with coworkers much faster than believing and acting as if “I’m hot stuff because my Mom runs the company.” A cocky attitude will set back workplace standing and reinforce beliefs about nepotism.

Sometimes the best hire for a position is the person you see on the other side of the table at family gatherings. Just be aware that you need to proceed carefully when introducing him or her into your company.

Chuck Williams is dean of the College of Business at Butler University. Margaret Padgett, an associate professor of management, contributed to this article. For more information on the College and its “real life, real business” approach to business education, visit or e-mail Chuck at

  • Print
  • E-Mail
  • Newsletters

To view the past 6 months of archived Perspectives, select an article from the dropdown below and hit 'View':

To search the archive of Perspectives articles, go to the Search page