What do you mean when you talk about nepotism in the family business? Here we go again.

A FEW Q & As SPRING TO MIND. Thoughts from around the world of family business consulting.

Well, nepotism is when a family member is hired in the business because of who they are They do not need to be skilled, experienced or even good at what they do. Scary, isn’t it? It is seen as an entitlement.

Q IS THIS A GOOD THING

I think this is a complex question and very much depends on the family, the business and its employees. It can also align with the values of the business and in this case it would be that family comes first. Rather than business first. Of course this is a personal and individual thought process. Some entrepreneurs categorically refuse to entertain the idea of family being good enough…..Ever.

Q WHEN IS NEPOTISM A GOOD THING?

There are a number of reasons why this can be a positive strategy in the family enterprise: Firstly – it can be far cheaper to hire relatives as they see their roles as a responsibility to contribute to the success of the family firm. They will often be loyal to the Nth degree. Folk see it as their duty and they are also very proud to be associated and part of the family run firm; especially if it spans multi generations. And they are regarded in the local community, their business eco system and valued for their commitment to charitable giving and philanthropy. That’s a whole lot of responsibility to bear on a single persons shoulders.

Secondly – there is more flexibility in the work environment and family life has a role to play in the work life mix. Family members can help each other out whilst remaining dedicated to the work in hand. For example childcare ceases to be an issue a the family will rally round; mentoring on the job by non family work makes is often a given. Looking after senior and elderly family is woven into the fabric of the job.

Thirdly – loyalty and trust are are a given – priceless in a competitive, dog eat dog world. Above all else family expect and will receive both.

In my experience and with speaking with other family firms, there is always room for supporting and encouraging family members who have mental and physical challenges? I can be a place for healing and also for taking risks in innovation. You are encouraged to think big and it is expected that ideas come from family members that can catapult the business into new sectors and markets. The business will be seen to grow and develop through the next generation. When it works well is when the general workforce buy into the family factor with all of its values, legacy and reputation. It is an expectation that the business will embrace the next generation and it generally does.

Q WHEN IS NEPOTISM SEEN AS A NEGATIVE?

Family members who are seen to scale the heights of promotion and leadership roles without the proper experience, expertise and respect afforded to them by the workforce. It will be seen as devisive. And often kill any incentive for non-family management to remain loyal, potentially fulfilled and see things other than the job or role given ‘on a plate’. If family are appointed to roles of responsibility without the relevant experience, skills, people and leadership development, then the business will likely fail.

Q HOW CAN THIS BE MANAGED?

It’s important that no matter if you are family or not, everyone should be in the business because they are the best person for the job. A good way to take out the emotion is to create policies around recruitment of family members, so that everyone is in the picture. It is also then public knowledge as far as the business is concerned. There will be no grey areas. This in turn can be included into the family constitution with the acknowledgement and agreement from all family members. This policy is then referred to for future appointments.

Q DO YOU HAVE A CASE STUDY WHERE NEPOTISM HAS WORKED?

Yes, I consulted to a family where there was an expectation that the son would come into the business. However, at the time the son was living across the other side of the world and not working in the business. Whilst he had the ability to come into the business as the next successor, I felt he wasn’t capable at this time with a downturn in the market. And also having to live up to the expectations of the business and of his own family unit, this was a daunting task. But the tables did turn when he stepped up and decided to make a success of it and undertake leadership training and accepted being mentored. He also worked side by side with other senior management to understand the business through and through. Gradually he took full responsibility and eventually turned the business around. This took guts, determination, commitment and a certain amount of humility. And of course all the hard work, late night working did impact the family too. All expectations have to be managed. Above all it takes integrity, strength of character and mental agility to turn an entitled opportunity into a good business decision.