Nepotism is the practice of favoring relatives and friends in employment.

If employees observe nepotism in the department, it will negatively impact the employees' productivity, motivation, job satisfaction, morale and retention with the organization.

Nepotism can pop up throughout the company, so keep an eye out if you see any of the following.

Nepotism can manifest in the practice of hiring relatives and/or friends based on personal relationships and not skillset or experience relevant to the position. Another example of nepotism in hiring can be if the business owner creates a position only so he or she can hire a family member.

The practice of promoting employees based on personal relationships and not skillset or experience relevant to the position is another example of nepotism. This is often seen in the working relationship between manager and employee. If both individuals have enough in common to form a friendship outside of work then the risk for nepotism is possible.

The practice of managers giving desirable work assignments and projects to members of their team based on personal relationships and not skillset or experience relevant to the position demonstrates nepotism.

Nepotism occurs when managers give preferred work shifts to members of their team based on personal relationships and not based on what the organization needs in order to be successful. Example: In a warehouse environment every department or phase in production requires a certain number of employees actively working in order to meet production goals. Managers assigning preferred shifts based on personal relationships becomes a problem when suddenly the night shift is understaffed. Although the manager may not know what the problem is, the problem is nepotism in the workplace.

In companies large and small, success is dependent upon employing a highly skilled and competent workforce. HR can be a critical partner in this process, working with the leaders in the company to effectively respond and prevent nepotism. The best way to respond to nepotism is to proactively work to prevent it.

Take the time to understand the culture and values of the leaders at your company. One step to begin is by interviewing each of them to learn what they believe are the company’s greatest assets and where the company fits in the greater industry. As you build a relationship with these leaders you will be better equipped to promote fairness for all, without creating enemies in the workplace. These leaders will often be hesitant with letting HR have a seat at the table out of fear of being told no. Take the time to get to know them to mitigate their fear.

Once you have proven you are there to support these business owners and not to control them, you can better advise them when certain circumstances arise. Every business owner has their own way of doing things, but that may not mean they know how to avoid legal trouble. When circumstances arise, you will want to advise them of the options available to resolve the issue as well as potential legal and financial risk to the organization.

You have built relationships with the company leadership team, advised them on the importance of legal compliance and implemented clear policy and guidelines for managers. However, nepotism may still leak into your organization. When this happens, you have already built a strong foundation to more effectively advise and coach leadership to remind them that the goal is to build an excellent workforce that is highly competent and skilled.

Every position should be filled with the candidate best fit for the job, not based on the relationship with the business owner or leadership team. If a family or friend of the business owner is the best fit for the job, then that is another story. In a written policy or guidelines for all hiring managers, articulate employment law (i.e. Title VII, ADA, ADEA and EPA) and how to best create interview questions that focus on job competency and cultural alignment with the mission and values of the company. You will help the company build a high-quality workforce where experience and skills are more important than nepotism.

Whether you need to update a current policy or you are creating a new policy to combat nepotism, below are three great examples from the Society of Human Resource Management (SHRM) that you can use in your employee handbook and manager training:

[Company Name] is committed to a policy of employment and advancement based on qualifications and merit and does not discriminate in favor of or in opposition to the employment of relatives.

Due to potential for perceived or actual conflicts, such as favoritism or personal conflicts from outside the work environment, which can be carried into the daily working relationship, [Company Name] will hire relatives of persons currently employed only if: a) candidates for employment will not be working directly for or supervising a relative, and b) candidates for employment will not occupy a position in the same line of authority in which employees can initiate or participate in decisions involving a direct benefit to the relative. Such decisions include hiring, retention, transfer, promotion, wages and leave requests. This policy applies to all current employees and candidates for employment.

Family member is defined as one of the following: spouse or significant other, parent/step parent, child/step child, grandparent, grandchild, brother/brother-in-law, sister/sister-in-law, uncle, aunt, nephew, niece, first cousin, in-laws (father, mother, son, daughter).

Prior to the employment offer, the immediate supervisor must complete a signed statement certifying that the candidate for employment or other employment action is not a relative as defined above. Failure to submit the signed statement to the vice president of human resources (HR) will result in the delay of the job offer until the statement is submitted. The hiring supervisor is responsible for ensuring policy compliance. Department directors are responsible for monitoring changes in employee reporting relations after initial hire to ensure compliance with this policy. Employees are responsible for immediately reporting any changes to their supervisor. If any employee, after employment or change in employment, enters into one of the above relationships, one of the affected individuals must seek a transfer or a change in the reporting relationship. Such changes must be approved by the vice president of HR. If a decision cannot be made by the affected employees within 14 days of reporting, reassignment will be made on direction of the department director and the vice president of HR. No exception to this policy will be made without the written consent of the vice president of HR.

[Company Name] wants to ensure that corporate practices do not create situations such as conflict of interest or favoritism based on employment of relatives. This extends to practices that involve employee hiring, promotion and transfer.

Close relatives, partners, those in a dating relationship or members of the same household are not permitted to be in positions that have a reporting responsibility to each other. Close relatives are defined as the following: husband, wife, father, mother, father-in-law, mother-in law, grandfather, grandmother, son, son-in-law, daughter, daughter-in-law, uncle, aunt, nephew, niece, brother, sister, brother-in-law, sister, sister-in-law, step relatives and cousins.

Individuals will not be hired or promoted into a position that would create a conflict in [Company Name]’s policy. If employees begin a dating relationship or become relatives, partners or members of the same household, and one party is in a supervisory position, that person is required to inform management and human resources of the relationship. The employees will have 60 days to resolve the situation on their own. After 60 days, if the employees have not yet resolved the situation on their own by means acceptable to [Company Name], such as a transfer or employment outside the company, the employees’ supervisors will work with human resources (HR) to determine the most appropriate action for the specific situation. This may include transfer or, if necessary, termination of one of the employees. If there is a situation where an action of [Company Name], such as reduction in force, results in an involuntary circumstance in which two relatives, partners or members of the same household may be reporting to each other, one of the employees will be reassigned within 60 days. During those 60 days, the supervisory employee will not have involvement or direct input in the employment decisions of the other employee. [Company Name] reserves the right to apply this policy to situations where there is a conflict or the potential for conflict because of the relationship between employees, even if no direct reporting relationship or authority is involved. In these situations, [Company Name] will reassign one of the employees within 60 days. Any exceptions to this policy must be approved by the department director and HR. Written justification for the exception must be submitted to HR prior to any employment decisions.

[Company Name] strives to provide a work environment that is collegial, respectful and productive. This policy establishes rules for the conduct of personal relationships between employees, including supervisory personnel, in an attempt to prevent conflicts and maintain a productive and friendly work environment.

A “personal relationship” is defined as a relationship between individuals who have or have had a continuing relationship of a romantic or intimate nature. An employee who is involved in a personal relationship with another employee may not occupy a position in the same department as, work directly for or supervise the employee with whom he or she is involved. [Company Name] reserves the right to take prompt action if an actual or potential conflict of interest arises concerning individuals who engage in a personal relationship that may affect terms and conditions of employment. Supervisors and managers are prohibited from dating subordinates and may be disciplined for such actions, up to and including termination. When a conflict or the potential for conflict arises because of a personal relationship between employees, even if there is no line of authority or reporting involved, the employees may be separated by reassignment, or terminated from employment. If such a personal relationship between employees develops, it is the responsibility and obligation of the employees involved to disclose the existence of the relationship to the department director or manager. When a conflict or a potential for conflict affecting terms or conditions of employment arises because of the relationship, the individuals concerned will be given the opportunity to decide who is to be transferred to another position, or terminated, if no position is available. If no decision is made within 30 calendar days of the offer to resolve the situation, [Company Name] will determine who is to be transferred or, if necessary, terminated from employment.