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Tips to keep nepotism from disrupting business operations

On Behalf of | Jun 1, 2022 | Business Law

Working with your family members may be something you want to do or feel an obligation to do if you own a business. While there are certainly perks to hiring people you already know and trust, issues can arise if you move from employing family to favoring them.

Drawbacks of nepotism

Working too closely with family or giving their opinions more weight without merit can create complications. Business interests can come second to preserving family ties; disputes between relatives can wreak havoc on regular operations.

More specifically, consequences or conflicts stemming from nepotism include:

  • Disruption in the organization
  • Distrust or anger aimed at leadership
  • Reduced workplace morale
  • Poor productivity
  • Financial losses arising from decisions from unqualified leaders
  • Damage to corporate reputation

These outcomes can happen when employees, partners and the public lose trust in leadership.

Preventing disputes regarding nepotism

As a business owner, you can put measures in place to mitigate possible drawbacks of nepotism.

Avoid problematic arrangements

If you do hire relatives, you can sidestep many issues by ensuring they do not work too closely. Hiring them to different departments or teams can be wise. You can also prohibit family members from working directly under each other or having too much influence over relatives.

Set firm boundaries

Creating clear and solid boundaries can help prevent people from losing faith in leadership and thinking they can take advantage of their relationships.

You can do this by creating a nepotism policy, allowing employees to submit anonymous feedback and making employment decisions based on an individual’s merit.

Know the laws

Further, New York nepotism laws expressly prohibit state employees from making employment decisions involving a relative, awarding them contracts or investing public funds in which family members have a financial interest.

Complying with these rules can prevent costly conflicts.

Addressing conflicts if they do arise

If you are hiring family or you worry about possible issues that could come up after doing so, you might consider seeking legal guidance to discuss the law, draft agreements and document decisions. Doing so can help you tackle nepotism before it derails your business.

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