Poland family business conference

Dr Jones is a professor of psychology at Missouri State University who specialises in industrial-organisational (I-O) psychology. His research in this area explores ethical decision-making and prejudice in personnel selection and development. 

His fascination with the societal influence of nepotism, initially inspired by Adam Bellow’s In Praise of Nepotism, led Jones to conduct personnel testing to narrow the focus of I-O psychology in business. He makes a distinction between “family hiring” and “kin preference” and asserts the former, which considers the outcomes of these decisions, is a powerful tool for ensuring sustainability in business.

We spoke with Dr Jones about the stigma of nepotism, the potential to trivialise its societal benefits and whether or not family businesses can practice nepotism productively.

Distinguishing Family Hiring from Kin Preference
Dr Robert Jones and Cherri Jones

How do you define nepotism?

Nepotism is vaguely characterised by the hiring of relatives to benefit the family rather than the organisation. More specifically, nepotism is offering a job to family members regardless of their qualifications. The phenomenon is both perceived and actual. In a trial, the perception of nepotism often guides court decisions; these legal processes are not data-driven.

How prevalent is nepotism in business?

We don’t know, but we can speak to the prevalence of family businesses in the US. In this country, close to 90 per cent of businesses are family-owned, and these firms employ about 62 per cent of the country’s workforce. 

What are some negative implications of nepotism when it comes to family business?

There are two prescribed methods of illegitimate hiring or nepotism in its harmful form: opportunistic and coerced. The Western stereotype, where a next-generation member takes a job simply because they can, is considered opportunistic. On the other hand, it is coerced hiring if an elder makes it clear that a next-gen will incur unwanted consequences if they choose another path.

I suspect that satisfaction is lower where coercive nepotism is concerned, and performance suffers despite the potential advantages of consistency. There is perhaps a trade-off: increased tenure at the cost of performance and satisfaction.

There’s also some debate about whether the perception of nepotism leads to differences in satisfaction of the perceivers themselves. There’s evidence both ways, which may result from cultural differences as well as difficulties in defining the behaviour itself. 

Decreased satisfaction in the workplace may simply be a product of nepotism‘s stigma. There are examples of poor hiring decisions in all kinds of jobs, both family and non-family.

“…People in family firms align the interests of their core social group (family) with the interests of their workgroup, which results in increased commitment to the organisation.”

How can nepotism benefit a family business?

Here’s an example: throughout his adolescence, a young man works on the floor of his grandfather’s store, which specialises in Western wear. He goes to university, where he studies business, art and textiles. He returns to work in the family business and familiarises himself with all aspects of it while at the same time getting his Master’s in Business Administration. 

Because of his love for the business, he is more qualified than any other candidate for an executive position in the company. Open communication proves that there are equitable processes in place, doing away with the stigma of nepotism.

In productive examples such as this one, processes are set into place and visible. Decision-making is above board, takes the interests of all stakeholders into account and typically arrives at a favourable outcome. It is not always perfect, but it is equitable. 

Our fundamental commitment to our family is often more important than our commitment to our occupation. How these commitments influence each other is something that deserves further examination.

The consistent hypothesis here is that people in family firms align the interests of their core social group (family) with the interests of their workgroup, which results in increased commitment to the organisation. 

There is also some evidence suggesting that nepotism is essential for people from disadvantaged groups to make a consistent living in a society that’s hostile toward their group. Those familial ties help individuals who are otherwise underprivileged and have the potential to generate long-term benefits that get people out of poverty.

What strategies are most effective in the prevention of nepotism? 

Systematic hiring procedures that are common in larger organisations include abilities tests, personality inventories, structured interviews and work samples. In fact, I’ve helped numerous organisations to implement these procedures, which rely heavily on actuarial statistical analyses to show that they are related to important work outcomes. They’ve been tested extensively in court, in the US and elsewhere, with very positive results as a rule.

Other organisations have anti-nepotism policies that fall under the legal heading of ‘selection devices’, not dissimilar to the aforementioned tests and interviews. One of my field’s principal tasks is to evaluate whether or not these selection mechanisms are relevant and can accurately predict job performance and tenure. 

Anti-nepotism governance policies that attempt to place limits on hiring, promotion and compensation based solely on familial membership are probably not as effective. Either way, they lack the evidence used to validate other selection procedures. 

“…We’ve begun to distinguish ‘family hiring’ from ‘kin preference’ in hiring. This distinction considers the outcomes of these decisions on the business, and only the latter is negative.”

How is nepotism related to corruption? 

Until I-O psychologists took a look at this problem, there was little evidence to work from, despite several court cases that dismantled the use of anti-nepotism policies. As a result, we’ve begun to distinguish ‘family hiring’ from ‘kin preference’ in hiring. 

This distinction considers the outcomes of these decisions on the business, and only the latter is negative.