Exploring Nepotism in Workplace: Causes, Consequences, and Countermeasures

Exploring Nepotism in Workplace: Causes, Consequences, and Countermeasures

Hafatin Natrah binti Mohd Noh@Safah, Navaratnam Vejaratnam

Department of Business Management, FAME, New Era University College

DOI: https://dx.doi.org/10.47772/IJRISS.2025.907000105

Received: 26 June 2025; Accepted: 30 June 2025; Published: 01 August 2025

ABSTRACT

Nepotism is the practice of offering jobs or promotions to family members or close associates, often without considering their qualifications. This issue is increasingly visible in both private companies and public institutions, leading to unfair treatment and dissatisfaction among employees who feel their efforts are ignored. A recent example from Malaysia, where the Prime Minister appointed his daughter as a senior advisor, brought public attention to this issue and raised concerns about ethics and transparency in leadership. Nepotism appears in several forms, such as family-based favoritism, political influence, hereditary privilege, and personal bias. It often results from cultural expectations, unclear rules, unethical leadership, or pressure to support relatives. These factors create a system where connections are valued more than merit. This can damage trust among workers, leading to low morale, stress, and conflict in the workplace, as well as harm to the organization’s public image. To reduce nepotism, the article recommends clear anti-nepotism policies, transparent hiring practices, and strong ethical leadership. Case studies from different countries show mixed results. In places like Northern Cyprus and Poland, nepotism created problems. But in some Malaysian family businesses, it worked better when supported by planning, training, and clearly defined roles. The article concludes that the impact of nepotism depends on how it is managed if handled carefully, it can be controlled; if ignored, it leads to long-term harm.

Keywords: Nepotism, Organization Fainess, Perceived Unfairness, Empolyee Motivation, Family Business.

INTRODUCTION

The current issue of nepotism in Malaysia has been centred around Prime Minister Anwar Ibrahim’s decision to hire his daughter, Nurul Izzah Anwar, as his senior economic and financial adviser. Nurul Izzah, despite her defeat in the last election, was assigned to this position. This has led to extensive criticism and claims of nepotism. Detractors contend that her nomination, although unpaid, undermines the government’s dedication to openness and equity (Haizan, 2023; Channel News Asia, 2023).

Nepotism, the act of showing preferential treatment towards relatives or friends in professional environments, is a substantial problem in the organisational context. It affects performance goals, creates conflicts of interest, and leads to favouritism. Firstly, entitled nepotism may have less motivation to meet performance goals (Bloom & Van Reenen, 2007; Stewart, 2003 cited by Jaskiewicz et al., 2013). Nepotism may have been hired for altruistic family reasons. This rationale may be represented in positively biased performance ratings of the nepotic (Lubatkin, Schulze, Ling, & Dino, 2005 cited by Jaskiewicz et al., 2013) and less critical feedback to nepotism even when the nepotic fails to meet projected business goals (Beckhard & Dyer, 1983; Kets de Vries, 1996 cited by Jaskiewicz et al., 2013).

In addition to sibling rivalry (Schulze et al., 2001), nepotism is frequently linked to conflicts of interest between family members (Zellweger & Astrachan, 2008) and between family owners and outside stakeholders (Berrone, Cruz, & Gómez-Mejía, 2012; Fan & Wong, 2002). These conflicts can harm a family’s reputation and image (Firfiray et al., 2018).

Furthermore, Pelit et al. (2015) mentioned that in general, nepotism is defined as hiring or promoting people based on family or kinship relationships without regard for factors such as skills, capabilities, success, and education level.

This article tries to understand nepotism from a deeper theoretical angle, especially how it plays out inside organisations. It pays attention to what makes nepotism happen in the first place, what kind of harm it brings, and also what steps can be taken to keep it under control. The goal is to give a clearer view of how favouritism shapes everyday work situations. It goes into areas like what drives employee motivation, how smoothly teams function together, and how all this affects the overall results of an organisation. With this approach, the article does not just define nepotism it shows why it matters and what can actually be done to deal with it.

UNDERSTANDING NEPOTISM

The word “nepotism” has deep roots, coming from the Latin word nepotus, which means nephew or grandchild (Geys, 2017, as cited by Ab Wahab et al., 2021). Over time, this term started to reflect a specific type of favouritism one based on family ties. Today, nepotism usually refers to the practice of giving jobs or advantages to relatives, even if those individuals are not the best fit for the role. Rimvydas and Ieva (2020, as cited by Ab Wahab et al., 2021) pointed out that in such cases, personal ties are valued more than merit or qualifications, which already sets the tone for imbalance at work.

In modern workplaces, nepotism is seen as harmful, especially when it gets in the way of fair processes like hiring or promotion. It breaks the rule of equal opportunity and replaces it with preference that ignores talent. Pelit et al. (2015) also described this clearly, showing how focusing only on relationships, instead of real skills or education, can disturb the entire working environment. Workers who are not part of these favoured circles may begin to feel left out or even unappreciated, which eventually affects their morale and job satisfaction.

To explore nepotism deeper, Williams and Laker (2010) divided it into four types. First is family nepotism, the most common, where someone hires or promotes a family member. Then comes the idea of paired employees—relatives working together who can shape each other’s career paths. Political nepotism is when officials place their own relatives into government roles. The last, organisational nepotism, is more dangerous because it becomes part of a company’s culture, making favouritism feel normal instead of something wrong.

Building on these, Ombanda (2018) highlighted eight more detailed forms. He included relative nepotism, friend nepotism or cronyism, and link nepotism which happens through personal connections. Spousal nepotism is also common, where someone’s partner gets a role just by marriage. Other serious types include tribal or racial nepotism, where race becomes the basis for employment, and contribution nepotism, which rewards someone for past favours. Referral nepotism is when influence from someone powerful gets a person hired, again ignoring qualifications. These types show how nepotism goes beyond just family—it includes friends, social ties, and community links too.

Tytko et al., (2020) discussed more about how hereditary and matrimonial nepotism can shape leadership roles, especially in businesses run by families. In the case of hereditary nepotism, it is common that important jobs are passed from parents to children, often without checking if they are really the best people for that role. This way of thinking might look like protecting the family legacy, but it can also stop more capable workers from growing. On the other side, matrimonial nepotism happens when someone gets a position only because of who they marry, not because of their own skills. In both examples, we can see how personal feelings and family ties are mixed into professional choices. This makes it hard for companies to stay fair and to choose people based on ability, not relationship.

In another study, Jaskiewicz et al. (2013) brought in the psychological side of nepotism, which gives more understanding of how people think in such situations. They talked about two kinds: reciprocal nepotism and entitlement nepotism. With reciprocal nepotism, family members who get jobs feel they must give something back, like working harder or being loyal, and this can help the company. But with entitlement nepotism, the thinking is different. The person believes they deserve the job just because of their family name. This kind of attitude usually leads to weak effort, and others in the company may feel unhappy or less motivated when they see this. It creates a working environment where fairness disappears slowly, and the whole team may suffer in performance.

In many family-owned businesses, keeping the business inside the family is a strong tradition. It gives a feeling of safety and control. But when the people chosen are not suitable for the job, it becomes a quiet problem. Workers who try their best might feel they are ignored just because they are not part of the family. Some may even leave the company. What looks like a safe choice from the family’s side can slowly hurt the business inside. Nepotism in this way does not just affect one or two people; it can shape the whole company’s future in a negative way.

In summary, nepotism includes many forms whether family, political, racial, social, or psychological. No matter the reason, the main concern is that decisions are not based on fairness or ability. If it is not controlled, nepotism can break trust, weaken teamwork, and reduce productivity at work. The next section will look into why nepotism continues to happen in different kinds of organisations.

CAUSES OF NEPOTISM

Nepotism still find place in many organisations because of both internal and external reasons. Some of these reasons come from how the company runs its system, others are from deeper cultural habits or how leaders behave and think. When such things are left unchecked, it creates a work culture where giving special treatment to friends or relatives becomes a normal thing. People start seeing it not as a problem but just the way things work, which is dangerous for fairness and growth.

One strong reason behind this problem is the broken psychological contract that employees feel. Arici et al. (2020) pointed out that when workers notice nepotism, it causes workplace tension and rude behaviour. This happens mostly when they believe the organisation has not kept its silent promises like fair treatment or chances to grow. Once trust is lost, people start acting defensive or even cold toward each other. This emotional damage slowly eats away the teamwork and smooth communication that every organisation needs to succeed.

Another important point is how nepotism affects employee spirit and loyalty. According to Ignatowski et al. (2019), favouritism in hiring or promotions weakens the social fabric inside companies. People feel left out, less motivated, and disconnected. When someone sees that hard work won’t lead to rewards, they stop trying. This leads to poor performance and less attachment to the job. A Nigerian study in 2023 confirmed this, showing how gender and ethnic background made the situation worse, especially in places where diversity wasn’t managed properly. In such settings, the damage from nepotism goes even deeper.

Perceived unfairness is also a major reason behind the negative reactions to nepotism. According to Basu (2009), employees who see favouritism in their workplace often experience stress, dissatisfaction, and frustration. This feeling becomes stronger when they know their efforts are not recognised, while others benefit due to personal connections. Over time, this affects mental health and productivity.

In addition, coercive nepotism plays a role in lowering morale. Stout (2006) explained that when people are pressured to accept nepotistic practices as part of their job environment, they become emotionally exhausted. Rajpaul-Baptiste (2018) also highlight that one of the important role in the practice of nepotism is cultural values where the nepotism is more likely to be recognized when in communities where collectivism and high power distance are predominant. For example, countries show higher occurrence and acceptance of nepotism, they have a collective culture like India.

Furthermore, leadership style can either support or discourage nepotism. Akuffo and  Kivipõld (2019) mentioned that order for the leaders to satisfy their own benefit against the interest of the organization, they used nepotism, favouritism and cronyism and it considered as unethical behaviours. It can become basis for corruption to start in the organization, where the practice of giving family, friends, political allies or networks connections positions without proper process or merit in order to appease local interest (Safina, 2015 cited by Akuffo and Kivipõld, 2019). Pearce (2015) also found that in some cases, nepotism becomes part of an informal system were leaders reward loyalty over ability.

One more reason for the continuation of nepotism is the practice of “schmoozing”, a behaviour where individuals maintain relationships with people in power to gain future rewards. Paiker (2020) pointed out that this behaviour is commonly used to sustain nepotism and creates a system where informal networks are more important than qualifications. This situation especially harms women, as it reduces their chances to compete fairly in the workplace.

Overall, the causes of nepotism are strongly linked to both how the organisation is managed and how people behave inside it. When there is no transparency, no proper recruitment process, and no ethical leadership, nepotism is more likely to happen and continue. At the same time, cultural values and personal expectations also shape how employees view and respond to it. If these core issues are not handled properly, nepotism will keep affecting employee morale and reduce the overall performance of the organisation.

CONSEQUENCES OF NEPOTISM

Nepotism continues to happen in many organisations because of several deep-rooted reasons. Some of these reasons are related to how the organisation is run, while others are shaped by cultural beliefs, leadership behaviour, and psychological attitudes. When these issues are not managed properly, they create a working environment where nepotism becomes common and even seen as acceptable.

One key reason is the sense of broken trust between employees and the organisation. Arici et al. (2020) explained that when employees feel that nepotism is taking place, they also feel that the company has broken its silent promises. This situation, called psychological contract violation, can lead to unfriendly or negative behaviour in the workplace. When workers believe that hiring or promotions are unfair, their trust in the organisation goes down, and it becomes harder to work well with others. This leads to poor teamwork and more conflict among staff.

Another strong cause is the effect of nepotism on employee motivation and their sense of belonging. According to Ignatowski et al. (2019), nepotism reduces social capital by lowering job satisfaction, weakening motivation, and making employees feel less connected to the company. When workers notice that opportunities are not given fairly, they may lose interest and stop putting in their best effort. As a result, the overall performance of the team suffers. A similar result was found in a 2023 study from Nigeria, which showed that nepotism negatively affected job satisfaction, especially when it involved gender and ethnic differences. These effects were worse in companies that did not handle diversity properly.

Nepotism also impacts job satisfaction and performance. Topsakal et al. (2024) in their study established that professed nepotism suggestively lessens job satisfaction and organisational commitment, although at the same time increasing sarcasm which a serious way of decreased on morale and innovation.

From an organisational perspective, nepotism can damage reputation and credibility. When clients, stakeholders, or the public see that an organisation promotes people through personal ties, it reduces trust. This is especially dangerous in public institutions or companies that depend on public support. In the long run, it may affect partnerships, investments, or public image. Nepotism also prevents organisations from hiring the best talent, which affects efficiency and productivity (Serfraz et al., 2022) (Büte & Tekarslan, 2010).

Moreover, nepotism has consequences for mental health and employee well-being. Constant exposure to unfair treatment, discrimination, and lack of recognition can lead to emotional exhaustion. The employees who are not related with nepotistic circle can suffered stress and declined in job satisfaction because of the nepotism. This is because of they got unfairness and favouritism that can cause the state of mind of demotivation and resentment

In short, nepotism creates a negative chain reaction in the workplace. It lowers motivation, increases conflict, reduces performance, and harms both the personal well-being of employees and the overall success of the organisation. Even though it may seem harmless or traditional in some cultures, the long-term effects can be damaging. To maintain a fair, motivated, and healthy work environment, organisations must understand and address the impact of nepotism.

STRATEGIES TO REDUCE NEPOTISM

Although nepotism is a serious problem in many workplaces, it can be managed and reduced through proper strategies. These strategies should emphasis on preventing unfair practices, promoting transparency, and building a more inclusive organisational culture. In order the organizations can improve their employee motivation, performance and turst, they need to take serious action to tackle nepotism.

By having an anti-nepotism policy is one of the important strategy to address the issue of nepotism in the organization. The meaning of nepotism, the reasons why of nepotism can be harmful, and what actions are not acceptable in the organization and these should be explained in the policy. The policy must be clear, written and applied to all employee equally. The policy must be understood and followed by all the employee (Laker & Williams, 2003). Policies should also outlibe procedures for handling infractions and guarntee that all choices are made impartially, without regard to personal ties.

Structured and transparent recuitment practices is another key practise to reduce the risks of nepotism. The result of the hiring should be based on job-related criteria such as experience, qualifications, and performance during the test or interviews. To avoid bias, the hiring process can having multiple interviewers involved. By having these practices is to safeguard the result of the hiring based on qualification and merit, not the one with the best connections  (Elsayed et al., 2019)

To further reducing nepotism, fair and open promotion systems should be applied by organizations. The employees can be assessed by regular performance reviews by the organizations based on objective metrics and the results documented to monitor employee progress and feedback. Therefore, the promotions are awarded based on the qualification and performance  by the organizations (Aldossari & Bourne, 2014)

Another strategy is to provide training and awareness program such as identifying implied favoritisms, regular training sessions on the anti-nepotism policy, and ethical workplace practices should be conducted. The training on fair decicion-making processess should be joined by supervisor and managers to hightlight the significant of sustaining a merit-based culture (Calvard, 2012). In order for a leader to less likely to involve in favouritism or nepotism, the leaders must have a strong balance processing on considering various viewpoints. Other than that, to curtail unethical practices including nepotism, it is suggested that managers receive training in this authentic leadership characteristic (Akuffo & Kivipõld, (2019).

Fostering an open , accepting and safe work environment where the employee feel free to express their concerns. Communication and transperancy are promoted by an open culture, which gives staff members the confident to voice concerns without worring about the consequences . Organizations should use a number of tactics that encourage transperancy and inclusivity in order to accomplish this. In order to allow eomplyees to report unethical acts, such nepotism, without fear of reprisal, it is imperative that anonymous reporting channels be made available (Smith, 2010).

To detact and avoid nepotism, the use of HR software and data analytics can assist track recruitment and promotional patterns by providing unbias data to support fair decision marking (Smith, 2010).

In conclusion, a mixture of strudy policies, ethical leadership, transparent proceses and inclusive culture in oder to minimize the risk of nepotism. Therefore. The organization can safeguard the employee morale, improve performance, and build a trustworthy reputation. These approaches can prevent unfair practices together with form a healtier working atmosphere for all employee.

CASE STUDY

In order to show the forms of nepotism manifest in real-world situation in the business organizations through the case studies from Poland, Northern Cyprus and Malaysia. The first case study conducted by Sroka and Vyeinhardt (2018) where it focused on Poland’s steel companies which the reseacrh took place in late 2016 which involved 7 organization participated and 18 managers have been interviewed about the nepotism and favouritism in the company. In this research, the companies were seperated by three groups and served as the groundwork for the case studies. The first group focused on foreign-owned businesses which relate to code of ethics such as ArcelorMittal Poland and Celsa Group, which together produce about 80% to 85% of Poland’s crude steel. From the interview result, it was found that faviritism and nepotism in administrative positions. The second group is business that re listed on the Warsaw Stock Market, where involved small size companies with a few hundred employee and controlled by one or two strategic investors who have the right in hiring choices. Even though unusual, example of favoritism and nepotism were observed, such as the promotion of employees who were suggested by shareholders.  Third group focused on relatively small steel companies either both private and public companny. One respondent  stated to the situation as “total nepotism” even though extra material showed that it was more of a “soft” form of nepotism than the traditional kind. Favour involved promotions without the require qualifications and contract extentions part retirement age. While the manifestations and extend of nepotism and favouritism diverse, they were present in all groups to come extent. Compared to large foreign-own enterprises, smaller and stock echange-listed firms experienced more severe problems (Sroka and Vyeinhardt, 2018).

The next case study in Northern Cyprus which focused on the effects of nepotism on human resource management in hotel industry (three-, four-, and five-star hotels). This study involved full-time employees by distributing 500 questionnaires using a judgemental sampling approach. However, 257 usable responses were collected, giving a 51% response rate and the data collection was conducted in April 2005. The findings of this study showed that nepotism negatively affected various human resource (HR) management procedures, particularly fairness in evaluation, training, promotion and hiring. HR finds difficult to function independently where it involve favouritism towards friends and family members disturbed merit-based procedures. Employees seen nepotism as bias and demoralising (Arasli et al., 2006). Because of the nepotism, many employees felt ignored or undervalued which reduced the job satisfaction. Employees tend to leave the organization when nepotism present in the organization because they loss of confidence in career advancement and fair treatment. Furthermore, the negative word-of-mouth (NWOM) is a result of nepotism where the employees with their dissatisfaction complain to others about their workplaces. Employees morale and the organization’s reputation can be harmed by the unfavourable communication. The study showed that even sturdy HR systems became less effective when nepotism was prevalent, even though effective HR practices can reduce negative behaviours and improve job satisfaction. In order to lesson nepotism, Arasli et al. (2006) advised Nothern Cyprus’ hotel managers and owners to practice professional and equitable HR practices. Improving transparancy and fairness in HR procedures can increase employee satisfaction, service quality and loyalty which are vital in the hospitality sector.

Next case study explored on how nepotism can help family-owned businesses stay in business in Malaysia with two companies were studies which were Bsimi Empire Sdn. Bhd. And MOFAZ (M) Sdn. Bhd. (Ab Wahab et al., 2021). The study determines how nepotism can enhance and support famlity companies when corresponding with appropriate talent development. Bismi Empire Sdn. Bhd. as the first case study, where a chicken-based business not inherited by family was founded by a business’s founder who later brought in his wife and children. The children were sent to study in fields such as marketing, finance, veterinary medicine, and business to prepare for their future roles. They were also encouraged to marry spouses with business knowledge. Before taking up positions in the company, family members were required to gain skills and knowledge. The study highlighted the importance of strong organisational structure, complementary family roles, and tolerance to ensure the success of the business. Next case study is MOFAZ (M) Sdn. Bhd., a diverse company involved in motorsports, real estate, construction, aviation services, marine leisure, and automobile sales. The children of the owner were active in business in early age particularly in automobile and racing fields. Every children oversaw different corporate divisions where one son was involved in self-driving cars in the UK, another son run luxury automibile rentals, and the last son was managed Mercedes and Honda dealership in Malaysia. The children were free to pursue their own interest while remaing part of the family company ecosystem because the founder did not force them to follow a single path. The founder highlighted the significance of having clear authority, responsibility, skill development and trainning which helped the business grow throug appropriate planning, strategy, action and monitoring.

In conlcusion, variety of sectors and nations show that nepotism can affact organizations in positive or negative ways. For example, in the Polish steel sector, notwithstanding offical ethical guidelines, declined in transperancy and reduced efficiency can be caused by nepotism and favouritism (Sroka and Vveinhardt, 2018). Nepotism harmed HR practices, lower job satisfaction, and increased turnover and negative word-of-mouth which were the same negative effects were seen in case study of Northen Cyprus hotels (Arasli et al., 2006). On the other hand, the case studies on Malaysian family businesses has demonstrated where nepotism can help preserve business continuity and family value by having proper governance and structed talent development (Ab Wahab et al., 2021)

CONCLUSION AND FUTURE OUTLOOK

Nepotism can forms biased for some individuals based on personal or family relations compared to performance or qualification, this makes nepotism is very serious matter in many organizations. As delibrated on the above, nepotism can give negative effects towars organization’s reputation, employee morale, increase workplace conflict and reduce motivation. Nepotism can reduce the trust and creates unhealthy work environment among the employee, when the organization hired or promoted the people because of who they know rather than of what they can do. This article explain the understanding of nepotism which include the meaning and the types of nepotism which include family, political and social. It also discuss the causes of nepotism such as cultural values, leadership style, lack of clear policies, and psycological aspects. This article also discuss the concequences of nepotism that can cause low jon satisfaction, poor performance, and emotional exhaustion which individuals or organizations can be damaged by nepotism. Furthermore, this article discuss numerous strategies to mitigate nepotism by having clear or transparent anti-nepotism polices, hiring and promotion management, ethical leadership and forming comprehensive organizational culture. Apart from that, the case studies provides the insightful view of the nepotism cultures perspective from different region and economic business sectors.

Nepotism need to be contained or minimized which can be done by stronger action of the organizations. The top management and the employees need to understand the importance of fairness and accountability to combat the nepotism. There are several approaches that can help to prevent favouritism in decision-making through audit, whistleblowing and technology systems. Significantly, the organizations’ business management and working enviroment cannot practise reward based on personal connections, it must practise the culture based on talent, hard work and honesty are rewarded.

Overall, it is not easy to handling with nepotism, however it is important for fairness, trust and continuing development of the organizations. The organizations are encourange to practice a system based on merit rather than favouritism for them to succeed and build strong teams. Therefore, the organizations can form a professional and ethical workplace for everyone.

For futher understanding of nepotism, further rsearch can be done in certain sectors like education, healthcare, food and beverages, and the public sector because it provide insightful information on organizational dynamics and ethical standards. Other than that, futher research on comparative cross-cultural to look at the anti-nepotism policies and how they implemented in different nation which can provide the understanding how nepotism culture may affect the workplace behaviours. Furthermore, next research study can be done on the effectiveness of the countermeasures against nepotism towards the well being of the workplace behavior because it is very important to guarantee that applied approaches really reach their intented goals and also can help to improve the current policies or the best practices. Therefore, nepotism should be controled and tackled professionally by the organizations in order to sustain the good workplace environment and ethical business practices.

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