Nepotism in Hiring: The Quiet Inequity That Undermines Morale and Productivity

Evelina Silveira

In the realm of DEI, how frequently have you encountered discussions about the most common form of workplace inequity – nepotism?  Yet, it happens more often than you think.

Remember that time you prepared for weeks for an interview, received glowing reports from your immediate supervisors, and were encouraged to apply for an internal posting? You were so sure you were going to get it, and a team of supporters was advocating for you. But, behind the scenes, the successful candidate was pre-determined. Instead, out of nowhere, someone you've never heard of lands the job. And their credentials? They seem to be a mystery or don’t align with the job requirements. Anger and feelings of injustice build up, but you hold them inside because you know it won’t make a difference.

Nepotism and its unjust, shady hiring practices cause widespread adverse effects. Once nepotism is adopted, it can easily become embedded in the hiring culture. So why do employers choose to hire people whom they know?

Here are just a few reasons:

Trust – The employer may feel that they can trust their friend or family member more than another employee with sensitive information or their finances.

Paying a favour – The candidate or their family may have previously assisted the employer and now wish to reciprocate.

Power – In the case of insecure bosses, they may prefer someone who is less qualified but can be more easily controlled and not question their actions. The ideal candidate for them could be the status quo. While it may not be the best organizational decision, it is less stressful for the employer.

Convenience - There is a spot that needs to be filled quickly, and the employer knows someone who can start immediately with minimal orientation time.

Consider a scenario I recently encountered in my coaching work that highlights the potential complexities of hiring someone you know. Sherry hired her friend, Carole, as her assistant, but the issue is that Carole doesn’t arrive on time, and her productivity has decreased significantly. Sherry knows how much Carole needs a job, and the thought of discussing her output or lack thereof makes it a sensitive and nerve-wracking proposition. Carole is under the impression that her friendship with Sherry means automatic job security. Sherry is now getting a lot of flak from her managers because the work is not getting done. Could Sherry’s job now be at risk? However, Sherry is now in a very uncomfortable position: she must decide whether to discipline Carole and risk losing her friendship, or ignore her behaviour altogether, which could create an even greater rift with the rest of the team and potentially end her employment.

It's important to understand that although nepotism might be rooted in some high-context cultures, where families reward each other and their friends for long-term loyalty through appointments, job offers, and program admissions, it is unfair and inappropriate to apply this system in a North American context. Doing so can cause tension and may also lead to accusations of workplace discrimination.

Let’s unpack the consequences:

• Blurred Boundaries: When personal relationships enter the professional sphere, accountability often takes a back seat. Managers may hesitate to address performance issues for fear of damaging personal ties. Constructive feedback becomes diluted or avoided altogether.

• Perceived Injustice: Employees who’ve worked hard, earned credentials, and proven themselves feel sidelined. Their contributions are overshadowed by someone who “knew the right person.” This perception of unfairness isn’t just emotional—it’s structural.

• Demoralization of Talent: When merit is ignored, motivation plummets. Talented professionals disengage, knowing their efforts won’t be rewarded. The message is clear: relationships trump results.

  
  

• Toxic Culture: Over time, nepotism breeds cynicism. It shows that the organization prioritizes loyalty over competence, and that favouritism—not fairness—is the currency of advancement.

  
  

• Creation of a Monoculture:  Organizations thrive on innovation, risk-taking and constructive conflict. In time, they can easily become a bastion of groupthink if only similar-minded people get hired. 

• Allegations of Discrimination: Employers are expected to maintain thorough records of their hiring practices and adhere to best practices for fair selection. Employees may begin to mistrust the hiring process, which can lead to filing discrimination complaints if they notice a pattern of hires that do not align with the job requirements.

  
  

This isn’t just theoretical. Italy, a country with a rich tradition of family-run businesses, offers sobering data. A 2025 survey of over 800 employees across 186 small and medium-sized Italian firms revealed that nepotism and favouritism significantly reduce productivity and destabilize company culture. In fact, 70% of employees in family-run businesses believe nepotism negatively affects morale, and family ties influence up to 35% of hiring decisions in these firms.

The University of Bologna’s research underscores that discriminatory hiring practices discourage internal talent and undermine long-term competitiveness. When employees perceive that advancement is based on bloodlines or other loyalties rather than merit, they disengage, and innovation stalls. Turnover rises. And the organization loses its edge.

Before you consider hiring someone that you know, instead of following through a fair and transparent recruitment and selection process, consider the effects on the individual candidates, your team, the organization, and your integrity.