What’s Wrong with Hiring a Family Member to Work Under the Supervision of Another Family Member?

August 17, 2021 by Mike Bishop

A chess piece is moved by a hand

To answer that question, let’s take an example: A social service nonprofit has a very talented manager who has been with the nonprofit for several years. The manager supervises approximately 10 staff members, most of whom have at least 3 years of experience in this field and a master’s degree in social work.

The number of clients the nonprofit serves has increased, and so has the workload. Everyone agrees to bring on another staff member soon. The manager strongly urges the hiring of their nephew, who just graduated from college with a bachelor’s degree in social work. Aside from a 4-week internship, the nephew has no real-life work experience in this field, but the manager insists that the nephew is a hard worker, a fast learner, and that the manager can vouch for his character 100%.

The staff have several concerns:

  • Suspicions that the reasons the manager may have for wanting to hire their nephew are based more on maintaining family harmony than serving the agency and its clients
  • Concerns that supervising a family member may prove problematic to the manager’s ability to ensure this employee’s performance expectations are satisfactorily met
  • Concerns the fair and impartial treatment of staff may be compromised

However, the manager holds fast to the idea that a nonprofit can overlook all these “formalities” when hiring staff.

In short, the staff could see the dark clouds of nepotism on the horizon.

What Are the Symptoms of Nepotism?

As you can imagine, this is a very common situation—and a problematic one if handled improperly.

Let’s start with the basics about nonprofit organizations. A nonprofit, notwithstanding the humanitarian, charitable, religious, or social mission it might have, is nevertheless still a business. As such, the nonprofit is subject to a considerable number of laws that impact how it’s organized and operated. This requires compliance with all applicable laws impacting many aspects of the day-to-day operations of the organization, including issues related to finance, corporate responsibility, and yes, labor and employment issues.

Some nonprofits, often smaller ones, tend to overlook these responsibilities and operate the nonprofit as a family-owned small business that often overlooks the “formalities” that legal compliance might impose. This is a very risky way to operate a nonprofit, and it goes without saying that a nonprofit organization should always run as a business complying with all laws and sound principles of good business judgment, all for the purpose of successfully carrying out the nonprofit’s mission.

One of the more important aspects of running any organization is to avoid the risk of nepotism, usually defined as favoritism granted to relatives and friends. In the example, the manager wanting to hire their nephew seems to fit this definition. The negative implications of hiring, supervising, or even merely working with family members or close friends who have personal relationships with any current employee, especially supervisors or managers, are obvious but often disregarded.

Examples of such potential problems, among many others, include:

  • A perception of favoritism toward the relative or close friend

  • The risk that a supervisor, if related to or close friends of the employee, may be tempted to treat their relative or friend with a relaxed degree of supervision or evaluation

  • The possibility that other employees may feel like they might get in trouble if they have a conflict with the relative or friend of another employee and that the non-related employee’s side of things will be disregarded

  • A perception on the part of the other employees that they are second-class citizens

  • Poor workplace morale

What does a non-related co-employee do when, after dealing and interacting with the nephew, the co-employee concludes that contrary to the manager’s opinion, the nephew is neither hard worker, a fast learner, or of good character?

Creating a Policy

The risks that come with nepotism or hiring relatives or close friends of existing employees, executive directors, and board members of a nonprofit must be carefully monitored and avoided.

This does not mean that qualified relatives or friends of any existing employee cannot or should not be hired to join the nonprofit’s staff in all circumstances. What it does mean is that nonprofits should hire and handle all aspects of that person’s employment to avoid appearances or creating perceptions of favoritism.

The best place to start to ensure this problem is avoided and controlled is to implement a clear and effective nepotism/conflict of interest policy.

Such a policy should, at a minimum, make the following clear:

  • The nonprofit, as an organization, avoids and disapproves of nepotism, favoritism, and conflicts of interest.

  • The nonprofit is not averse to hiring relatives or close friends of current employees, but that hiring will be based on qualifications and experience and never on these relationships. 

  • Family members will not be included in the hiring decisions of other family members. And, even when the family member is not directly involved in the process, it is important to have a clear and transparent hiring process.

  • Any relatives or close friends of current employees will not be supervised or evaluated by their relatives or friends, and employees will not be involved in, or attempt to influence, any work-related decision that may involve a close friend or relative, including those involving compensation or benefits.

  • Relatives or close personal friends are to scrupulously avoid creating the appearance or perception of favoritism in the workplace, by either word or conduct. 

  • Any employee that enters a close personal relationship with a coworker must report the relationship to their supervisor to determine if a conflict of interest exists.

  • If such a close relationship develops, or if an employee becomes related to a co-employee, the nonprofit will take appropriate action to ensure that any potential for a conflict of interest due to that relationship is eliminated.

Considerations of professionalism, adherence to the law, good business practices, and dedication to the nonprofit’s mission should serve as the guiding principles to operating any nonprofit. Relaxation of those principles, including hiring a possibly unqualified and inexperienced individual based upon a close relative’s subjective opinion, is likely to jeopardize the integrity of not only how the nonprofit is run, but the nonprofit’s mission.  

Tags: Risk Management

Mike Bishop

About the Author

Mike Bishop is an Employment Risk Manager for the Nonprofits Insurance Alliance, where he counsels nonprofits on the management of employment risks by helping them understand employment law mandates and best practices to motivate and manage employees. Before that, Mike worked at the law firm Matheny Sears Linkert and Jaime, where he focused on employment law counseling and litigation. When he isn’t hard at work, Mike enjoys attending concerts by the Cleveland Orchestra and exercising his masterful skills as a jazz guitarist. Mike holds a B.A. in Political Science from the University of California, Davis, as well as a J.D. from the University of the Pacific, McGeorge School of Law. He currently resides in Lakewood, OH.