Handling nepotism issues intelligently

Nepotism, the favoring of a relative over other employees, can operate at any level in a company. High level nepotism may be so ingrained in the DNA of a company that it cannot be eradicated, but nepotism amongst mid and lower level employees can be avoided with some intelligent HR policies that don’t discriminate against productive family members.

A reader asks:

Please help me understand – in your article on nepotism, are you saying that companies SHOULD install a nepotism policy that removes the possibility of a family member of an active employee from being hired at the company?   

She was referring to my article, How important is nepotism?

I wrote:   
If you read my article, I believe you will see that I believe that any activity that gives family members special privileges over other qualified employees is destructive to the company and to general morale. It is a kind of business insanity that should be avoided at all costs.

Having family members work in the same department is unwise because there is a connection that circumvents normal organizational lines. Most companies allow members of the same family to work in the company, but not in the same department.

Nepotism at the lower levels of the company can easily be avoided by intelligent use of policy that says that family members cannot work for each other or in the same department or division.

The real problem with nepotism is that when a family owns and runs the company, family members are often treated differently than other employees and this always leads to trouble in the long run. They are promoted when they are unqualified and they are forgiven for errors that other employees get fired for.

Net result, incompetency is rewarded and the good people leave at the first opportunity.

The reader responds:

I totally agree with you.  What I’m trying to substantiate is removing the existing general nepotism policy at the public utility company where I currently work and to allow our HR hiring process to choose the best candidates.  Simply placing an umbrella statement of no family members working anywhere in the company appears to be a cope out to me; taking the easy road.  We are no doubt turning away qualified and effective workers as a result.

My suggestion:

Just include the provision that family members must not work in the same division and you should be very safe. For example family members in a personnel dept can interact with other family members to share salary info. When they are in separate divisions, there is no management connection between them.

Are any of you running into nepotism problems? What solutions have you found,  other than leaving for a saner work environment?

Please note that not all family enterprises show favoritism to relatives. Some even set the bar higher for family members than for other employees.