Chapter 5

Family Business Issues and Generational Differences

Nepotism

Nepotism refers to the process of hiring or promoting employees simply because they are family members. A commonly heard derisive comment when discussing junior family members is, “They have the right last name.” Family firms can have the view that all family members deserve jobs, regardless of qualifications. Often, this leads to too many unqualified, unproductive employees. Free-riding family members can lead to poor morale among the nonfamily employees. The forced hiring of an undeserving or ineffective family member because of pressure from other more powerful family members is a common cause of significant family conflict as well. It is also an underlying reason that ...

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