NEPOTISM

Undoubtedly favouritism of any sort generally evokes negative feelings; and this is mostly when it happens in the workplace where people can clearly see, or they experience its negative affects. Perhaps one of the reasons why favouritism is so controversial, otherwise known as nepotism or cronyism in the workplace environment, is because it tends to defy logical thinking and is replaced by selfish, emotional behaviour. Both can wreak havoc in a business and amongst its employees.

Typically, blatant favouritism and the favourable treatment of family members in the workplace (as opposed to the appointment of more competent people) is what one would refer to as nepotism, while the appointment of friends is called cronyism. Either way, these practices often lead to far greater problems within companies because fairness and transparency tend to be ignored. Moreover, the people who are appointed on this basis are often incorrectly rewarded and allowed privileges to which they are not entitled, with no logical basis of merit and competence.

Clearly the subject of nepotism needs to be understood in the context of the business environment in which it may be practised. Rather interestingly, nepotism, when practised well, can in fact be positive. Nepotism is usually understood as a counter-productive and discriminatory practice which goes against the values of equality, merit, independence and competition and it is simply stamped as being unethical.

However, there are grounds for arguing that nepotism practiced in the correct environment and context, could in fact be regarded in a more positive light, particularly in small businesses and where there is no public funding, nor an expectation to employ an individual with the requirement of certain qualifications or experience.

Naturally the test must be able to withstand the scrutiny of the following criteria; the process and occurrence of such appointments must be transparent, there should be no sign of any forms of abuse and there should be no conflict of interest (not least of course that the person being appointed should offer some degree of skill and experience). Such appointments are often based upon a 'trust factor' and when executed well, the benefits may lead to further employment of other people as the company grows.

Inappropriate practices of favoritism clearly spells DANGER for companies, and these risks may include major disruptions in the business and its operations, including personal risks where criminal proceedings could be laid against the perpetrators. The risks may also extend to increased professional risks and even company reputational damage. Protection mechanisms and measures should include proper employment policies, following proper selection processes, applying ethics, policies and being committed to appointing people based upon the values of merit, fairness and efficiency.

CGF's report, Nepotism enjoys the peer review of Dave Loxton (Werksmans - Director) and Chris Kotze (Deloitte - Senior Manager: Legal) and covers:

  • Nepotism
  • Definition
  • Classification
  • Perceptions of nepotism
  • Nepotism: Positive vs. negative practices
  • Corruption
  • SA Law & legal instruments
  • Effects of nepotism: Business & personal risks, internal operations, external operations & public sector
  • Nepotism: Monitoring, measures, mechanisms
    & policy
  • Contacts, acronyms used within this presentation, references & additional reading

This report is now available on the web at this link www.corporate-governance.co.za.

For further product related information, kindly contact:
Terry Booysen tbooysen@cgf.co.za
Gretchen Meyer gmeyer@cgf.co.za
Jacqueline van Staden jvanstaden@cgf.co.za

Tel: +27(11) 476 8264 / 1 - Cell: +27(82) 373 2249 –
Fax: 0866231269 –
e-mail: tbooysen@cgf.co.za –
Websites: www.cgf.co.za / www.corporate-governance.co.za
Skype: terry.booysen

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