The family business is an enterprise or project owned and operated by family members, fathers, mothers, and children where the company’s vision and ideologies are the same. Nepotism is common in such establishments. There are so many family enterprises or businesses that have successfully grown into famous empires. A significant percentage of people believe and support that running a company or business with family members is the most effective option. Nepotism affects business ideology, organisational value, and productivity negatively and positively. There should be restrictions when including family members in a business. The paper aims to closely examine the concept of nepotism in business, highlighting its drawbacks and benefits.
Nepotism
Nepotism refers to an ideology or practice in a business where an individual appoints or hires family members to occupy different positions for which people from outside may be higher or better qualified. Adam Bellow believes people are hard-wired to care for friends and family members (Daniel, 2020). He argues that appointing family members in a business is associated with negative and positive impacts. He based his argument on the scenarios of ancient Chinese clans, Renaissance Papal Lineages, and American families like Bushes, Kennedys, and Gores. If practised haphazardly, nepotism can lead to embarrassment to all parties involved in the business, including customers or recipients. If done professionally, nepotism can benefit an organisation and society (Daniel, 2020).
Nepotism enhances family bonding and relationships by creating distinct business values compared to other organisations, companies or enterprises. In his argument, Adam Bellow is sceptical concerning the long-term impact of nepotism since it can lead to societal embarrassment. He tries to show that nepotism ignores or leads to the seclusion of better and highly qualified employees in society. Handling nepotism in a positive and professional way can save the family business from perishing due to harmful and negative stereotypical ideologies of including family members in a business (Daniel, 2020). A great percentage of business people are sceptical and distrustful in expressing their views and opinions about the impacts of nepotism in an enterprise or business.
The integration of the aspect of nepotism in a business has led to multiple questions. If the owner of the organisation or business appoints his son to be the new manager, how should the employees from outside handle him? It raises even more questions when he is younger than them and occupies a lower position in the company. Most American companies and businesses have conflicting views and policies about nepotism since they have unique anti-nepotism beliefs and values.
American companies do not allow nepotism in their operations. They believe that different roles or positions should be occupied and accomplished by professionally qualified, highly competent and skilled employees, regardless of being outsiders (Daniel, 2020). Fundamentally, nepotism conflicts with the American values of merit and egalitarianism. Nepotism can be harmful if it is not handled well. For example, Paul Wolfowitz lost his job at World Bank after attempting to secure a promotional deal for Shaha Reza, his partner.
The African and Asian community values family members and tolerates nepotism. One of the things that have made them successful in running family businesses is the presence of unique cultural practices and values that outsiders cannot imitate or tolerate. In the United Kingdom, organisations prefer royal family members to outsiders. Based on this, Dr Gillian Evans argues that nepotism can benefit a business and enhance the creation of a safety net (Daniel, 2020).
However, the practice is frustrating for community members who cannot access job opportunities because of nepotism, regardless of their high professional qualifications, skills and competence. Nepotism should be integrated carefully to achieve and maintain exceptional business value. The primary goal of a business is to achieve high profitability and productivity, which necessitates growth and sustenance. To achieve this, it is important for business leaders to hire professional, competent and skilled employees who are not necessarily family members.
Pros of Running a Family Business
Running a family business is associated with various advantages. First, it acts as a greater incentive for the family members to remain committed and work harder to ensure the success and growth of their business (Sheila, 2018). A family business is associated with tax advantages, especially when under-aged children need to be hired or included in the business. Involving family members in a business is important because one understands their personalities and work ethics. It reduces the risk of appointing or hiring a person who might not meet the job expectations due to personality differences and the inability to apply work ethics.
A family business acts as a shorter learning curve or bonus to the owner since the family members are highly likely to be familiar with and understand the business. It reduces the time and money spent on training the outside employees about the business and its requirements, policies and protocols (Sheila, 2018). Working with family members makes it easy to adjust work schedules. For example, they can stand in for each other, especially when faced with an emergency or unforeseen situation.
A family business enhances the creation of a more relaxed and conducive environment with minimal conflicts. The absence of major family issues and conflicts makes it easy to run the business since no time is needed to learn about each other. Since they understand the likes, dislikes, preferences and interests of each other, the family members are likely to operate a business smoothly without major issues, disagreements or conflicts. Dealing with family members saves money and time since there is no need for advertising job opportunities and scheduling interviews in an effort to find the best person who fits a certain job position (Sheila, 2018). Additionally, running a business with family members ensures easy decision-making with minimal or no office politics. The family members are likely to follow and consider business traditions and protocols for decision-making compared to employees who have been hired from outside.
Drawbacks of Running a Family Business
Involving family members in a business can lead to distractions and petty disagreements, which are likely to pull one’s attention and focus from the business goals. The distractions may make it hard for someone to concentrate on important details concerning the business, including the customers’ expectations and the best ways of improving business productivity and the quality of services rendered to the customers. This may, in turn, negatively affect the services offered to customers leading to dissatisfaction and reduced business productivity and profitability, thus leading to failure.
Working closely with family members may lead to difficulties differentiating between home and work. The person will likely take work home or take family issues and problems to work. For instance, disagreement between wife and husband can interfere with the business, thus driving customers away. Additionally, family members like the mother may have difficulties balancing work and family duties, thus affecting her performance and productivity in the business (Amato et al., 2020).
Dealing with family members makes the business more vulnerable. For instance, if the family experiences a breakdown or divorce, a great part of the business will likely be affected. The business may be closed down when handling the divorce proceedings, thus affecting the flow and sustainability of the business in the competitive market. Running a firm with family may lead to the breakage of protocols and rules that have been established to ensure a seamless flow of business operations and the successful attainment of desired goals as far as productivity and profitability are concerned. For example, a son may break business rules since he knows he is less likely to be fired.
A family business may lead to hard feelings among other staff members, especially when a son or daughter breaks the rules and no actions are taken. The other employees may build resentment. When dealing with family members in a business, it may be hard to handle raises and promotions. Such things should be clearly documented and allocated as deserved. Business leaders must handle infractions fairly to avoid hard feelings and resentment in the firm since it may demotivate the employees or cause conflicts (Sheila, 2018).
The inclusion of family members hinders diversity since the CEO feels he must hire his son or daughter even though they do not have the knowledge, skills and competence needed for the job position or role. Hiring family members lacking the necessary skills may cost the business money and time. Working with less competent and skilled family members may ruin the business due to poor products, mismanagement and failure to meet and satisfy customers’ needs.
Allowing a father, mother and children to be part of the business can lead to many chiefs. If the business fails to define and establish work boundaries clearly, there is a likelihood of a disaster. Everyone in the business may want to feel like a boss and push for their opinions to be heard and considered. It leads to confusion since the staff members may need help understanding who to listen to and follow. If everyone becomes the boss, there is a possibility of differing opinions, difficulties in decision-making and bumps in the implementation of business projects, operations or activities.
A business that family members run may have challenges when taking negative feedback and making adjustments. Giving corrections and criticism to a son or daughter will likely trigger strife, friction and conflict in the workplace. Feedback on negative or poor job performance is likely to be taken negatively and cause friction in the family unit. It may affect family relationships since all the members have close and strong emotional ties. To avoid hurting a family member, one is likely to give dishonest feedback about performance. Lack of transparency or honesty in a business may lead to errors, poor performance and reduced productivity.
Owning and running a family firm is associated with stale ideas (Amato et al., 2020). For example, the son is less likely to object to his father’s ideas concerning a certain project or task. As a result, family members are likely to support ideas of each other even though they are stale and not evidence-based. Succession planning is a key issue in a family business. Having multiple owners may lead to difficulties in deciding who will run if one has to step down. The leader is obliged to identify the best person who is skilled enough to ensure the growth of the business. This is a daunting decision.
My Stance
I agree with the statement on having more restrictions on running or operating a business with all family members, like, father, mother and children. It is apparent that businesses that are owned and run by families are delicate and sensitive since one has to balance the rewards and risks. If one is starting to begin a business or firm with his family members, he should think carefully before leaping into it. He cannot assume that the enterprise will be successful since families are different.
Problems and issues are common in most families. The person should find effective ways of overcoming family issues to ensure they do not interfere with the business flow and operations. To ensure business safety, it is important to scout out the terrain in physical and emotional aspects for a better and clear understanding of issues to expect when dealing with family members in the organisation.
Hiring staff members from outside enhances workplace skill mix and knowledge transfer. It brings together professionals and experts with advanced and diverse skills and expertise. This enhances creativity and innovation in the business, thus improving quality of services offered to customers. Including employees from outside shows value to community members and allows them to apply their knowledge and skills. It enhances a culture of equity and inclusivity in the community. Combining family members and employees from the outside ensures the establishment of clear boundaries and minimises family-related conflicts and issues that are likely to interfere with the business.
In conclusion, a family business includes the father, mother, children and relatives. The family-managed business enhances the achievement, maintenance and elevation of a sense of stability in the organisational structure, culture and leadership. Nepotism is a practice whereby an individual includes only his family members and relatives in a business regardless of their education level, skills, and competence. A family-owned firm is various advantages and disadvantages. The benefits of including family members are the possibility of hard work, tax advantages, shorter learning curve, creation of a relaxed environment, cost-effectiveness, adjustment of work schedules, and minimised conflicts.
On the other hand, business-managed enterprises and firms have various drawbacks, including more vulnerability, more distractions, inability to balance and separate between home and work, breakage of rules, limited diversity and creativity, lack of skills, hard feelings and resentment, stale ideas, and negative perception of feedback. Generally, it is important for business organisations, firms, and enterprises to consider hiring employees from outside to enhance creativity, skill mix, knowledge transfer, effective decision-making, improved performance and productivity.
References
Amato, S., Basco, R., Backman, M., & Lattanzi, N. (2020). Family-managed firms and local export spillovers: Evidence from Spanish manufacturing firms. European Planning Studies, 29(3), 468-492. https://doi.org/10.1080/09654313.2020.1743238
Daniel P. (2020). Keeping it in the family. Sage Publishing.
Sheila C., (2018). The advantages of running a family business. Journal of Management, 1, 3-4.
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