Turning a property development company into a family business never crossed John Burke's mind. According to the Burke Properties' founder, he never thought that three out of his five children will be interested in the business. So, he made them join the firm, in positions that suited their skills and interest.
The scenario above depicts the practice of nepotism. Family and closely-held business tend to be nepotistic by nature. But to successfully promote and practice nepotism, Biz Times revealed business owners should take several factors including the competency of the progenies in making the company grow, their determination in sustaining the company's legacy as well as their qualifications for specific roles.
Nepotism in business often becomes controversial, but it does not have to be negative. Despite the challenges, turning a company into a family business has its rewards. For one, hiring a family member may bring many useful skills to your business and can let you assign the right tasks to the right person. Second, you won't waste your time in training new employees since they are already familiar with the company and how it works.
Hiring family members can also bring special advantages. Aside from having another capable employee, your family will be earning extra money and get tax advantages. In nepotism, family members enter a business agreement with a strong commitment to you and to your company. Thus, they may be more willing to work longer hours when necessary.
Aside from the advantages, nepotism also offers a lot of disadvantages depending on one's impression of the issue. Nepotism in the workplace can spark favoritism concerns, while a personal family conflict may cause poor business performance. Chron added that nepotism can cause hiring of underqualified, unmotivated family members that aren't worth what they are paid. They can also undermine the workplace culture and increase the burden on other staff.
Nepotism has several advantages and disadvantages. A business owner must carefully consider how each positive or negative point will affect the business. It can either turn your business in a complete disaster or make it stronger while you end up to be a happier business owner.
Meanwhile, family-owned companies often place relatives into top positions, sometimes without even grooming them beforehand, Forbes noted. Since nepotism seems to be a usual scenario among family-owned companies, Abigail Johnson, whose family runs America's largest mutual fund company Fidelity Investments, is currently being groomed for a top position. While this promotion can spark some issues, the key in managing a successful business is to balance one's desire to help family members.
So, if family is the basic societal unit, wouldn't it be the most ideal place to start a business?
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