Nepotism is defined as the practice among those with power or influence of favouring relatives, friends, or associates, especially by giving them jobs and is often a topic of discussion within the realms of family business.
We asked our Global Family Business Think Tank Panel if they thought that when it comes to selecting the next leaders of the family business, nepotism still exists.
When It Comes To Selecting The Next Leaders, Do You Feel Nepotism Still Exists?
Yes - 82%
No - 16%
Don't Know - 2%
Our respondents were broadly in agreement that despite the recognition of the issue, nepotism remains a key challenge for families in business around the world today.
THE THOUGHTS OF OUR ‘THINK TANK’ REPRESENTATIVES:
“Nepotism does still exist today but it is not always negative. Business families may prepare their next generation from very early on, or next generations may want to be part of the business from a very young age and put themselves in places that help them learn more about the family and the business. In both instances, if they became future leaders some would argue that it is a nepotistic decision, even though those taking over have been prepared to take on the position.”
Isabel Botero
George E. & Mary Lee Fischer Chair in Family Entrepreneurship, University of Louisville
“In my experience, I currently see that family businesses have a preference for finding competent leaders within the family. If a well-qualified person is found within the family, that will certainly be the choice.”
Rogerio Fae Rodrigues
Family Business Consultant, UNE Consultoria
"Nepotism still exists, though it is not necessarily bad. There is nothing better than a family business led by a qualified family member, and nothing worse than a family business led by an unqualified family member.”
Josh Baron
Senior Lecturer, Harvard Business School
“First choice will naturally be a blood relative who has the ability and willingness to take on the responsibility. If a suitable blood relative is not available then a suitable non-family person can take over the management.”
Andre Diederichs
CEO, Family Business Association of South Africa (FABASA)
“The concept of family members continuing to lead the family business over many generations in and of itself is not a problem. The practice becomes a problem when family members are not prepared as future leaders for the family and the business. To prepare future leaders you must begin to prepare them now.”
Charlie Leichtweis
Founder and Managing Director, Experts in How LLC
“In my experience, if you put someone in a position who does not have the skills, competencies, and attitude to do well in that role then ultimately that will have a negative impact on the business. In an increasingly competitive world, putting someone in a position purely because of accident of birth does not set up a business to succeed.”
Beverley Mitchell
Founder, Beverley Mitchell Consulting
“Families are often reluctant to appoint external professional management which is not surprising in many ways as a founder will likely want their legacy to be carried on by their children and so it is perhaps natural that children succeed into leadership roles.”
Mike Kane
Partner & Head of Family Business, Turcan Connell
“Nepotism, when used effectively and in the right circumstances, can be a competitive advantage for family businesses. Having leaders with an intrinsic connection to the business and alignment to the family’s values and shared purpose can be potentially quite beneficial. We often talk about wanting management to think like owners and this enables that but does require the right individual and level of support and structure to ensure it remains a
competitive advantage.”
Daniel Trimarchi
Director, Family Enterprise Advisory, KPMG
“Nepotism does still exist but that may always be an element of the nature of family firms. It is important to communicate clearly with other important, and potentially ambitious people about what they should expect in terms of the leadership positions they can and cannot achieve in the business.”
Jasper Brinkerink
Lecturer in Entrepreneurship & Innovation, University of Edinburgh
“Attitudes to inheritance are deeply cultural and where one culture watches for bias and is uncomfortable with nepotism, another sees the family connection as the most naturally trusted source of succession. Not everyone sees nepotism as a bad thing and each context is unique.”
Nick Mayhew
Founder & Managing Director, Alembic Strategy
“To a lesser degree perhaps. As family business boards become more diverse we see a culture of meritocracy begin to form, where family (or increasingly non-family) members rise to the top based upon performance and the contribution they are able to make.”
David Twiddle
Managing Partner, TWYD & Co
“Trust and family legacy drive this behaviour. In my experience, one of the hardest issues a family faces is the reality the next gens might not be the best candidates for leading. Building emotional intelligence in addition to technical skills tends to be the biggest leadership gap.”
Allie Taylor PhD
Owner & Business Psychologist, Orange Kiwi LLC
“Yes, but is this necessarily a bad thing? Self-awareness and preparation is the key here. If the business and product is driven by the family legacy and it is important for the family to present the leading face of the brand, it might be an essential part of the business strategy in the medium term. This should then be aligned to the values and message communicated by the business to the outside world.”
Charlotte Tong
Partner, Goodman Jones LLP
“Nepotism continues to pose a significant challenge in family businesses. This practice places family enterprises at a disadvantage relative to non-family counterparts, as it restricts access to top professional talent, potentially jeopardizing the longevity of the family firm. Prioritising professionalism within the family business and adopting merit-based criteria for candidate selection, grounded in experience and talent, yields considerable advantages for both the enterprise and the family.”
Jacqueline Schwartz
Founder, Legado Consentido
“The best family businesses have little or little tolerance for nepotism.”
Michael L Chindamo
Founder, Fautores Family Offices
“Regrettably ‘blood continues to be thicker than water’ and it is only the most enlightened businesses that buck this trend and are then the ones that tend to survive.”
Howard Hackney
Founder, Howard Hackney LLP
“We still have a long way to go in changing the conditioning of family business leaders to consciously mitigate biases and remain aware of their own judgements when selecting the next generation of leaders.”
Abirami Duraisamy
Executive Coach, Outshine Outplay
“I think in any family business there is always a bit of nepotism because you implicitly trust your family members. A lot of families want their children or next gen to be in the business but that doesn’t mean they should. While families can try to see if the next gen can lead, if they find out that they cannot, it’s best for both the family and the business to be up front and communicate about who is the best future leader for the business, even if that is not a family member.”
Kyler Gilbert
Vice President, Business Consulting Resources
These results were part of the 2024 Global Family Business Think Tank Report that was published in Autumn 2024.
A copy of the final report is available to download below and is free to Family Business United members and digital subscribers (simply log in to access). If you are not yet a member or digital subscriber and wish to obtain access to the report, you can find out more about becoming a member of Family Business United here or take out a digital subscription to access all areas and content available on the platform including this report here
Download the Global Family Business Think Tank Report, Autumn 2024 here
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