Is nepotism acceptable in insurance?

Family-run brokerages are far from uncommon in Australia and many owners welcome their offspring into senior roles within the business – but is the practice really fair and what should leaders do if other employees begin to feel aggrieved?

Grevis Beard is the co-founder of workplace investigations firm, Worklogic. He warns that, when firms engage in nepotistic practices, they place the value of fairness under attack – but it is possible to placate employees who are outside of the family.

“The practice of employing family members as part of the mix may send a message that they will have a favoured career path within the firm because of their family connection,” he says.

“The question for any business is whether you are employing the best person for the job, based on their merit, skills, experience, potential and values, regardless of whom they are related to,” he continues. “Even where you have run a scrupulously objective recruitment process, if this results in the appointment of a family member, the perception of nepotism can still be a damaging one.”

In order to satisfy employees who may be suspicious of family promotions or unfair career progression, Beard says business owners need to be able to demonstrate that there is an objective and impartial decision-making process for giving feedback, identifying training opportunities and offering benefits for staff.

“This process needs to be transparent and visible, and genuinely counters any possible influences of ‘who is related to whom’,” says Beard. “A conflict of interest policy is a very helpful and clear way of setting out what the process is for managing a situation where staff may be related to one another and find themselves either in the same team and/or managing another relative.”

However, while there are certainly risks with playing favourites, Beard does admit there are some potential benefits in hiring employees who share a family history.

“It may be that staff who are related to one another, are more attuned to understanding ‘what makes others tick’ – this can help with promoting team cohesion, as well as preventing or resolving conflict more quickly,” he tells Insurance Business. “On the other hand, sometimes family members who are working together may be avoidant in giving feedback to each other. Each family, and workplace, is different.”

His final advice for leaders who want to operate fairly in a family environment is to be clear about the company’s values.

“If you truly value fairness, then, regardless of the make-up of your workplace, ensure that you risk-manage any perception of unfairness in the firm,” he says. “You will need to implement and abide by a clear and visible conflict of interest policy, train people to be able to give genuine feedback about team members (including those who are related to each other), and be able to hold everyone accountable for their performance.

“Creating this type of cultural accountability, and managing risks of any perception of unfairness, ahead of time, is key.”


This article was originally published in Insurance Business Australia