Modern HME Family Series Part 3 - Nepotism: The Good and the Bad

Posted on in Growth Strategies

By: Sarah Hanna, president, ECS Billing & Consulting North

Let’s face it: Many organizations within the HME industry are family owned and operated.

The industry was founded by individuals who have passed their legacy onto members of their own family. My career in this field started when I was hired by my mother to assist her in running one of our family-owned companies. The one thing my mother did say when I was hired was that she was going to be harder on me than anyone else in the firm, and that I had to learn each position before I could take on a managerial role. I understand the nuances associated with working in a small, family-owned business and along with that the dangers of nepotism. It is important to look at how/if nepotism comes into play in the running of your organization and how to prevent it from sabotaging your company.   

What is Nepotism?

Merriam-Webster defines nepotism as, “the unfair practice by a powerful person of giving jobs and other favors to relatives.” Another meaning when you google the definition of nepotism is, “a form of discrimination in which family members or friends are hired for reasons that do not necessarily have anything to do with their experience, knowledge or skills.”

It is typical practice to bring relatives into the family fold as employees in the HME industry and in small businesses in general. As with anything in life, there are pros and cons associated with hiring a relative.

How Can You Tell if Nepotism has Crept into Your Company?

A decline in employee morale is a large indicator. When relatives are given key positions or promotions, bypassing an employee with stronger merits, it spoils employee morale as a whole, impacting productivity and turnover. Employees who see no opportunity for growth in a company will have a lower level of commitment and may cause turnover. If staff feel like there is favoritism among family members and they are not treated fairly, they will look outside of the company for new opportunities. If managers feel they are not allowed to discipline a family member subordinate because he/she is a relative, they will feel powerless to perform their job and give up. Nepotism can allow rules to be broken and lead to chaotic situations for business owners. 

Motivation is a key factor in the success of a business. Nepotism is one of the biggest motivational challenges found in family-owned companies. Non-family staff who perceive a sense of preference to those relatives are unmotivated to go above and beyond for the business. Similarly, family members who feel entitled to special privileges and positions become complacent and don’t strive to improve performance. The dangers of nepotism can be seen in low employee morale, reduced productivity and increased turnover. 

As a business owner, you need to give considerable thought into hiring a family member. The addition of relatives and friends to an organization can cause non-related employees to be distrustful of the team member and you as a leader. To prevent the appearance of nepotism in your organization, there are a few steps you can take: 

  • It is recommended that family members gain experience with an unrelated company prior to working for the family-business. By doing so, they can bring new ideas and a fresh perspective to the organization.
  • The hiring process should be the same for family and non-family members. Have them interview and complete all paperwork for the actual position.
  • Employ based on qualifications and experience.
  • Resist the temptation to create a “special” compensation package for them. Keep their pay in line with those with the same credentials within the company.
  • Have an open discussion with your staff before you hire a family member. This will assist in limiting gossip and speculation. Allow the staff to voice their concerns and assuage their fears.
  • Family members should follow the same rules and protocols of respect for your position and authority within the workplace.
  • Treat your family member the same as other employees. It is tempting to be more lenient, but before acting make sure you can honestly say you would do the same thing for any other employee in the same situation.

By avoiding nepotism, your company will thrive. Family and non-family team members will work side by side with mutual respect and a solid purpose based on the mission of the business without regard to familial relationships.

About the Author

Sarah Hanna is president of ECS Billing & Consulting North. She is a nationally recognized speaker and consultant on revenue cycle management, corporate operation and workflow assessment. Sarah has worked in the health care industry for more than 25 years conducting seminars and client consultations on billing protocols, operational efficiencies and workflow, revenue cycle management, and reporting mechanisms for corporate success.