I’m a history junkie, so my first memory of nepotism in the workplace was way back in the day (1961) when a newspaper article reported that newly elected President John F. Kennedy (encouraged by his father, it turns out) appointed his younger brother, Bobby, as the attorney general of the United States. Most historians believe he had a successful tenure, although they remind us that the judgment of history is seldom final.

Workplace nepotism — showing favoritism to family members in an organization — can take place at the time of hiring, and in many areas of employment, such as wages and benefits, promotions and demotions, discipline and layoffs, supervision and working conditions. Most public agencies, and some employers with labor contacts, often have specific policies regarding the appropriateness of employing immediate family members and close relatives.

Let’s look at a few of the issues companies face when either permitting nepotism or forbidding the placement of close relatives on the payroll.

Nepotism is most often found in family-owned businesses. Employees joining such companies understand that family members and close relatives will most likely be favored and advanced in almost every aspect of the enterprise.

Multi-generational companies are quite common and often featured in this journal, providing inspiration to others who believe that such an arrangement strengthens family bonds and provides a legacy for future generations.

Of course, leadership issues can arise, especially when younger family members opt out of the family business, leaving the company with a shortage of in-house leadership talent. In such cases, organizations either seek new blood to sustain the company or decide that the best path forward is just to sell the company.

Those companies that have adopted a nepotism policy usually design it to forbid one family member from directly supervising another member or both working in the same department.

As a human resource director, I’ve joined organizations with and without such policies.

In one business without such a policy, a mother was supervising her daughter. When asked why the daughter’s performance reports reflected substandard work when, in fact, she was regarded as an exemplary worker, the mother replied that she didn’t want to be accused of favoritism so she lowered the daughter’s ratings. Clearly, a misuse of supervisory authority and an abuse of a valued employee who was quickly transferred to another section.

In another instance, a wife was working as a secretary to her husband, creating confusion as to who was managing the department. A transfer was made and, finally, a policy was adopted to prevent re-occurrences.

It’s been my experience that corporations with nepotism policies occasionally find themselves bending the rules, trying to attract badly needed outside talent and needing to satisfy the employment needs of an accompanying spouse. If the institution is unable to find suitable employment outside the company for the spouse, a position might need to be created for the person, leading to employee resentment and charges of favoritism. This problem often occurs in an organization attempting to recruit specialized and highly coveted talent to its workforce.

A nepotism policy needs to be tailored to fit the needs of the workforce and must have effective language in place to explain the circumstances under which nepotism might be necessary. Such a policy should be seen as a method of diminishing complaints that the nepotism policy is being violated and as a way of maintaining good employee morale.