Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

Nepotism vs. Common Sense

If my wife and I raised well-educated, hard working children, who believe in our business and carry it forward, is that bad? At one point, years ago, we had preteen kids putting sticky labels on floppy disks in our living room. We had teenage kids going to the office and answering phones for the business after school. Our son managed our Internet presence from 1998 until 2001, and our daughter and her husband built our UK subsidiary and then managed our marketing for years. Three of our daughters work for our company, Palo Alto Software. One of those three runs it.

Is that bad? Apparently some people call that nepotism and that sounds ugly.  In Nepotism vs. Family Business over at MommyCeo, Sabrina Parsons objects:

We can see that family businesses are extremely important to the US economy, and are part of what makes America what it is today. So, how do you reconcile a family business and these negative attitudes towards nepotism? You can not see a family business from one generation to the next, unless family members work and run the business. Family succession planning is very important to the health of a family business. Good family succession planning means the difference between a healthy business that keeps growing and running from one generation to the next, and a business that burns out and fails, or worse gets sold out of the family (often times for bargain price to be dissolved for assets).

She has good reason to be angry. She’s responding to a Harvard Business Review post, picked up by NPR today,  that seems to assume family members are by definition incompetent. That’s a dumb generalization, a sloppy stereotype.

In fact, the real definition of nepotism is favoritism and unfairness, not just family. I looked it up. Google gives me 7 definitions of nepotism, 6 of which incorporate unfairness and favoritism, leaving one outrider that assumes nepotism whenever there is a family tie in a business.  Wikipedia, the best of them, clearly defines it as favoring relatives because of their relationship rather than because of their abilities. That’s one of the points Sabrina is making.

So let’s clean up this sloppy thinking up. I expect better from NPR and HBR. Passing leadership on to smart, hard-working, and committed family members isn’t bad. Sharing DNA doesn’t lower ability. Don’t talk about nepotism without making this important distinction.

  • Rodney Blocker

    I agree with you about nepotism and what it really is. There are definitely very competent family members that can run the family businesses but I have dealt with "nepotism" where very incompetent family members are in management positions are allowed to continue to "mess up" and any other employee in the company would have already been fired. It really hurts the morale of the company when this happens. To call competent family members in management positions nepotism is very much a generalization and stereotype … I am in the midst of a transition of a family business of which I'm in the key management position and a family member isn't so I enjoyed the article in the WSJ.