Nepotism is hiring or favouring your friends or family members at your business solely because of your relationships with these individuals. In many cases, these people get hired not because of their qualifications, but simply because of who they are. Hiring friends and relatives may have a negative effect on your business. For this reason, many small businesses adopt an anti-nepotism policy that forbids the hiring of family or friends unless they are well-suited for the job. Nepotism lowers employee morale and hinders operations if the friends or relatives you hire are looking to fill a chair and not fulfil their responsibilities. Existing workers may view nepotistic hiring as an offense or poor reflection on their abilities, especially if that hire assumes a managerial position. The appearance of favouritism, justified or not, may move employees to work less and daydream more. Moreover, the inner circle you employ may goof off and collect a paycheck because they don’t understand your business, but they still feel a sense of entitlement or privilege. The end result may mean lost revenue if the practice continues, nepotism could cost you your life’s work. Family businesses are centered around relatives by design. Most employees understand that structure. However, don’t take an organization largely built by employees and transform the company into a family affair. While you may satisfy those people close to you, the move could take a turn for the worse.