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nepotism

Does Nepotism Really “Rock”?

By now you’ve probably heard how Karan Johar, Saif Ali Khan and Varun Dhawan stood onstage at the India International Film Awards 2017 and chanted, “Nepotism rocks!”

Let’s ignore, for a minute, the rudeness and immaturity. Instead, let’s talk about nepotism – does it, in fact, rock?

As parents, it’s hard to say it doesn’t. And as Indians, it’s hard to say it’s avoidable; here, nepotism is just good parenting. And while we can all get behind condemning “the practice among those with power or influence of favouring relatives or friends” in bodies and industries that are either meant to be broadly representative (government) or would be richer for diversity (Bollywood), we tend to give ourselves a pass in our own homes and offices.

Because no one has a problem with nepotism when the relative being favoured is competent, works hard, and produces good outcomes. Yet there are plenty of examples where that’s not the case. These negative examples of nepotism are certainly more obvious, and often more public, but are they more frequent? Is it the norm for nepotism to not, in fact, rock?

Research on this is limited, but it does suggest so: Per a Harvard Business Review exploration of family businesses in the US, 90% of family businesses fail before the third generation can take charge. A very different business and family environment, to be sure, but still telling.

According to Pete Michaels, chairman of Vistage International, a networking organization for business executives, it boils down to feelings of entitlement and a lack of commitment/motivation among the beneficiaries of nepotism: “Too many kids feel they deserve the business when their parent(s) retire or die. This is often a result of their upbringing, being given things they didn’t work for.”

Which suggests that in order for nepotism to rock, a certain foundation has to be laid earlier in a child’s life. This is the conclusion Michaels reaches in his piece for Smart Business Magazine: “One of my members is a third-generation CEO of a business started by his grandfather. He has two sons in the business with significant responsibilities earmarked to take control when he retires. In my opinion, this is a success story because of my CEO member’s core values. His kids were raised with the same strong core values found in his company.”

In other words, how we raise kids determines whether nepotism is going to be good for both them and the family business.

An analysis of successful family businesses by the business consultancy McKinsey & Company suggests at least two of the core values Michaels recommends should be a sense of purpose, not just ownership, and an appreciation for achievement through merit. If from childhood we stress the importance of working hard, contributing value and earning achievements – then give kids the space to do so, even if it means letting them try and fail – then, one day, they won’t be the CEO standing on stage at a corporate retreat chanting, “Nepotism rocks!” They won’t need to.

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