The Germans are born metaphysicians as rightly noted by Jules Verne, a French science fiction writer. Maybe this is the reason why German sophisms lack British lightness but abound with German insightfulness. For instance, Arthur Schopenhauer (1788-1860, a German philosopher, irrationalist and misanthrope), referring to the burden of relationship with relatives, said, “Getting married is to halve your rights and double your duties.” I am sure that 50 percent of business owners who are tired of their marriage will support Schopenhauer with the same energy with which they applaud Grigory Leps (singer of “Leave and be happy”, etc.). However, the German wisdom does not affect their decisions to hire relatives and relatives of relatives.

The era of initial accumulation of capital, or as it is now called, the dashing nineties, is long time over. The tendency to hire family members is usually blamed on this period, as doing business was difficult with thieves, traitors and racketeers everywhere. No one could be trusted, and in this situation a relative was the best person to work with. Incidentally, this phrase was invented and included into a comedy with a nobleman who was later beheaded long before that era of initial accumulation, in the much calmer times and in a completely different country, a country with a stable class hierarchy, where family ties were institutionalized. But even then the desire to help a relative lead to the protest of a skeptical mind. Today, for employment of relatives one may lose a seat on the board of directors. Everything depends on the principles of the chairman and corporate culture norms in the company.

However, according to surveys, only 45 percent of managers have never hired relatives, 35 percent have done this several times, and 27 percent have hired relatives in exceptional circumstances. This strikingstatistic data makes us suspect leaders of atavistic instincts. Now let us take a closer look at their motivation. Olga Gavrilova, HR Manager of an audit and consulting group Gradient Alfa, believes that “relatives are often effective in small and medium-sized companies, but in a large corporation a manager’s relative can become a problem”. The thing is that it is more difficult to manage a large company and therefore it is more difficult to deal with dissatisfaction of employees, as in a large company it can affect the quality of work. Probably for this reason the majority of HR managers in large companies, according to Gavrilova, “are apprehensive about employing relatives”. 

President of HeadHunter.ru, Yuri Virovets, believes that the effectiveness of relatives is rather an exception than a rule. Senior lecturer in Sociology of Management in Lomonosov Moscow State University, Natalia Khlopayeva, sees more advantages in appointment of relatives to top positions, “The capital is preserved and increased, the money remains in the family, confidentiality of the company information is ensured, and a high degree of confidence in the family means a more comfortable and productive work of the company.”

So, the comments show that the company, which is a more complex system, will experience more problems and pressure from the inside because of favoritism than the company, which has a simpler structure. When the system ceases to be a kinship system and gives way to internal corporate relations with an hierarchical model it becomes a problem. The country specifics have nothing to do with it: small family-owned Italian companies are no different from small Russian or American companies, and the same applies to large syndicates.
 

In this context we can try to determine the extent of nepotism in different spheres of business. Yuri Virovets believes that nepotism is typical for “criminalized sectors of the economy such as drug trafficking or for low competitive areas where the efficiency does not matter.”

The majority of experts agree that favoritism is a priori an absolute evil, such as corruption, and do not think that relatives can contribute to efficiency. Yet Elena Zazhigalina, Deputy Director General, 3R Recruitment Company, believes that “hiring a relative is not always bad, it all depends on professional skills of a person”.

While it is easy to understand why people hire relatives, what shall we do about favourites at work? Favoritism is much more dangerous than nepotism. A lot is said about it in Russian and world literature, but like any other art it is of little practical use. On the other hand, corporate regulations, internal memos and even unspoken rules do not touch this issue, because –  especially with certain skills – favoritism is invisible not only to the eye but even to the most high-precision device, as an electron or Russian spirituality nobody has ever seen, and therefore cannot prove its existence.

First, to the contrary of family members, it is difficult to notice how favouritesappear. Secondly, they are much more difficult to get rid of. Third, they spoil the climate within the team much more, because if a family member is accepted because he is a relative, in case of favouritesit is much more difficult to accept for other employees as there is no reason why they are considered the best. However a favourite’s Achilles’ heel is that love is temporary as opposed to family ties.

Favouritesare usually much less efficient than relatives. They think that if managers appreciate them more than others, for some irrational reasons, this situation will not change: the irrational is usually stable. However, they are wrong. Moreover, favourites present a threat to head of the team – the employees will still have negative attitude even after the dismissal of favourites. The only way out is to have no favorites at all. Yuri Virovets believes that it is necessary “to mark employees on the basis ofsimple and transparent and understandable criteria: all employees must understand why a particular employee is praised.” Elena Zazhigalina also thinks that “as long as bosses find it hard to hide their special treatment of favourites, they must really be good employees”. 

The first rule of an employer is never having favourites and relatives in your team. They will certainly compete for leadership. And in this fight there will be no winners, only losers. “Conflicts between family members and favourites are possible,” says Elena Zazhigalina “Both on emotional and on professional grounds. To solve this problem one should use a surgical method, so it is best to prevent such illness rather than to treat it.”

I would like to conclude with an instructive story. In today’s Germany (not in Germany of Schopenhauer), an unpleasant situation occurred in a major multibrand automobile company. This happened to Chairman of the Board of the company. It all began because of love. And not to a relative or a favorite, not a person at all. This chairman loved one of the brands so much that he got very upset if suddenly the brand's performance was not up to high standards. Once he was so upset that he dismissed head of a successful brand to ensure performance was at least equal. The board was shocked, but the figures did not change. Love is blind.