In small and medium-sized family-run businesses, nepotism and the tendency to favour the owner’s family members for positions of responsibility discourage other employees, with negative consequences for productivity and company stability.
This is one of the first surveys ever carried out on this topic, published in the Journal of Family Business Management and authored by Filippo Ferrari, professor at the Department of Management of the University of Bologna.
The study analysed the working conditions of more than 800 employees across 186 small and medium-sized Italian family businesses, revealing the presence of discriminatory practices and their negative impact on various indicators of organisational well-being related to productivity.
“The discriminatory practices that we have identified are usually unintentional or carried out in absolute good faith by the company's top management. However, they have a significant impact on employees who are not part of the owning family, affecting the sense of belonging, perceptions of fairness within the organisation and the intention to resign”, says Ferrari.
Small and medium-sized family-run enterprises are the most widespread business model worldwide. Yet, the issue of unfair treatment often experienced by workers who are not part of the owning family is still overlooked in human resource management strategies. The results of this study confirm that family-run businesses often have dysfunctional dynamics, especially when family members in ownership positions choose to hold positions of responsibility regardless of their skills and expertise.
This highlights the urgent need for inclusion and diversity management in the company’s policy agenda. “This lack of fairness, driven by nepotism in employment positions, not only penalises internal talent but also damages the company’s long-term competitiveness”, says Ferrari. "As a result, the perception of discriminatory practices significantly reduces the employees’ organisational commitment and sense of justice, increasing the risk of turnover and undermining the workplace climate."
Small and medium-sized family-run enterprises should therefore adopt more transparent and merit-based human resource management policies. Objective selection criteria, role rotation, and career paths based on recognised skills are all practices that can contribute to creating a more equitable and productive work environment.
“In small and medium-sized enterprises it is often difficult to strike the right balance between informal, trust-based relationships and day-to-day collaboration and the formalisation of human resource management processes”, says Ferrari. “This study aims to be a starting point to encourage reflection on family business management practices and to promote more inclusive policies that can value talent regardless of family ties or affiliation”.
The study was published in the Journal of Family Business Management with the title ‘“All employees are equal… but some are more equal than others”. Role identity and non-family member discrimination in family SMEs’. The research was led by Filippo Ferrari, professor at the Department of Management of the University of Bologna.
