Ethical Decision Making in Workplace Nepotism Dilemmas

Introduction: Ethical Dilemmas in the Workplace

In their day-to-day lives, people encounter a wide range of ethical and moral problems that do not necessarily have straightforward solutions. There are ethical dilemmas that present complicated challenges for the decision maker. During such dilemmas, there is a need to establish ideal solutions firmly rooted in various ethical theories and sound moral judgment. Most of the time, when an ethical dilemma is encountered in an institutional setting, crucial tradeoffs are involved. The decision embraced could be costly on other fronts, but the dilemma will likely — and ultimately — be resolved.

The Hypothetical Scenario: Nepotism and Incompetence

An example of an ethical dilemma arises when incompetent staff are employed by a human resource manager as a result of nepotism. In a hypothetical scenario, the HR manager of Bank X is responsible for hiring staff based on their qualifications. However, when employees are deployed to different bank branches, it becomes apparent that several staff members lack competence — an outcome that would routinely be expected when hiring decisions are based on personal relationships rather than merit.

More specifically, the branch manager of one location notices that sales and overall performance are declining at a high rate, with the underlying cause being the incompetence of certain staff members. Among the underperforming employees is the branch operations manager, who is a nephew of the HR manager. The position of operations manager requires relevant education, experience, and specific competencies. The branch manager finds it increasingly difficult to work with the operations manager because the latter is not qualified for the role, and the branch manager is convinced the individual was hired solely on the basis of his family connection to the HR manager.

The branch manager wants to escalate the matter but fears jeopardizing his own employment. At the same time, he faces daily challenges because he is effectively forced to carry out all meaningful work himself, as the operations manager is unable to contribute meaningfully to bank operations. Although the branch manager believes that escalating the matter would help resolve the issue, the HR manager is part of senior management and could interpret the complaint as a challenge to his hiring judgment. Since the HR manager controls hiring and firing decisions across the organization, the branch manager risks being dismissed for exposing the unethical and unprofessional practices of his superior. On the other hand, if the branch manager remains silent, he must continue shouldering the burden of his colleague's incompetence — effectively jeopardizing the performance of his branch and, ultimately, the entire organization.

Solving such workplace ethical dilemmas is not easy; however, various ethical theories can be applied to arrive at the most viable decision. These include, but are not limited to, the utilitarian approach and the virtue ethics approach. The utilitarian approach argues that the best ethical action is the one that provides the most good and does the least harm (Bartels & Pizarro, 2011). Virtue ethics, in turn, holds that ethical actions must be consistent with ideal virtues (Alzola, 2015). In this dilemma, the utilitarian framework is particularly applicable.

Parties Involved and the Utilitarian Framework

Several distinct parties are involved in this dilemma. The first is the branch manager, who has observed the operations manager's incompetence. The second is the operations manager, who is presumably aware that he does not merit his position and that poor performance on his part is unlikely to be challenged given his family connection to the HR manager. The third party is the HR manager himself, who has knowingly hired unqualified individuals — including family members — for critical roles within the bank. The fourth party is the bank as an institution, which is experiencing a downward spiral in performance as a direct result of these poor hiring decisions.

According to the utilitarian ethical framework, reporting the matter to management would be the correct course of action. As Byars and Stanberry (2018) explain, "utilitarianism is a theory of morality that advocates actions that foster happiness or pleasure and oppose actions that cause unhappiness or harm" (p. 67). It therefore follows that the best course of action is the one that promotes the happiness and wellbeing of the greatest number of people. In this scenario, the "greatest number" refers to the bank's various stakeholders — including shareholders, employees, and customers.

Poor organizational performance stemming from staff incompetence threatens all of these groups. Employees could find themselves without work if the bank fails; shareholders could lose their investments; and customers would lose access to the reliable financial services they depend on. It therefore follows that the branch manager should bring the matter to upper management's attention — and, if he believes management itself may be compromised by the HR director, escalate the matter further by writing directly to the board of directors.

Conclusion

Workplace ethical dilemmas involving nepotism place decision makers in genuinely difficult positions, where personal risk conflicts with organizational duty. Applying both utilitarian and consequentialist ethical frameworks to this scenario leads to the same conclusion: the branch manager should report the misconduct to upper management or the board of directors. While personal consequences may be severe, the broader benefit to the organization's stakeholders — employees, shareholders, and customers — outweighs the cost of inaction. Ethical courage, even when professionally risky, is ultimately consistent with the principles of sound moral judgment.

References

Alzola, M. (2015). Virtuous persons and virtuous actions in business ethics and organizational research. Business Ethics Quarterly, 25(3), 287–318.

Bartels, D. M. & Pizarro, D. A. (2011). The mismeasure of morals: Antisocial personality traits predict utilitarian responses to moral dilemmas. Cognition, 121(1), 154–161.

Byars, S. M. & Stanberry, K. (2018). Business Ethics. OpenStax.

Love, E., Salinas, T. C. & Rotman, J. D. (2020). The ethical standards of judgment questionnaire: Development and validation of independent measures of formalism and consequentialism. Journal of Business Ethics, 161(1), 115–132.