Nepotism is the practice of hiring family members regardless of their qualifications. In some cases, a relative of a company executive may be qualified to perform the job for which she is hired. The fact that she is an executive's relative gives her an advantage over the other applicants. But when the employee is not qualified to perform the job, then nepotism becomes counter-productive. Your executive staff begins hiring family members because they need jobs, But the family members' lack of qualifications and ability can affect your company's profitability.