A global multinational bank has been under scrutiny for its hiring practices throughout Asia, especially China, South Korea, Singapore and India. The banking giant was accused of hiring children of powerful officials to win lucrative business deals. More often than not, the bank won business from various governments and companies with ties to children of the powerful officials. It is alleged that some of the appointments are linked to the specific deals pursued by the bank. Is it right on part of the bank to do this? Doesn't it encourage nepotism? What will this signal?

While nepotism can never be justified, it is not uncommon. However, when it becomes rampant or substantial it becomes injurious to the business as it has happened in case of this institution.

If you don’t hire the right people based on merit, the short term and the long term work as well as productivity is bound to take a substantial toll. This also has a very negative impact on the morale of the meritorious workforce who is committed and is hard working. Top performers start seeing unethical shortcuts to do the business and therefore the ethical fabric of the corporation gets damaged.

It is not just an unethical practice, but clearly an illegal one in several countries. The US Foreign Corrupt Practices Act bars companies from making payments or providing anything of value to government officials to win business. The U.K.’s Bribery Act imposes a broader ban on payments / favours that entice anyone to improperly carry out their duties. Similar regulations in many European countries do not permit such practices.

It is also important to look at this case from another perspective. Think of a situation when the decision makers are changed or transferred those who gave business to the bank, in return of the favor of employment/engagement as consultants to their children/relatives. The entire business so gained will be in jeopardy as well as the future of such children / relations will be in doldrums. In long term therefore, it is certainly a “No win” strategy for any one.

I would like to recommend that such practices should never be resorted to by any corporation desirous of doing long term business.