2007:“World Bank President Paul D. Wolfowitz resigned yesterday, effective June 30, yielding to demands from governments around the world that he leave to end the ethics controversy that has consumed the institution. Wolfowitz has argued that he sought to resolve an obvious conflict of interest by transferring his longtime companion, Shaha Riza, to another job at the State Department so that he could avoid supervising her, while increasing her pay as compensation for the career disruption. Her income jumped from $133,000 to $193,590 in just two years - which is more money than Secretary of State Condoleezza Rice makes before taxes.”(Courtesy ABC News)
Favoritism exists in the workplace. But favoritism is not confined to love and sex. Family relations and office friends can also upset co-workers' sense of fairness and end up undermining the organization's performance. Such dilemmas are acute in a family business, when a founder who is choosing a successor must decide whether to favor his son or daughter or search outside for a better qualified manager.
How can an organization control these relationships? In countries like India, personal connections are positively viewed and it is accepted and in many cases even expected - that a father will pass the business to his son. But business performance could suffer if the decision maker loses objectivity and does not use merit as the top criterion.
It is very difficult to quantify relationships. Then, how to measure the negative impact of perceived unfairness and favoritism?
A situation, in which employees receive fewer resources than they believe they deserve, is perceived as unfair, and it may lead to counterproductive work behavior. Unfairness makes matters worse, but fairness may not eliminate the negative influences of jealousy. Workers may engage in harming behaviors if they feel envious that someone else received a relatively better result.
The topic of favoritism becomes even more controversial in terms of Nepotism and supervisor-subordinate dating.
There is a long history to conflicts of interest. In post world war era, organizations had to deal with romantic relationships as more women became part of the workforce. Rigid no-dating policies were set up which invited discrimination charges as they tended to penalize women more often than men, as men, were more likely to be supervisors.
But, no-dating policies do not fit a modern workforce. People marry late, work for longer hours and work is the place where they meet people with similar interests. Hence banning personal relationships is highly unrealistic.
What the organization has to ensure that the senior person does not make important decisions concerning the other, such as pay and promotions. It may be necessary that such issues be handled by a person or committee outside the command under which the subordinate works. The main approach is to act fair. The other employees are less likely to see all the members of a committee as biased.
Employees have many reasons to keep a relationship secret. It could be the fear of looking unprofessional, to avoid gossip or just to keep it private. They think it can safely be managed this way. But it's hard to have good judgment when emotionally connected.
Some organizations have a policy, through a contract, which emphasizes an employee's duty to disclose, to a designated supervisor, any personal relationships that could involve conflicts of interest. The policy should keep it confidential and restrict the information to a few concerned. Once the disclosure is made, it is for the company to decide whether a conflict warrants action, such as an employee transfer.
Finally, no policy works well if employees see it as a punishment. Employees must be ensured that the company is not opposed to relationships, just to conflicts of interest. This climate of trust has to be developed and the policy, properly communicated. A small paragraph in the MOP is not enough to override human impulses.
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