Trust or Intimacy? When Relationship Overrides Performance on Ships and Hotels

Nepotism often disguises itself as trust, loyalty, family values, or a close-knit team, while it can gradually override professional performance, accountability, and equal standards.

Nepotism in hospitality and shipping rarely manifests itself in the form of a manager openly stating: I will give preference to my relative, friend or former colleague even if someone else is more suitable. Much more often we hear about trust, loyalty, family values, a well-established team, a quick operational solution or that hiring someone you know poses less risk.

In a smaller hotel, it may seem natural for the owner's child, spouse, or other family member to be involved in the operation, and on a river or ocean liner, it may seem natural for the captain, hotel manager, or department head to want to work with people they know from before. However, a relationship alone is not proof of suitability or unsuitability. Many family members, spouses, old colleagues, or personally recommended employees can be excellent professionals whose presence creates real value for the business.

The problem does not begin with knowing someone, but rather when acquaintance replaces professional selection, the relationship exempts the person from having to prove performance, or the same rules and consequences no longer apply to the person concerned as to everyone else.

An organization does not become nepotistic because relatives, partners, or former colleagues work in it, but because they are subject to different selection, performance evaluation, and liability rules.

Not all relationships are nepotism.

It is worth distinguishing between nepotism, favoritism, clientelism, and professional recommendation .

In a narrower sense, nepotism is when someone favors a family member or relative. Favoritism is a broader phenomenon: it can include friends, old colleagues, former business partners, colleagues of the same nationality or language group, and anyone who is part of an informal network of trust.

In the world of shipping, and especially in the world of river shipping, it is often not the classic family nepotism that is most characteristic, but rather relationship favoritism. A manager moves to a new company or another ship and then gathers around him those with whom he previously worked. This can be a completely rational decision, since he knows the work, workload, personality and reactions of the people involved. On a ship or hotel, where a bad selection decision quickly appears in the guest experience and the operation, previous positive experience represents real value.

However, professional recommendation becomes favoritism when there is no real competition, no independent verification of competence, or the performance of the recommended person cannot be objectively assessed later. Even the appointment of a professionally qualified person can be destructive if other employees feel that the job, promotion, or better ship assignment has already been decided before the formal selection process.

The question is therefore not only whether the selected person is suitable, but also whether the selection process was transparent, verifiable and credible.

Hotel industry research shows that nepotism has measurable negative consequences

Nepotism is not just a theoretical or moral issue. Research in the hotel industry has found a correlation between perceptions of nepotism, reduced organizational trust, cynicism, increased mobbing, turnover intentions, and loss of credibility in human resource systems.

A study published in 2024 by Yunus Topsakal, Abdurrahman Dinç and Ezgi Özcan analyzed the responses of 397 employees working in a five-star hotel in Northern Cyprus. According to the results, the perception of nepotism had a negative impact on emotional organizational commitment, organizational identification, trust in leaders and employees, while strengthening cognitive, emotional and behavioral cynicism. In other words, the employee is not only disappointed in the leader, but also gradually moves away from the organization itself . The study was published in the journal Tourism & Management Studies.

In a two-year study of 488 frontline hotel employees, mainly from India, Weng Marc Lim and his co-authors found that nepotism reduces employees' mental attachment and increases their intention to leave . One explanatory factor in this process is the violation of the so-called "mental" contract: the employee feels that the employer has broken its often unspoken promises of fair treatment, performance recognition, and predictable career prospects. The study is aptly titled: When employees feel betrayed.

A previous study of three-, four- and five-star hotels in Northern Cyprus found that nepotism has a significant negative impact on HR practices, job satisfaction, and turnover intentions, and increases the likelihood that employees will speak negatively about their employer. Hüseyin Arasli, Ali Bavik, and Erdogan H. Ekiz put it particularly forcefully: “nepotism paralyzes human resource practices.” The study was published in 2006 , but its findings are still strikingly relevant today.

One of the most serious consequences of nepotism is therefore not necessarily a spectacular conflict, but a quiet withdrawal. A good employee does the minimum, does not make more suggestions, does not take on additional responsibilities, and then leaves when he finds another opportunity.

Family hotel or family privilege?

In the case of smaller, family-owned hotels, the presence of the family is not a problem in itself. Many excellent hotels that have been successful for generations draw their strength from family ties, long-term thinking, personal responsibility and local networks. Family members often work much harder, take greater personal risks and identify with the business more strongly than an outside manager.

However, a lot depends on the owner's healthy attitude. Is he able to separate ownership rights, strategic management and daily operational management? Does he accept that just because he financed the investment, he does not necessarily understand revenue management, handling guest complaints, technical operations, kitchen processes or managing employees better than the professionals selected for this purpose?

The invested money undoubtedly creates ownership rights, but not professional competence in itself.

The situation is particularly problematic when the owner is not a hotel professional, yet feels that due to the size of the investment, he has the final say on all operational issues. In such cases, the management structure may formally appear professional: there is a hotel manager, sales manager, F&B manager and financial director, but the actual decisions are still made based on the owner's personal preferences, momentary impressions, or, in worse cases, his mood or family interests and tastes.

In this system, the professional leader who does not come from within the family or belongs to the nepotistic circle has responsibility, but no real authority. He is held accountable for results, while the most important decisions are made by others, often undocumented and bypassing the formal organizational order.

When family members are hidden behind the “independent” leader

In my own experience, one of the most destructive structures is when family members do not formally run the hotel, but are placed behind a supposedly independent professional manager. They do not always have a clearly defined job title or clear decision-making responsibilities, yet they receive all information, have an opinion on every decision, and are in direct contact with the owner.

In such cases, the family member often acts as a kind of organizational probe . He or she observes the manager and employees, prepares informal reports, interprets conflicts, and then bypasses the formal hierarchy to convey his or her own version to the owner. The appointed manager can never be sure when an operational decision becomes the subject of a family discussion, who passed on what information about it, or which of his or her decisions are being overwritten in the background.

This has a paralyzing effect on operations. Management slowly loses its initiative, because before every decision it has to consider not only professional aspects, but also the expected reactions of family members. And employees quickly realize that in addition to the official leader, there is also an informal center of power . From now on, they do not necessarily report to the person above them in the organizational chart, but to the person they think is closer to the owner. This is no longer professional management, but shadow management.

Research examining the professionalization of family businesses explicitly warns that professionalization is not the same as appointing an external manager . According to Julie Dekker and her co-authors, professionalization is a multidimensional process that includes decision-making systems, formal controls, HR processes, governance structure, and clear delineation of responsibilities. The presence of an external director does not in itself make a family business professional. The research was published in the Journal of Small Business Management.

Hungary and family hotels operating further west

In my own professional experience, the further west I went, the more often I encountered family-owned businesses where the family had more clearly separated the ownership, supervisory and operational roles. This does not mean, of course, that nepotism, owner arbitrariness or poorly functioning family businesses do not exist in Western Europe. I perceived the difference rather in the fact that in many places management mechanisms had developed earlier that tried to keep the operational influence of personal and family interests in check.

In Hungary, on the other hand, I have come across several smaller hotel businesses where the owner was not able or willing to actually hand over operational decision-making rights even after appointing a professional manager. The professional was expected to deliver results, discipline and take responsibility, while they were constantly interfering in his decisions, often not based on professional, but on personal or family considerations.

This is not a national law that applies to all Hungarian family businesses, but my own hotel experiences are confirmed by research examining the professionalization of Hungarian family businesses.

According to a study published in 2025 by researchers at the Corvinus University of Budapest, the level of professionalization of larger Hungarian family businesses is already relatively high, but small and medium-sized businesses have the most development opportunities in managing the relationship between family and business . The study measured professionalization not as a single designation, but as a system consisting of several interconnected dimensions. The study was published in the journal Management Science.

Zoltán Kárpáti and György Drótos, through a long-term case study of a Hungarian medium-sized enterprise, concluded that the different dimensions of professionalization are interconnected and that if any area is left undeveloped, it can lead to uncertainty. It is therefore not enough to appoint a professional leader if decision-making, control, communication, the role of the family and the system of responsibility do not change. The study can be read here.

A family member can also be a credible professional partner

An article about nepotism could easily become a one-sided criticism of family businesses, but that would be neither accurate nor fair. During my own sailing career, I have worked for a family-owned river cruise company where family members held positions for which they had the necessary expertise, experience, and personal credibility.

They could be looked up to as professional partners not because of their last names, but because they knew the operation, understood the problems of the ship's workers, were able to reason professionally, and accepted the consequences of their decisions. Family ties in this case did not mean exemption, but additional responsibility.

This difference is fundamental: in a well-functioning family business, the family member does not merely share in the power, but also proves that he is able to use it responsibly, not only inherits the right to make decisions, but also acquires the necessary knowledge, accepts professional control, and is held accountable just like any other manager.

The International Finance Corporation’s management handbook for family businesses therefore recommends the development of a clear family employment policy, family guidelines and goals, independent board members, and thoughtful leadership succession. The separation of family and corporate roles should not be done to exclude the family from its own business, but to ensure that family influence is exercised within predictable and accountable frameworks.

When the entire management consists of relatives and friends

I also worked at a company where a significant portion of the management was recruited from relatives, friends, and old confidants. In such a system, objective decision-making is hardly possible, because personal relationships permeate the formal organizational structure.

Performance appraisals are not just about how someone does their job, but also about who is their relative, friend, former colleague or confidant. For the same mistake, one person may receive a warning, another an explanation or another opportunity. For one employee, assertiveness is a leadership virtue, for another a collaboration problem. For one person, criticism is valuable feedback, for another, disloyalty.

In this system, not only are individual decisions unfair, but the very possibility of objectivity is eliminated. Sooner or later, the employee understands that it is not enough to work well; he also needs to know which informal circle he should belong to, who he should not contradict, and which problems it is advisable to keep quiet about.

Double standards are particularly dangerous because they quickly become self-perpetuating. Beneficiaries reinforce each other's positions, decision-makers refer to each other's assessments, and critics of the system are increasingly easy to portray as problematic, negative, or disloyal.

When the leader chooses not the best, but the least dangerous

Nepotism and favoritism are not always based solely on family ties, friendship, or loyalty. Sometimes a leader builds a narrow circle of trust around himself because he is unsure of his own professional competence, knowledge, training, or leadership skills. In such cases, he does not necessarily choose those who would create the most value for the organization, but those who would least question his position.

For such a leader , a more prepared, experienced or independent-minded colleague is not necessarily a resource, but a threat. He does not see his knowledge as something that could complement his own, but rather as a professional difference that could make the leader's shortcomings visible. As a result, he prefers to surround himself with people who are less competent than him, who are easier to manage, who are personally committed or who show unconditional loyalty in exchange for their position.

In such an environment , professional performance can paradoxically become a risk . The more knowledge, experience, and independent opinion someone has, the more easily they can be labeled as difficult, uncooperative, overly ambitious, or disloyal. However, the real problem is often not the employee's behavior, but rather that their presence creates a constant basis for comparison and raises questions that the manager cannot or does not want to answer professionally.

In such cases , favoritism is not just about who is promoted, but also about who is eliminated. Professionally stronger employees may be left out of decisions, withheld from them, questioned about their credibility, rewritten about their performance history, or portrayed as conflicted. In more extreme cases, minor mistakes are exaggerated, rumors are spread, contradictory instructions are given, and the resulting problems are used to justify the removal of the person concerned.

In my own professional career, I have had the opportunity to work in an environment where the leader, instead of trying to attract and retain people with greater knowledge than him, tried to push out the professional knowledge he perceived as dangerous. Instead of using the higher level of competence for the benefit of the organization, he treated it as a threat to his own position and used methods that had little to do with fair leadership or objective performance evaluation.

This operation may seem stable in the short term, because an obedient, conflict-free and seemingly loyal team develops around the leader. However, in the longer term, the organization becomes intellectually empty. Professional discussions disappear, the quality of decisions deteriorates, innovation ceases, the best employees leave, and the leader encounters less and less information that would question his own ideas.

Eventually, a system is created in which the best decision no longer matters, but who confirms what the leader wants to hear. Nepotism and favoritism then become a kind of managerial protective ring : it keeps critical knowledge outside and rewards compliance inside.

This is particularly dangerous for the organization, because the lack of competence is not simply maintained, but reproduced. A weak leader chooses weaker people, who later appoint new leaders based on similar criteria, and over time the entire corporate culture can lose its connection to professional performance.

An insecure leader doesn't always build the strongest team around themselves. They often choose people who make them seem the strongest.

Why is shipping particularly susceptible to this?

A ship is an extremely closed work and social system. Employees not only work together, but also live together for months at a time, often under the same management hierarchy. There is no real opportunity for everyone to go home at the end of the working day, maintain distance, or process conflicts in a different social environment.

Moreover, management decisions do not only affect work-related tasks. They can also affect cabin assignments, rest periods, access to shore, vacation timing, performance evaluations, the next contract, promotions, and assignment to the next ship. The manager or crewing department can therefore have a significant impact on the employee's entire existence on board.

On land, management often relies on reports, guest satisfaction indicators, audits and statements from ship managers to understand what is really happening on board. This provides a significant information advantage for onboard management. If a manager builds their own network of trust, they can easily get a filtered, pre-conceived picture of operations on land.

In the field of river shipping, this can be further complicated by the fact that the ship owner, operator, charterer, hotel management and staffing agency are not always the same company. Responsibility is divided between several organizations, while the employee often does not see clearly which organization to turn to with a complaint, evaluation dispute or discrimination.

Seasonal labor shortages, rapid selection, short contracts, high turnover, and trust from previous collaborations all favor the formation of informal networks. A manager naturally wants to work with people they already know. The problem begins when the familiar team becomes a closed circle, which can hardly be entered with professional performance.

Favoritism on a ship can be a safety issue

Aziz Muslu's research on perceived favoritism in ship management suggests that the phenomenon can increase workplace stress and turnover, while reducing job satisfaction, organizational commitment, motivation, and teamwork. The study's starting point is that favoritism can also negatively impact ship safety and quality management . It is important to note that this research deals with general ship management, not exclusively river or ocean cruise ships, but organizational risk can also be interpreted in the cruise industry. The study is available here.

If documentation deficiencies, violations of hygiene rules, problems with working and rest times, harassing behavior or disregard for safety regulations are condoned in the case of a protected employee, the organization is not only operating unfairly, but may also create a real risk.

According to the International Maritime Organization, the ISM Code aims to provide an international standard for the safe management and operation of ships. The regulation requires the assessment of all identified risks to the ship, personnel and the environment, and the development of appropriate protective measures. The IMO's wording is clear:

“The cornerstone of good safety management is commitment from the top.”

The organization adds that the final result is determined by the commitment, competence, attitude and motivation of people at all levels. Safety culture is therefore inseparable from how consistently and impartially management applies the rules.

Safety culture cannot be measured by how thick the rules are, but by whether the same rules apply to the leader's relatives, partners, and trusted people.

When no one tells the truth anymore

One of the most serious consequences of nepotism and favoritism is organizational silence. If an employee sees that the person involved in the problem is a relative, partner, friend, or old confidant of the manager, it is easy to conclude that complaining is pointless or dangerous.

The employee is not necessarily silent because he has no opinion, but because he is rationally weighing the possible consequences. In the case of a short-term contract, even a serious threat could be that he will not receive a new contract, will be placed on a worse ship, will receive an unfavorable evaluation, or will simply no longer be considered a “team player.”

In maritime shipping, the Maritime Labour Convention’s rules on handling complaints on board require that seafarers’ complaints on ships covered by the Convention be dealt with fairly, effectively and promptly. The Convention prohibits any discrimination against the employee making the complaint, provides for representation and, if necessary, provides for the possibility of direct recourse to the master or an external authority.

It is important to note, however, that the MLC does not apply to vessels operating exclusively on inland waterways, and therefore in European river navigation, national employment law, EU labour law, collective agreements and the company's own grievance system may determine the specific procedure. However, the basic principle of the MLC should also be followed here: the complainant must be provided with a channel that is independent of the manager or network of contacts to which the complaint relates.

A formal grievance mechanism is not enough if employees do not believe in its independence. If the complaint is ultimately investigated by the same manager or the same close circle of contacts to which the person concerned belongs, the procedure may seem appropriate on paper, but in practice it does not provide real protection.

Invisible distribution of better ships and positions

One of the unique resources and motivational opportunities of sailing is the ship's schedule. On paper, two identical jobs may represent the same position, but in practice there can be a serious difference between a new, well-equipped ship sailing on a stable route and a unit struggling with operational problems, staff shortages or continuous program changes.

The same goes for contract lengths, turnaround times, itineraries, cabins, crew composition and promotion opportunities. If the distribution of these is not transparent, it can easily lead to the belief that the best ships, more favorable contracts or management positions are primarily reserved for people with the right connections.

It is especially destructive when the requirements for a promotion are not set in advance. One employee may have years of experience, excellent reviews, training, and proven leadership skills, while another may simply need a recommendation from an influential manager. Such a decision is not just a matter of fairness between the two people involved. It sends a clear message to the entire organization about what really matters.

Why does the system persist?

Nepotism can persist for a long time because it seems convenient and effective in the short term. The leader chooses someone he knows, so he feels less at risk of being selected. A family member or old colleague understands expectations more quickly, requires less explanation, and in many cases may actually be more loyal.

Long-term costs, on the other hand, appear later and in a form that is harder to measure. Better employees leave, middle managers do not take real responsibility, honest feedback disappears, and employees learn that certain problems are not worth reporting.

The organization's performance-oriented culture is gradually replaced by one of adaptation, demonstrating loyalty, and aligning with the right people. While leading, you may believe that you have built a stable, conflict-free, and loyal team. In reality, you may simply have silenced those who would have dared to report problems.

How can it be prevented?

The solution is not to automatically exclude relatives, partners, friends or former colleagues. This would be unfair and would deprive businesses of many excellent professionals. The goal is to recognize conflicts of interest, make relationships transparent and separate personal ties from decision-making authority.

Family, partner and close personal relationships must be officially declared. There should be no direct reporting lines between close relatives and partners, especially when one party decides on the other's work schedule, salary, leave, promotion, contract extension or disciplinary matters.

Management appointments and promotions should be assessed by multiple people, preferably including decision-makers from outside the ship or the ownership family. Each position requires pre-defined competency, experience and performance requirements that cannot be adjusted retrospectively to the candidate already selected.

Contract extensions, ship assignments, and disciplinary decisions should not depend solely on the opinion of a single onboard manager. HR on land should act not as a mere administrative intermediary, but as a real control point. They should recognize patterns: if a manager always brings the same people with them, if members of a certain group advance disproportionately quickly, or if the same rule violations are consistently accompanied by different consequences.

Organizations should also examine the kind of people leaders choose to work with. It is worth mapping not only family and friendship relationships, but also whether there is real professional diversity in management, whether dissent works, and whether the leader is able to accept knowledge greater than his or her own. An important measure of leadership suitability is whether someone can work with more qualified professionals without feeling that his or her position is threatened.

Smaller hotels require written family employment policies, precise job descriptions, market-based pay, and truly independent performance evaluations. The appointment of an external, professional manager only makes sense if he or she is given decision-making authority and the owner does not operate a parallel family management system behind him or her.

It can also be a useful practice for the next generation to gain substantial professional and managerial experience in another hotel, shipping company or company before joining the family business. They should not automatically enter the family business as directors, but rather along a clearly defined development path. Ownership is hereditary, but managerial skills are not.

Trust is a value, but it cannot be an excuse

One of the greatest strengths of family businesses is trust, personal commitment and long-term thinking. And a well-established crew can operate faster, more efficiently and with less conflict than a constantly changing crew. These advantages should not be underestimated.

But trust only remains an organizational value if it doesn’t come with automatic privilege. A relative, partner, friend, or former colleague must also prove they are fit for the job and be subject to the same requirements, controls, and consequences.

A family hotel can still be professional because it is run by family members, and a boat crew can still be excellent because its members know each other from before. The line is drawn where the relationship is no longer an entry point to the possibility of proof, but an exemption from the obligation to prove.

A true leader is not loyal to his family or trusted people by shielding them from the consequences. He is loyal by applying the same professional standards to them that he expects from everyone else.

A good leader is not strong because he knows more than everyone else, but because he is able to take on board those who know more than him in a particular area. Anyone who is only willing to work with people who do not question him, do not contradict him, and do not make his shortcomings visible is not building a team, but erecting a protective wall around his own incompetence.

Nepotism not only elevates the person who perhaps did not deserve their position, it also sends a message to everyone else that there is a limit to their performance that cannot be crossed by professional work.

In a well-functioning organization, there are no such limits. There, acquaintance can be a recommendation, trust can be an advantage, and family ties can be an asset – but everyone has to earn position, authority, and leadership rights over and over again.

Sources used

1. Topsakal, Yunus – Dinç, Abdurrahman – Özcan, Ezgi (2024): The impact of nepotism on employee organizational attitudes in accommodation enterprises. Tourism & Management Studies, 20(1), 21–34.

2. Lim, Marc Weng and co-authors (2023): When employees feel betrayed: The mediating role of psychological contract violation on nepotism and workplace commitment in the hotel industry. International Journal of Hospitality Management, 108, 103381.

3. Arasli, Hüseyin - Bavik, Ali - Ekiz, Erdogan H. (2006): The effects of nepotism on human resource management: The case of three, four and five star hotels in Northern Cyprus . International Journal of Sociology and Social Policy, 26(7/8), 295–308.

4. Muslu, Aziz (2022): Favoritism in Ship Management: A Scale Development and Validation. Transactions on Maritime Science, 11(2).

5. Kárpáti Soma – Szüle Borbála – Wieszt Attila – Drótos György (2025): Professionalization maturity in Hungarian family firms . Management Science / Budapest Management Review, 56(5), 25–40.

6. Zoltán Kárpáti – György Drótos (2023): How should we professionalise our business? Experiences from a longitudinal case study of a medium-sized family business in Hungary. Management Science / Budapest Management Review, 54(2), 53–67.

7. Dekker, Julie – Lybaert, Nadine – Steijvers, Tensie – Depaire, Benoît (2015): The effect of family business professionalization as a multidimensional construct on firm performance . Journal of Small Business Management, 53(2), 516–538.

8. International Finance Corporation: IFC Family Business Governance Handbook .

9. International Labor Organization: Maritime Labor Convention, 2006 – On-board complaint procedures .

10. International Maritime Organization: The International Safety Management Code .

About the author

Tamás Pakuts has decades of international hotel, hospitality and shipping management experience. He has worked for large international chains, family-owned hotels and river cruise companies, and as a manager he has experienced first-hand the impact that ownership influence, favoritism, double standards and true professional autonomy can have on the operation of an organization. In his writings, he connects these experiences with leadership, HR and organizational development aspects.