What is Cronyism? (Overview, Definition, and Examples)

  • By: Josh Palmer
  • May 17, 2023
Reading Time: 4 minutes

It’s important for board directors to avoid cronyism, instead appointing board members/directors based on skills, experience, and background.

Cronyism is a pervasive issue in many organizations and can negatively impact the fairness and effectiveness of decision-making processes. When cronyism is present, individuals receive favoritism based on personal relationships rather than competence. Cronyism often promotes less-qualified or less-deserving candidates, potentially decreasing performance and damaging morale.

While cronyism can undermine the integrity of board meetings, sound board management capabilities can help mitigate the risks associated with such practices. In addition, board members should be trained on how to run a board meeting effectively to ensure compliance with established protocols.

What is Cronyism?

Cronyism occurs when people in power or authority use their influence to favor their friends or associates, regardless of their qualifications. It’s a form of corruption in many organizations, including businesses, governments, and nonprofit organizations.

This practice can solidify organizational power structures, making it challenging for individuals without the right connections to advance or succeed. It can create a culture of favoritism and exclusivity, where merit and performance are not the primary drivers of success.

Cronyism can take many forms, including giving jobs or promotions to family members or close friends, awarding contracts or business deals to favored individuals or companies, or using personal relationships to influence hiring or investment decisions. Cronyism can be challenging to detect or prove, but its negative impact on organizations can be significant.

Cronyism and Business Ethics

Business ethics include the principles and values that guide ethical behavior in business, including how organizations and their members should conduct themselves. From a moral standpoint, cronyism is considered unethical as it involves using personal relationships and biases to gain privileges rather than evaluating individuals based on their worthiness. It can undermine the principles of fairness, meritocracy, and equal opportunity, which are fundamental ethical principles in most organizations.

An emergency board meeting may allow cronyism to flourish, as decisions need to be made quickly without proper oversight or scrutiny. Organizations should draft a board meeting agenda to establish clear protocols for emergency board meetings to avoid giving undue advantage to friends or family members.

Why is cronyism unethical?

Cronyism is unethical for several reasons, including;

  • Lack of fairness, as it involves giving preferential treatment to individuals depending on relationships rather than evaluating them objectively based on their skills and value. 
  • Breach of trust and confidence in the organization, as it creates a perception that decisions are made from intimate connections instead of objective criteria.
  • Lack of transparency, as cronyism involves making decisions without proper transparency or accountability, creating an environment where unethical behavior can flourish. Preventing cronyism can be especially challenging in closed board meetings.
  • Negative impact on performance as the chosen individuals are often less qualified. As a result, their performance may harm the organization and morale.

To prevent the possibility of cronyism and other forms of corruption, prepare for a board meeting in advance to ensure the meeting is conducted openly and transparently. Board members can enhance transparency by distributing the agenda before the meeting, along with relevant documents and information that board members need to make informed decisions.

What's the Difference Between Cronyism and Nepotism?

Cronyism and nepotism are similar, as they involve favoritism and biases in decision-making. However, they differ in the nature of the relationships used to confer advantages.

Cronyism is the act of favoring close friends, associates, or allies in positions of power or authority. It involves using relationships with individuals who may not necessarily be qualified or deserving to gain preferential treatment in hiring, promotions, contracts, or other opportunities.

On the other hand, nepotism specifically favors family members in organizational decisions. It can include hiring, promoting, or granting special privileges or benefits regardless of capabilities.

What's the Difference Between Cronyism and Favoritism?

Cronyism and favoritism are similar concepts, as they both involve giving preferential treatment to certain individuals depending on intimate relationships or biases. However, favoritism is a broader term encompassing any practice of giving preferential treatment to specific individuals, whether based on personal relationships or preferences. 

Cronyism refers to the practice of individuals in positions of power or authority using their influence to favor close friends, associates, or allies, despite their experience. It often involves relationships beyond the workplace, such as friendships or political alliances.

In essence, cronyism is a specific type of favoritism involving personal relationships to gain advantages, while favoritism can take many different forms and may not necessarily involve individual relationships.

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About The Author

Josh Palmer
Josh Palmer
Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.