Favouritism to relatives due to the blood relationship rather than making decisions based on standard metrics such as performance, personality, achievements and results. A related term is cronyism, which is favouritism to friends and other non-relatives based on the relationship rather than merit.
Both terms are antithetical to meritocracies, which are organisations in which authority and responsibility are conferred based on merit.
Nepotism and cronyism in businesses can dampen motivation among hard-working employees that don’t benefit. They can also put pressure on the initial personal relationship due to the need to be professional, which may require difficult conversations.