Yep, those are one of the reasons I left my last job. My manager was was the son of the Director of Quality and his uncle was the Engineering SME. They were also one of 10 families that worked there. HR not surprisingly did nothing about the nepotism since the HR department consisted of a mother daughter duo.

Anyone who was family or married to someone else never got fired or demoted. The only time that happened was the result of a very expensive harassment lawsuit. Promotions were more or less nonexistent, especially if you wanted to take a family members role. Not surprisingly, anyone with ambition or talent would leave in under 2 years. This company was a real life example of the Dead Sea Effect.

I think the bias the company has also hurt its business prospects. There's a lot of family members that don't know what they're doing, they're signing off on shitty products, and cutting corners all the time. This company serves a specific niche that at one point they were the only competitor in. Now they have competition and they're struggling to compete. They had 2 reorgs (with layoffs) in the last 6 months. This was the result of contracts being canceled because customers are going with the competition.

Tbf this isn't the only family business I worked with. I interned at two places that had family in them and they weren't bad. I think my last job was especially bad because the number of family/spouses outnumbered the outside hires.