I was interested to read about entrepreneur and ex Dragons’ Den star James Caan in the news this week. The new government-appointed social mobility tsar is accused of hypocrisy, after it emerged both his daughters are employed in businesses connected to him.

On Monday, Caan told the Daily Telegraph he was against nepotism among business owners, saying important to “let the child stand on its own two feet” and to not assist them in getting a job until they have “tried everything”.

However, the press almost immediately picked up on the fact Caan has employed both his daughters in businesses he is connected with. His youngest has managed to land three jobs in various companies backed by her father in the last four years.

In a statement posted on his website, Caan said “I absolutely believe that parents should encourage their children to explore their own opportunities... The fact is that parents will always have the innate feeling to help their children into jobs. I’m no different”.

It's disappointing to see this attitude from a new government figure who should be promoting meritocracy. A public figure at this level needs to be leading by example if they want to be taken seriously. What message is Mr. Caan sending to the millions of young job seekers in this country who are victims of the ‘it’s not what you know, but who you know’ culture?

Not only will Caan’s children find it hard to command respect from their colleagues, but this family fast-track approach practice can be very damaging to businesses. Would the shareholders continue to have confidence in the business if it became apparent the CEO’s family member had been promoted above a highly qualified and experienced candidate?

As a business owner, I know the importance of hiring and keeping competent staff. But your best employees won’t tolerate favouritism. They will have promising career opportunities elsewhere and they will not be around too long if you don’t create a meritocratic work environment.

Of course, there are exceptions and James Caan’s nepotism is on a different scale to a small restaurant owner employing their adolescent children to help with serving.  Experience like this can instill values of hard work in children and even establish stronger family bonds.

But when it comes to bigger businesses it’s important to give them a taste of how hard it can be to secure a job. A job in the family cafe or shop can teach children to fend for themselves, but a fast-track to management in a successful business can give the child a distorted view of hard work and a feeling of entitlement. If your small cafe suddenly grew into a large chain, would you trust your teenage children to take the helm of management?  And just think what effect this would have on your top performers who are more qualified than your family members.

It’s important for owners of businesses small and large to know where to draw the line when it comes to family favours. I only hope that, despite his personal situation, James Caan can go some way towards making the job market fairer, more open and based on merit and skill.