I think it's fine in a true "family business" e.g. you wholly own a hardware store or a restaurant and you have your family working there and eventually you hand it off to your children (assuming they want it).

In large public companies or institutions that have shareholders or state owners then it's unfair for an executive or senior administrator to carve out a job for a family member. He's giving them something he doesn't own, unlike in the family business example.