I want to start 2018 by upsetting the family and business systems in a positive way.
Knowledge is power and ignorance breeds conflict so allow me to share a powerful quote from Prof Kim Eddelston related to a “Fredo” child or better known as a black sheep family member,
“As Fredo demonstrates, these bad apples can disrupt both family relationships and the firm. Continuing to reward Fredos while ignoring their damaging behavior leads to more problems: the child’s sense of entitlement increases, higher levels of relationship conflict in the family firm result, and more problems with productivity and teamwork emerge.”
A “Fredo” behavior rears its ugly head when the business leader, usually the patriarch, behaves more like a father than a business owner and his actions are manifested in many ways:
- Bias in choosing family over the business
- Is motivated in hiring family members regardless of their qualifications and competence
- Failure to enforce discipline against the erring or underperforming family members
With the next generation family members getting “kid glove” treatment, a “Fredo” will naturally surface and is emboldened to flaunt his or her entitled behavior.
Paradoxically, as the parents continue to ignore the telltale signs of misbehavior, they remain hopeful that their “Fredo” will change and become motivated. Despite the “Fredo” child’s inadequacies, they reward him or her with promotions and bigger compensation.
Creating this environment will naturally make the child demonstrate poor business decisions, commit abuses, initiate tension against his or her siblings and inevitably create conflict after conflict with whoever crosses his or her path. This phase is characterized with constant clashes during meetings, poor performance, high employee attrition rate and professional managers leaving their jobs as a result of the heightened conflict.
When the “Fredo” child is left to do things on his or her own, the disruptive behavior will worsen over time and the acrimony spilling over to the rest of the siblings. When the parents are no longer around, the conflict escalates to an ownership tussle among heirs.
In “The Godfather” novels, Vito Corleone realizes his son Fredo’s shortcomings, but he insists that Fredo, like his siblings must also be given the same opportunity in the family business.
Parental Action Spells Danger
I have witnessed many family businesses led by patriarchs, where the dysfunctional behavior of their “Fredos” are generously rewarded by way of higher pay and new positions in the hopes that the change will motivate them to perform better.
The actions are dangerous, unwise and counterproductive. In the absence of any deliberate effort to contain an aberrant family member, any form of appeasement that parents do to win their “Fredo” to their side will likely fail. And to rub salt into the wound, business owners may unknowingly foment a conflict if they are currently doing the following:
- Rewarding an underperforming family member
- Tolerating the family member’s bad and disruptive behavior in the workplace
- Continually providing financial support to non-working family members
- Appointing unqualified family members in managerial positions and worse, elevating them to the Board of Directors
- Giving equal compensation to active family members
- Giving higher compensation to family members over professionals
- Not subjecting active family members to performance and Accountability Rules
- Flip flops on the issue of wanting to retire but refuses to relinquish control
- Letting the next generation family members decide for themselves on the issue of succession and direction of the business but retains the patriarchal shadow