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Avoid ‘the Fredo effect’ in your family business with this expert insight

Posted in ,   |  February 21, 2024

If it hasn’t happened in your family business yet, someone eventually is bound to play the role of Fredo.

The fictional member of the Corleone family in “The Godfather” is seen as the weakest of his brothers, an embarrassment to the family and a proverbial weak link.

“I’ve seen Fredos in the best of families – families you’d think would be immune to it, but nobody is immune to it,” said Kimberly Eddleston, founder and editor of and the Schulze Distinguished Professor of Entrepreneurship and Montoni Research Fellow at Northeastern University in Boston.

Eddleston will be a featured speaker at the 32nd Annual Family Business Conference hosted by the Prairie Family Business Association on April 17-18 in Sioux Falls.

The conference is sold out for in-person attendance but has options for virtual attendance.

“I think having a conference like this is amazing. It’s absolutely amazing, and I wish we saw more of this,” Eddleston said. “It’s education, it’s incredibly reasonable, and plus, it’s celebrating family businesses and all they do. They get recognized, and hopefully at the same time, they’re receiving guidance and inspiration and insight.”

We sat down with Eddleston to learn more about the message she plans to share with family businesses at the conference.

What’s the theme of your presentation at the Family Business Conference?

A lot of it is about how it’s hard working with family, working with the ones you love. You’d think they would be more committed, more ethical, more loyal, and unfortunately that’s not always the case. In my experience, it’s not if but when you end up dealing with a family member who is an impediment to the business, actually hurts the business and by extension the family. It’s a sensitive, taboo topic, and that’s why I like to add a little humor, so we use Fredo, the middle son from “The Godfather” as an inspiration to see and understand why this occurs.

You grew up working for several of your family’s businesses, so are you drawing somewhat on your own experience?

Yes, even the family in my circle – my family businesses that I take inspiration from – we would never have expected it. So it’s not if but when a family ends up dealing with someone who can really hurt the business, and a lot of this is talking about why. When people go through it, a lot of them think they’re alone because no one wants to talk about their idiot son or unethical daughter who stole or doesn’t show up. So when we talk about why it occurs, people can have solace.

Do you discuss how to deal with it?

It’s very difficult. There are all these jokes about how impossible it is to fire or reprimand a family business member and make it stick. There’s always a reason: Thanksgiving is around the corner, or it’ll affect Sunday dinner. The best-case scenario is preventing the problem. And we’ll talk about what you can do. Families need to realize things might be perfect now, but as the family grows and the wealth of the business and the opportunities of the business grow, chances are you attract family members who look at the family business as a piggy bank, and you can become a welfare institution if you’re not careful.

That clearly has multiple implications on the business?

Yes. As the family grows, maybe you have cousins who don’t share the same work ethic and were bought up in different households with different trusts and bonds and business ethics. Same with people who marry into the family business. As you get into the third and fourth generation especially, the emphasis has to be on the health of the tree, not the health of the branches, because the branches can end up competing for resources. I teach a class of next gens, and we do a fun little exercise: Pretend like you’re starting a business. Who in your family would you hire and why, and who would you not and why? And you know who those are. But if you don’t deal with the “Fredos” in your business, you end up having nonfamily members leave, and there are stories of families not wanting to deal with it and closing shop or selling, which is really sad.

Are there some best practices you share?

Creating formalized HR practices, really trying to professionalize the firm, are ways you can prevent the problem and steer some people away from the business to hopefully find another place in the world, which is key. Families can ensure they get occupational training and career counseling, but keep them part of the family. In some families, it’s like if you’re not involved in the business, you’re not in the family, and we don’t want people there because of obligation. We have to make sure there are other ways they feel included and part of the family.

What do you hope people take away from hearing you speak?

Healthy family, healthy business. That’s what I always say. And you’re not alone. If you’re dealing with this, you’re not alone, and there’s a lot to learn and a lot you can do to prevent it and manage it. And at the same time, if it hasn’t happened to you, make sure you’re taking steps to stay on that path.

Register today for the 32nd Annual Family Business Conference and learn more by clicking here.

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