What family businesses can learn from The Godfather

Aside from being one of the most influential books and films of my generation, The Godfather has a few lessons for the boss of a family-run business, writes Ken Jacobson, former CEO of chief executive mentoring organisation, Vistage

What strikes me most about The Godfather is the way in which the Corleone family is knitted together by fierce, sometimes conflicting emotions: passion, fear and trust. The results, as you probably know, are decidedly mixed.

It’s the same for family businesses. Though succession planning is often an issue – as it is for the Corleones – family businesses have lower staff turnover and develop strong relationships with their customers.

At the same time, I encounter owner-managers – many of whom have inherited their enterprises – who adhere to their own, slightly skewed version of Casa Nostra’s code of silence (omertà). In some cases it manifests itself as an absolute refusal to seek outside support and guidance – particularly where it concerns the finances.

In a number of cases, this is simply the family way and if a small family firm has been around for a long time, a new owner-manager can feel duty-bound to maintain the tradition. After all, it can bring some tangible benefits, particularly financial. These owner-managers can keep all the fruits of their labour in the form of dividends and ensure the future prosperity of their nearest and dearest.

However, there are downsides too. For owner-managers of family businesses, who determinedly shield their companies from outside help and expertise, it is truly “lonely at the top”. The more successful they are, the more isolated they become. What’s worse, the company’s expansion is strictly limited by the capabilities of its owner-manager and family circle – which can in turn lead to under-performance or even stagnation.

For many owner-managers, it comes down to a stark choice: keep it in the family, or invite outsiders in. As Don Corleone and son Michael demonstrate, neither course is foolproof. Both Godfathers ensure their family business’ survival by barricading themselves – in Michael’s case, quite literally – against their rivals. However, the rot also comes from within: both men’s professional interests are repeatedly betrayed by family members and longstanding associates.

To those who decide to keep it in the family, I cannot emphasise enough how important it is to communicate effectively with the other family members. Professional objectives should be prioritised above personalities, and open discussion within the company’s inner circle should be encouraged. It is also a good idea to encourage family members to gain valuable professional experience outside the family business before inviting them to join the fold. This will furnish the company with new ideas, helping it to maintain its competitive edge.

A decision to employ somebody from outside should only be taken after a thorough evaluation of which areas are not adequately covered by the family. For example, a key member of a family business may be an excellent sales director, but lack financial know-how. Taking on a hired gun focused on finance would help drive the company forwards – and allow others within it to work to their strengths.

‘He who is deaf, blind and silent will live a hundred years in peace’ is a popular Sicilian proverb. However, I can’t help thinking that for today’s businessmen and women, many of whom are operating in highly competitive markets, it is more of a death knell.

Ken Jacobson is former CEO of  Vistage.

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