Entrepreneurship

Entrepreneurship 5 Assembling the Team: Acquiring and Utilizing Essential Human Resources

“Union may be strength, but it is mere blind brute strength unless wisely directed.” --Samuel Butler, 1882

Human Resources • Knowledge • Skills • Talents • Abilities • Of co-founders and early employees are key to success

The Appeal of Similarity • Similarity leads to liking • Almost any kind of similarity will do—similarity with respect to attitudes and values, demographic factors, interests, etc. • Such effects are both strong and general

The Value of Complementarity • Avoids redundancy. • Provides a wider range of information, skills, aptitudes, and abilities. • The whole is greater than the sum of its parts.

Don’t yield to the temptation to work solely with people whose background, training, and experience is highly similar to your own. Doing so will be easy and pleasant in many ways, but it will not provide the rich foundation of human resources the new venture needs.

Know Thyself • We are often unaware of at least some of the factors that affect our behavior. • We do not gain knowledge of our major traits, abilities, or attitudes directly, through reflection. • We gradually gain insight into ourselves through our relations with other persons.

Your Personal Inventory • Knowledge base • Specific skills • Motives • Commitment • Personal attributes

Big Five Dimensions of Personality • Conscientiousness • Extraversion-Introversion • Agreeableness • Emotional stability • Openness to experience

Similarity or Complementarity? • A balanced approach • Focus primarily on complementarity with respect to knowledge, skills and experience • Bring similarity into the picture with respect to personal characteristics and motives

“He who knows others is clever; he who knows himself has discernment.” --Lao-Tzu

Impression Management • Self-enhancement—efforts to increase appeal to others • Other-enhancement—efforts to make the target person feel good

Self-Enhancement Tactics • Boost physical appearance • Appear highly skilled • Describe self in positive terms

Other-Enhancement Tactics • Flattery • Expressing agreement • Showing high degree of interest • Doing small favors • Asking for advice or feedback • Using nonverbal signals • Intimidation

Due Diligence • Failing to recognize impression management techniques can lead entrepreneurs to make poor choices as they assemble their initial team. • Don’t accept information or appearance without checking it out.

Deception • Microexpressions • Interchannel discrepancies • Nonverbal aspects of speech • Eye contact • Exaggerated facial expressions

Founding Team Relationships Three factors are crucial in developing strong working relationships among the team: • Clear initial assignment of roles • Careful attention to perceived fairness • Effective communication

Roles • The set of behaviors that individuals occupying specific positions within a group are expected to perform, and the authority or jurisdiction they will wield. • Divide responsibilities and authority following the principle of complementarity.

Self-Serving Bias • The tendency to attribute successful outcomes largely to internal causes, but unsuccessful ones largely to external causes • Often leads people to conclude that they have not been treated fairly

Perceived Unfairness Self-serving bias Harmful effects on working relationships Feelings of perceived unfairness

Constructive Is considerate Doesn’t threaten Is timely Doesn’t blame Is specific Offers concrete suggestions for improvement Destructive Is harsh Contains threats Is not timely Blames Is not specific Offers no concrete ideas for improvement Effective Communication

Expanding Human Resources Social networking allows entrepreneurs to: • Acquire human resources quickly • Know people directly or indirectly before hiring • Integrate new employees more easily into a loose structure

Is Bigger Better? • On balance, the benefits of increasing the number of employees outweigh the costs. • New ventures that start with more employees have a greater chance of surviving. • Profitability is positively related to size.

Advantages Reduced fixed costs Flexibility Secure specialized knowledge Disadvantages Lack commitment and motivation Carry information to competitors Temporary Employees

Temporary or Permanent? Flexibility and speed of acquiring new sets of knowledge Temporary employees Commitment and retention Permanent employees

Entrepreneurship