Ch 08 - Building a New Venture Team and Planning for the Next Generation

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Building a New Venture TeamBuilding a New Venture Teamand and

Planning for the Next GenerationPlanning for the Next Generation

CHAPTER CHAPTER 88

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8 - 2Ch. 8: Building a Team & Succession Planning

8.1. Three Vital Tasks of a 8.1. Three Vital Tasks of a LeaderLeader

1.1. Add the right employees and Add the right employees and constantly improve their skills.constantly improve their skills.

2.2. Create a culture for Create a culture for retaining employees.retaining employees.

3.3. Plan for “passing the torch” to the Plan for “passing the torch” to the next generation of leadership.next generation of leadership.


8.2. Building an 8.2. Building an Entrepreneurial TeamEntrepreneurial Team

Study: 80% of employees turnover is caused Study: 80% of employees turnover is caused by bad hiring decisions.by bad hiring decisions.

Leadership IQ study: Leadership IQ study: 46% of newly hired employees will fail in their 46% of newly hired employees will fail in their

jobs within 18 months.jobs within 18 months. 19% of newly hired employees will achieve 19% of newly hired employees will achieve

unequivocal success. unequivocal success. Study: 34% of hiring managers admit to Study: 34% of hiring managers admit to

making bad hiring decisions because they making bad hiring decisions because they were under pressure to fill a job. were under pressure to fill a job.


8.3. How to Hire Winners8.3. How to Hire Winners Commit to hire the best talent.Commit to hire the best talent. Elevate recruiting to a strategic position.Elevate recruiting to a strategic position. Create practical job descriptions and job Create practical job descriptions and job

specifications.specifications. Plan an effective interview.Plan an effective interview. Conduct the interview.Conduct the interview. Contact references and conduct a Contact references and conduct a

background check.background check.


8.3.1. Strategic Recruiting8.3.1. Strategic Recruiting

Look inside the company first.Look inside the company first. Encourage employee referrals.Encourage employee referrals. Make employment advertisements Make employment advertisements

stand out. stand out. Use multiple channels to recruit talent.Use multiple channels to recruit talent. Recruit on campus. Recruit on campus.


8.3.1. Strategic Recruiting8.3.1. Strategic Recruiting

Get involved in a college internship Get involved in a college internship program. program.

Recruit “retired” workers. Recruit “retired” workers. Consider using offbeat recruiting Consider using offbeat recruiting

techniques.techniques. Offer what workers want. Offer what workers want.


8.3.2. Conducting a Job 8.3.2. Conducting a Job AnalysisAnalysis

Create a Create a job description job description - a written - a written statement of the duties, responsibilities, statement of the duties, responsibilities, reporting relationships, working conditions, reporting relationships, working conditions, and materials and equipment used in a job.and materials and equipment used in a job. Handy tool: Handy tool: Dictionary of Occupational TitlesDictionary of Occupational Titles

Create a Create a job specification job specification - written - written statement of the qualifications and statement of the qualifications and characteristics needed for a job, stated in characteristics needed for a job, stated in terms such as education, skills, and terms such as education, skills, and experience.experience.


Sample Job Description from the Sample Job Description from the Dictionary of Occupational TitlesDictionary of Occupational Titles Worm PickerWorm Picker - - gathers worms to be used as fish gathers worms to be used as fish

bait; walks about grassy areas, such as gardens, bait; walks about grassy areas, such as gardens, parks, and golf courses and picks up earthworms parks, and golf courses and picks up earthworms (commonly called dew worms and nightcrawlers). (commonly called dew worms and nightcrawlers). Sprinkles chlorinated water on lawn to cause Sprinkles chlorinated water on lawn to cause worms to come to the surface and locates worms worms to come to the surface and locates worms by use of lantern or flashlight. Counts worms, by use of lantern or flashlight. Counts worms, sorts them, and packs them into containers for sorts them, and packs them into containers for shipment. shipment. (# 413.687-014 in D.O.T) (# 413.687-014 in D.O.T)


8.3.3. Planning an Effective 8.3.3. Planning an Effective InterviewInterview

Involve others in the interview process. Involve others in the interview process. Develop a series of core questions and ask Develop a series of core questions and ask

them of every job candidate.them of every job candidate. Ask open-ended questions rather than Ask open-ended questions rather than

questions calling for “yes or no” answers.questions calling for “yes or no” answers. Create hypothetical situations candidates Create hypothetical situations candidates

would encounter on the job and ask how would encounter on the job and ask how they would handle them.they would handle them. Situational interviewsSituational interviews


8.3.3. Planning an Effective 8.3.3. Planning an Effective InterviewInterview

Probe for specific examples in the Probe for specific examples in the candidate’s work history that demonstrate candidate’s work history that demonstrate the necessary traits and characteristics.the necessary traits and characteristics.

Ask candidates to describe a recent Ask candidates to describe a recent success and a recent failure and how they success and a recent failure and how they dealt with them.dealt with them.

Arrange a “non-interview” setting that Arrange a “non-interview” setting that allows others to observe the candidate in allows others to observe the candidate in an informal setting. an informal setting.


8.3.4. Conducting an 8.3.4. Conducting an Effective InterviewEffective Interview

Break the ice. Break the ice. Goal: to diffuse nervous tension.Goal: to diffuse nervous tension.

Ask questions. Ask questions. Puzzle interviews.Puzzle interviews. Remember the 25/75 Rule.Remember the 25/75 Rule. Be respectful and keep it legal!Be respectful and keep it legal!

Sell the candidate on the company. Sell the candidate on the company. Best candidates will have other job offers. Best candidates will have other job offers. Your job: to convince the best candidates Your job: to convince the best candidates that your company is a great place to work.that your company is a great place to work.


8.3.5. Checking References8.3.5. Checking ReferencesChecking an applicant’s references is an Checking an applicant’s references is an important part of protecting a company important part of protecting a company against making a “bad hire.”against making a “bad hire.”

Is it Is it really really necessary? Yes ! necessary? Yes !

According to a CareerBuilder survey, 49% According to a CareerBuilder survey, 49% of all candidates either exaggerate or of all candidates either exaggerate or falsify information about their previous falsify information about their previous employment on their résumés. employment on their résumés.


8.4. Company Culture8.4. Company Culture Distinctive, unwritten, informal code of Distinctive, unwritten, informal code of

conduct that governs the behavior, conduct that governs the behavior, attitudes, relationships, and style of attitudes, relationships, and style of an organization.an organization.

““The way we do things around here.”The way we do things around here.” In small companies, culture plays as In small companies, culture plays as

important a part in gaining a important a part in gaining a competitive edge as strategy does.competitive edge as strategy does.


8.4.1. Characteristics of a 8.4.1. Characteristics of a Positive CulturePositive Culture

Respect for work and life balanceRespect for work and life balance Sense of purposeSense of purpose Sense of funSense of fun EngagementEngagement DiversityDiversity IntegrityIntegrity Participative managementParticipative management Learning environmentLearning environment


8.5. Job Design Strategies8.5. Job Design Strategies Job simplification Job simplification - breaks work down into - breaks work down into

its simplest form and standardizes each its simplest form and standardizes each task.task.

Job enlargement Job enlargement (horizontal job loading)(horizontal job loading) - - adds more tasks to a job to broaden its adds more tasks to a job to broaden its scope.scope.

Job rotation Job rotation - cross-trains workers so they - cross-trains workers so they can move from one job in a company to can move from one job in a company to others, giving them a greater number and others, giving them a greater number and variety of tasks to perform. Often used with variety of tasks to perform. Often used with a skill-based pay system.a skill-based pay system.


8.5. Job Design Strategies8.5. Job Design Strategies Job enrichment (vertical job loading) Job enrichment (vertical job loading) - -

builds motivators into a job by increasing builds motivators into a job by increasing the planning, decision making, organizing the planning, decision making, organizing and controlling functions (which and controlling functions (which traditionally were managerial tasks).traditionally were managerial tasks).

Five core characteristics:Five core characteristics:1.1. Skill varietySkill variety2.2. Task identityTask identity3.3. Task significanceTask significance4.4. AutonomyAutonomy5.5. FeedbackFeedback


8.5. Job Design Strategies8.5. Job Design Strategies

Flextime Flextime - an arrangement under which - an arrangement under which employees build their work schedules employees build their work schedules around a set of “core hours” - such as around a set of “core hours” - such as 11 a.m. to 2 p.m. - but have flexibility 11 a.m. to 2 p.m. - but have flexibility about when they start and stop work.about when they start and stop work.

Job sharing Job sharing - a work arrangement in - a work arrangement in which two or more people share a which two or more people share a single full-time job.single full-time job.


8.5. Job Design Strategies8.5. Job Design Strategies

Flexplace Flexplace - a work arrangement in which - a work arrangement in which employees work at a place other than the employees work at a place other than the traditional office, such as a satellite traditional office, such as a satellite branch closer to their homes or, in some branch closer to their homes or, in some cases, at home.cases, at home.

TelecommutingTelecommuting - an arrangement in which - an arrangement in which employees have employees working from employees have employees working from their homes use modern communications their homes use modern communications equipment to hook up to their workplaces.equipment to hook up to their workplaces.


8.6. Rewards and 8.6. Rewards and CompensationCompensation

The key to using rewards to motivate The key to using rewards to motivate workers is tailoring them to the workers is tailoring them to the needs and characteristics of needs and characteristics of individual workers.individual workers.

Money is an effective motivator … Money is an effective motivator … up to a point.up to a point. Pay-for-performance systemsPay-for-performance systems Profit-sharing plansProfit-sharing plans Open book managementOpen book management Cafeteria benefit planCafeteria benefit plan


8.6. Rewards and 8.6. Rewards and CompensationCompensation

Intangible rewards – such as praise, Intangible rewards – such as praise, recognition, celebrations, and others – recognition, celebrations, and others – can be powerful, yet inexpensive, can be powerful, yet inexpensive, motivators.motivators.

Entrepreneurs tend to rely Entrepreneurs tend to rely on non-monetary rewardson non-monetary rewards. .


8.7. Family Businesses8.7. Family Businesses Make up 90% of all U.S. businesses.Make up 90% of all U.S. businesses. Account for 64% of U.S. GDP.Account for 64% of U.S. GDP. Employ 62% of private sector work force. Employ 62% of private sector work force. Comprise 37% of the Comprise 37% of the Fortune 500Fortune 500

companies.companies. Created 80% of the U.S. economy’s net Created 80% of the U.S. economy’s net

new jobs over the last two decades.new jobs over the last two decades.


8.7. Family Businesses8.7. Family Businesses

Unfortunately, only 30% of first-generation Unfortunately, only 30% of first-generation businesses survive into the second businesses survive into the second generation.generation.

Of those that do survive to the second Of those that do survive to the second generation, only 12% make it to the third generation, only 12% make it to the third generation. generation.

Only 3% make it to the fourth Only 3% make it to the fourth generation and beyond.generation and beyond.

(continued)(continued)


8.8. Why is Management 8.8. Why is Management Succession So Difficult?Succession So Difficult?

81% of all business founders intend 81% of all business founders intend to pass their companies on to their to pass their companies on to their children.children.

Just 29% of family business owners Just 29% of family business owners have prepared written management have prepared written management succession plans.succession plans.


8.9. Exit Strategies8.9. Exit Strategies Entrepreneurs planning to retire often Entrepreneurs planning to retire often

use two exit strategies:use two exit strategies: Sell to outsidersSell to outsiders Sell to insidersSell to insiders

Leveraged buyout (LBO)Leveraged buyout (LBO) Employee Stock Ownership Plan (ESOP)Employee Stock Ownership Plan (ESOP)

Ch 08 - Building a New Venture Team and Planning for the Next Generation

Documents