Entrepreneurship

Entrepreneurship 13 Building the New Venture’s Human Resources: Recruiting, Motivating, and Retaining High-Performance Employees

“Surround yourself with the best people you can find, delegate authority, and don’t interfere.” --Ronald Reagan, 1986

Ultimate Success Success for new ventures… • derives from a smooth and orderly shift… • to a state in which the entrepreneur has assembled a first-rate team of employees… • to whom she or he can delegate many of the growing venture’s key processes.

Attracting, Motivating, and Retaining Employees Why are these topics important? • In the early stages, you perform them. • You can place your personal “stamp” on these processes. • When it’s time to delegate, you’ll choose the best people for the job.

Recruiting and Selection The search for high-performance employees begins with two questions: • Where should you search for high-quality employees? • What specific techniques should you use to identify the best among them?

Knowing What You Need • Job analysis—what knowledge, skills, and abilities are required? • Job description—an overview of what the job involves

Beginning the Search • Social networks • Trade journals, newspapers, etc. • College and university employment centers • Internet sites • Current customers • Headhunters

Selection Selection tools and techniques must be • Reliable • Valid • Legal

Employment Interviews This selection technique is low in validity because: • Interviews are largely unstructured • Interviewers may ask different questions of applicants • Interviewers may be biased • Assessing others is more difficult than most people realize

Improving Interviews The validity of interviews can be improved with • Structured interviews • Biodata • Reference checks

Motivation Behavior that is energized by, and directed toward, reaching some desired target or objective GOAL Arousal Direction Persistence

The Role of Goals in Motivation Goals must be • Challenging • Attainable • Specific • Accepted • Reinforced with feedback

Expectancy Theory People will be motivated when they believe that • Expending effort will improve performance • Good performance will be rewarded • The rewards offered are the ones they really value

Maintaining Motivation • Provide the training and resources necessary to ensure that effort leads to good performance • Recognize and reward good performance • Provide the rewards employees really value

Fairness and Motivation • Unfairness leads to a strong drop in motivation. • Unfairness is perceived when there’s an imbalance between contributions and outcomes relative to those of other persons.

It’s Not Fair • Distributive justice • Procedural justice • Interactional justice

Playing Fair • Link rewards closely to performance • Establish fair procedures for employee evaluations and rewards • Treat employees with courtesy and respect

Making Jobs Motivating Job design—structuring jobs so they increase people’s interest • Job enlargement • Job enrichment

Retention Strategies • Developing excellent reward systems • Building a high level of commitment and loyalty among employees

Pay for Performance • Merit pay plans • Bonuses, awards, and stock options • Team-based incentives • Profit sharing • Employee stock ownership plans

Organizational Commitment The extent to which an individual identifies and is involved with his or her organization and is, therefore, unwilling to leave it

Types of Commitment • Continuance commitment • Affective commitment • Normative commitment

Phases of Company Growth • Conception/existence • Survival • Profitability and stabilization • Profitability and growth • Take-off • Maturity

The Control Barrier CONTROL BARRIER Entrepreneurs skills and abilities and essential to success Delegation, recruiting, motivation, and retention are crucial factors Phase One Phase Two Phase Three Phase Four Phase Five Phase Six

Entrepreneurship