5Entrepreneurship

Assembling the Team: Acquiring and Utilizing

Essential Human Capital

5-2

“Two are better than one;…if they fall, the one will lift up his fellow: but woe to him that is alone when he falleth, for he hath not another to help him up.”

--Hebrew Bible

5-3

Forming Founding Team

• Choose cofounders wisely

• Secure help from outsiders

• Develop strong working relationships

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Human Resources

• Knowledge• Skills• Talents• Abilities• Social capital• Of co-founders and early

employees are key to success

5-5

Success of Founding Team

• Prior experience in industry• Prior experience as entrepreneur• Broad social networks• Broad range of knowledge and

special skills– Communication– Social competence

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Personal Characteristics of Founding Team Members

• Conscientiousness• Agreeableness• Openness to experience• Extraversion• Emotional stability

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Added Resources

• Board of Directors• Key employees• Advisers• Investors• Consultants• Government programs

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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.

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Temporary Employees

Advantages• Reduced fixed costs• Flexibility• Secure specialized

knowledge

Disadvantages• Lack commitment and

motivation• Carry information to

competitors

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Flexibility and speed of acquiring new sets

of knowledge

Permanentemployees

Commitment andretention

Temporary employees

Temporary or Permanent?

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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

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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 according to expertise and knowledge.

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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

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Self-serving biasFeelings of perceived unfairness

Friction and conflict

Perceived Unfairness

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Effective Communication

Constructive• Is considerate• Doesn’t threaten• Is timely• Doesn’t blame• Is specific• Focuses on performance• Offers concrete

suggestions for improvement

Destructive• Is harsh• Contains threats• Is not timely• Blames• Is not specific• Focuses on recipient• Offers no concrete ideas

for improvement

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Stress Management

Life events

Emotional reactions

Physiological states

Cognitive appraisal

Stress

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Stressors

• Demands of job

• Juggling roles

• Responsible for others

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Dangerous Effects of Stress

• Physical illness

• Lower productivity

• Desk rage

• Burnout

5-19

Stress Management

Physical tactics

• Healthy diet

• Exercise

5-20

Stress Management

Behavioral tactics

• Reduce excessive worrying

• Incompatible reaction procedure

• Relaxation techniques

• Step back from stressful situations