Chapter 9Copyright © 2010 by Nelson Education Ltd. Selecting the Management Team and Managing Human...

Chapter 9 Copyright © 2010 by Nelson Education Ltd.

Selecting the Selecting the Management Team Management Team and Managing and Managing Human ResourcesHuman Resources

Selecting the Selecting the Management Team Management Team and Managing and Managing Human ResourcesHuman Resources

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Ian Anderson, Algonquin CollegeIan Anderson, Algonquin College


Looking AheadLooking AheadLooking AheadLooking Ahead

After studying this chapter, you should be able to:

1. Discuss the entrepreneur’s leadership role.

2. Discuss the evolving features of small firm management.

3. Describe the characteristics and value of a strong management team.

4. Identify the various kinds of plans and approaches to planning.

5. Explain the importance of employee recruitment and list some sources that can be useful for finding suitable applicants.

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Looking AheadLooking AheadLooking AheadLooking Ahead

6. Identify the steps to take in evaluating job applicants.

7. Describe the role of training for both managerial and nonmanagerial employees in a small firm.

8. Explain the various kinds of compensation plans and the differences between daywork and incentives.

9. Describe the problem of time pressure and suggest solutions

10. Discuss the contract employees, labour unions, the formalizing of human resources management, and government regulations pertaining to employee protection.

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Leading and MotivationLeading and MotivationLeading and MotivationLeading and Motivation

• Personal Involvement of the Entrepreneur–Creates a significant personal relationship with

employees based on loyalty and respect.–Directly influences employees’ understanding of

how the firm operates (e.g., its ethics).–Makes the firm attractive to new employees.

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LeadershipLeadershipLeadershipLeadership

• Leadership That Builds Enthusiasm–Empowerment

• Giving employees authority to make decisions or take actions on their own

–Work teams• Groups of self-managed employees with the freedom to

function without close supervision

–Benefits• Workers are more satisfied with their working environment• Productivity and profitability are enhanced

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Constraints on Management Constraints on Management in Small Firmsin Small Firms

Constraints on Management Constraints on Management in Small Firmsin Small Firms

• Small bank accounts and limited staff

• Lack specialized professional staff– Market research, HR, Financial analysis, etc.

• Constant change in organizational and managerial needs

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Stages of GrowthStages of GrowthStages of GrowthStages of Growth

• One-Person Operation

• Player-Coach– Entrepreneur begins coordinating the activities of

others

• Intermediate Supervision– Entrepreneur no longer direct, hands-on management

• Formal Organization– Greater formality in planning and control

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Stages of GrowthStages of GrowthStages of GrowthStages of Growth

9-8

Exhibit 9-1


The Management TeamThe Management TeamThe Management TeamThe Management Team

• Management team:– Consists of managers and other key persons who give a

company its general direction

• Characteristics of a Strong Management Team– Capable of securing the resources needed to make

business a success– Reassures investors about their investment and the

continuity of business– Diversity of talent makes the team stronger than an

individual entrepreneur

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The Venture TeamThe Venture TeamThe Venture TeamThe Venture Team

• Founder(s)– Advisory Board– Key Employees– Board of Directors– Management Team– Lawyer– Accountant

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Complementary Management TeamComplementary Management TeamComplementary Management TeamComplementary Management Team

• Building a Complementary Management team:– Competencies required depends on type of business

• Combination of education and experience• Requires achieving a balance of skills and competence in

functional areas– Designing a management structure that defines

relationships and responsibilities

• Outside professional support:– Supplements the skills of a management team– Active board of directors can counsel and guide

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PlanningPlanningPlanningPlanning

• Management Functions

– Planning• Long-range – strategic plans (future)

• Short-range – operational plans (current year)

– Leading – Organizing – Controlling

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Planning TerminologyPlanning TerminologyPlanning TerminologyPlanning Terminology

• Budget– A document that expresses future plans in monetary terms

• Business Policies– Guides for managerial decision making

• Procedures– Specific methods followed in business activities

• Standard Operating Procedure– An established work method of conducting a business activity

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Success in PlanningSuccess in PlanningSuccess in PlanningSuccess in Planning

• Make time for planning– Need detailed planning and quality control

• Set clear goals– Goals - created for critical performance areas– Objectives – short-term targets

• Encourage employee participation / communication

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Recruiting Personnel Recruiting Personnel (The Importance of People)(The Importance of People)

Recruiting Personnel Recruiting Personnel (The Importance of People)(The Importance of People)

• The Need for Quality Employees–Employee performance affects the capability of the firm

to service customer needs.

–Employee performance affects profitability.

–Payroll costs affect firm’s bottom line.

–Quality of employees determines the long-term competitive potential of the firm.

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Attracting Applicants to Small FirmsAttracting Applicants to Small FirmsAttracting Applicants to Small FirmsAttracting Applicants to Small Firms

• Advantages of Employment in Small Firms–Quicker movement to decision-making levels of

management

–Greater managerial freedom

–More opportunities for broad-based managerial experience

–Flexibility in work scheduling and job sharing

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Sources of EmployeesSources of EmployeesSources of EmployeesSources of Employees

Walk-insWalk-insWalk-insWalk-ins

SchoolsSchoolsSchoolsSchools

Public EmploymentPublic Employment Agencies Agencies

Public EmploymentPublic Employment Agencies Agencies

Executive SearchExecutive SearchFirmsFirms

Executive SearchExecutive SearchFirmsFirms

Employee ReferralsEmployee ReferralsEmployee ReferralsEmployee Referrals

Private EmploymentPrivate EmploymentAgenciesAgencies

Private EmploymentPrivate EmploymentAgenciesAgencies

InternetInternetRecruitingRecruiting

InternetInternetRecruitingRecruiting

Help-WantedHelp-WantedAdvertisingAdvertising

Help-WantedHelp-WantedAdvertisingAdvertising

Temporary HelpTemporary HelpAgenciesAgencies

Temporary HelpTemporary HelpAgenciesAgencies

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Job DescriptionJob DescriptionJob DescriptionJob Description

• Job Description–A written summary of the essential duties required by a

specific job• Aids in personnel recruitment.• Helps focus employees on their work.• Provides direction in training.• Serves as the basis for performance review.

• Job Specification–A list of the skills and abilities needed by the job holder

to successfully perform a specific job• Aids in selecting the most qualified job applicant.

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Chapter 9 Copyright © 2010 by Nelson Education Ltd. 9-19

Exhibit 9-6

Job Description for a Job Description for a Stock Clerk in Retail Food StoreStock Clerk in Retail Food Store

Job Description for a Job Description for a Stock Clerk in Retail Food StoreStock Clerk in Retail Food Store


Evaluating Prospects and Evaluating Prospects and Selecting EmployeesSelecting Employees

Evaluating Prospects and Evaluating Prospects and Selecting EmployeesSelecting Employees

Steps in Recruiting EmployeesSteps in Recruiting Employees

Application FormsApplication Forms

Applicant InterviewApplicant Interview

Reference CheckingReference Checking

Applicant TestingApplicant Testing

Physical ExaminationPhysical Examination

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Training and Developing Employees Training and Developing Employees Training and Developing Employees Training and Developing Employees

• Purposes of Training and Development– Prepare recruit to perform the duties of the job.

– Improve the performance of current employees.

– Prepare employees for career advancement.

– Improve morale of current employees.

– Serve as an inducement to potential applicants.

• Factors in Establishing a Training Program– Determining the need for training

– Creating a plan for training

– Setting a timetable for training

– Providing employee counselling

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Types of Training and DevelopmentTypes of Training and DevelopmentTypes of Training and DevelopmentTypes of Training and Development

Developing Developing Managerial and Managerial and

Professional Professional EmployeesEmployees

Orientation ofOrientation ofNew PersonnelNew Personnel

Training to Training to Improve QualityImprove Quality

Training Training Nonmanagerial Nonmanagerial

EmployeesEmployees

Training& Training& DevelopmentDevelopment to Improve to Improve Job QualityJob Quality

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Compensation and Incentives for Compensation and Incentives for Small Business EmployeesSmall Business Employees


• Financial Incentives–Keys to developing an

effective bonus plan:• Set attainable goals.• Set meaningful goals.• Bring workers in

(employee participation).• Keep targets moving.• Aim carefully.

…continued

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• Profit Sharing– A percentage of profits is distributed to employees

• Fringe Benefits– Supplements to compensation designed to be attractive and

beneficial to employees.• Benefits are a substantial portion of payroll costs.• Small firms tend to provide fewer benefits.• Small firms are increasingly outsourcing the administration of

their benefits programs.• Cafeteria plans can be a part of benefits along with dental care

and child-care re-imbursement

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Employee Stock Ownership Plans and Employee Stock Ownership Plans and Profit SharingProfit Sharing

Employee Stock Ownership Plans and Employee Stock Ownership Plans and Profit SharingProfit Sharing

• Employee Stock Ownership Plans (ESOPs)–Plans through which a firm is sold either in part

or in total to its employees.• Employees’ performance is motivated by their sharing

of ownership in the firm.

• Owners can cash out and withdraw without selling to outsiders.

• ESOPs offer tax advantages to owners and employees.

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Factors that Contribute to Factors that Contribute to Quality of Work LifeQuality of Work Life

Factors that Contribute to Factors that Contribute to Quality of Work LifeQuality of Work Life

• Top six factors that employees felt “were very important in a job”:–A workplace free from harassment and discrimination

–A healthy and safe workplace

–Trustworthy senior management

–Good balance between work and personal/family life

–Good job security

–Good pay

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““Very Important” Job FactorsVery Important” Job Factors““Very Important” Job FactorsVery Important” Job Factors

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Exhibit 9-7Source: CPRN-Ekos Changing Employment Relationships Survey 2000 (n 2000). Reprinted by permission of Canadian Policy Research Networks Inc.


Time ManagementTime ManagementTime ManagementTime Management

• The Problem of Time Pressure–Many owner-managers work 60-80 hours per week.–Effect of overwork is inefficient work performance.

• Time Savers for Busy Managers–Effective use of time (time management)

• Analyze how time is normally spent• Eliminate practices that waste time• Carefully plan available time• Use a daily planner to prioritize activities• Don’t avoid unpleasant or difficult tasks• Limit conference and meeting times

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Chapter 9 Copyright © 2010 by Nelson Education Ltd. 9-29

Hours per Week Worked by Hours per Week Worked by New Business OwnersNew Business Owners

Hours per Week Worked by Hours per Week Worked by New Business OwnersNew Business Owners

Exhibit 9-8Data developed and provided by the NFIB Foundation and sponsored by American Express Travel-Related Services Company.


Special Issues in HRMSpecial Issues in HRMSpecial Issues in HRMSpecial Issues in HRM

• Contract Employees–The “renting” of personnel from an organization

that handles paperwork and administers benefits for those employees• Leasing allows small firms to provide employee benefits.

• Leasing makes small firms subject to additional government regulations.

–Professional Employment Organization• A personnel-leasing company that places employees on

its own payroll and then “rents” them to employers on a permanent basis. …continued

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• Labour Unions– Most entrepreneurs prefer to operate

independently and to avoid unionization– Most small businesses are not unionized– Unions primarily concentrate their efforts on

larger companies.

…continued

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• Formalizing of Employer-Employee Relationships–Employee handbook contents

• Expression of company philosophy

• Recruitment

• Selection

• Training

• Vacations

• Grievances

• Discipline

• Performance reviews

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• The Need for a Human Resource Manager–Conditions favouring the appointment of an HR

manager:• A substantial number of employees (100+)

• Unionized employees

• A high labour turnover rate

• A strong need to recruit skilled and professional employees

• Supervisors or operative employees in need of training

• Low employee morale

• Intense job market competition for personnel

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Protecting Employee RightsProtecting Employee RightsProtecting Employee RightsProtecting Employee Rights

• Legal Protection of Employees– Legislation prohibiting discrimination based on

race, colour, religion, sex, or national origin.– Protection from robbery, assault, and other

crime

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Harassment PoliciesHarassment PoliciesHarassment PoliciesHarassment Policies

• Sexual harassment policy guidelines–Establish clear and meaningful policies regarding

sexual harassment in the workplace.–Meet with employees and supervisory personnel

to discuss the policies.–Investigate any and all complaints of sexual

harassment fairly and thoroughly.–Take timely and appropriate action against all

violators.

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Employment Benefits and Employment Benefits and Employment Insurance (EI)Employment Insurance (EI)Employment Benefits and Employment Benefits and

Employment Insurance (EI)Employment Insurance (EI)

• Federal and provincial employment standard codes set out required working conditions such as maximum work hours, overtime pay, meal breaks, minimum wages, and parental and maternity leaves.

• Women on maternity leave are entitled to employment insurance (EI) as are those workers who become unemployed, as long as they have met certain requirements.

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