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CHAPTER

Building a New Venture Team and Planning for the Next Generation

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2011 Pearson Education, Inc. Publishing as Prentice Hall

8.1. Three Vital Tasks of a Leader


1. Add the right employees and constantly improve their skills. 2. Create a culture for retaining employees.

3. Plan for passing the torch to the next generation of leadership.

Ch. 8: Building a Team & Succession Planning

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8.2. Building an Entrepreneurial Team


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

46% of newly hired employees will fail in their jobs within 18 months. 19% of newly hired employees will achieve unequivocal success.

Study: 34% of hiring managers admit to making bad hiring decisions because they were under pressure to fill a job.
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Ch. 8: Building a Team & Succession Planning

2011 Pearson Education, Inc. Publishing as Prentice Hall

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8.3. How to Hire Winners


Commit to hire the best talent. Elevate recruiting to a strategic position. Create practical job descriptions and job specifications. Plan an effective interview. Conduct the interview. Contact references and conduct a background check.

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8.3.1. Strategic Recruiting


Look inside the company first.

Encourage employee referrals.


Make employment advertisements stand out.

Use multiple channels to recruit talent.


Recruit on campus.

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8.3.1. Strategic Recruiting

Get involved in a college internship program. Recruit retired workers. Consider using offbeat recruiting techniques. Offer what workers want.

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8.3.2. Conducting a Job Analysis

Create a job description - a written statement of the duties, responsibilities, reporting relationships, working conditions, and materials and equipment used in a job.

Handy tool: Dictionary of Occupational Titles

Create a job specification - written statement of the qualifications and characteristics needed for a job, stated in terms such as education, skills, and experience.
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Sample Job Description from the Dictionary of Occupational Titles


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


Involve others in the interview process. Develop a series of core questions and ask them of every job candidate. Ask open-ended questions rather than questions calling for yes or no answers. Create hypothetical situations candidates would encounter on the job and ask how they would handle them.

Situational interviews
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8.3.3. Planning an Effective Interview

Probe for specific examples in the candidates work history that demonstrate the necessary traits and characteristics. Ask candidates to describe a recent success and a recent failure and how they dealt with them. Arrange a non-interview setting that allows others to observe the candidate in an informal setting.
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8.3.4. Conducting an Effective Interview

Break the ice.

Goal: to diffuse nervous tension. Puzzle interviews. Remember the 25/75 Rule. Be respectful and keep it legal!

Ask questions.

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


Checking an applicants references is an important part of protecting a company against making a bad hire.

Is it really necessary? Yes !


According to a CareerBuilder survey, 49% of all candidates either exaggerate or falsify information about their previous employment on their rsums.
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Ch. 16: Building a Team & Succession Planning

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2011 Pearson Education, Inc. Publishing as Prentice Hall

8.4. Company Culture

Distinctive, unwritten, informal code of conduct that governs the behavior, attitudes, relationships, and style of an organization. The way we do things around here. In small companies, culture plays as important a part in gaining a competitive edge as strategy does.

Ch. 16: Building a Team & Succession Planning

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8.4.1. Characteristics of a Positive Culture

Respect for work and life balance Sense of purpose Sense of fun Engagement Diversity Integrity Participative management Learning environment
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8.5. Job Design Strategies

Job simplification - breaks work down into its simplest form and standardizes each task. Job enlargement (horizontal job loading) adds more tasks to a job to broaden its scope. Job rotation - cross-trains workers so they can move from one job in a company to others, giving them a greater number and variety of tasks to perform. Often used with a skill-based pay system.
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8.5. Job Design Strategies

Job enrichment (vertical job loading) builds motivators into a job by increasing the planning, decision making, organizing and controlling functions (which traditionally were managerial tasks). Five core characteristics:
1. Skill variety 2. Task identity 3. Task significance

4. Autonomy
5. Feedback
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8.5. Job Design Strategies

Flextime - an arrangement under which employees build their work schedules around a set of core hours - such as 11 a.m. to 2 p.m. - but have flexibility about when they start and stop work. Job sharing - a work arrangement in which two or more people share a single full-time job.

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8.5. Job Design Strategies

Flexplace - a work arrangement in which employees work at a place other than the traditional office, such as a satellite branch closer to their homes or, in some cases, at home. Telecommuting - an arrangement in which employees have employees working from their homes use modern communications equipment to hook up to their workplaces.
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8.6. Rewards and Compensation

The key to using rewards to motivate workers is tailoring them to the needs and characteristics of individual workers. Money is an effective motivator up to a point.
Pay-for-performance systems Profit-sharing plans Open book management Cafeteria benefit plan

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8.6. Rewards and Compensation

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

Entrepreneurs tend to rely on non-monetary rewards.

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8.7. Family Businesses


Make up 90% of all U.S. businesses.

Account for 64% of U.S. GDP.


Employ 62% of private sector work force. Comprise 37% of the Fortune 500 companies. Created 80% of the U.S. economys net new jobs over the last two decades.

Ch. 16: Building a Team & Succession Planning

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8.7. Family Businesses


(continued)

Unfortunately, only 30% of first-generation businesses survive into the second generation. Of those that do survive to the second generation, only 12% make it to the third generation. Only 3% make it to the fourth generation and beyond.
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Ch. 16: Building a Team & Succession Planning

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2011 Pearson Education, Inc. Publishing as Prentice Hall

8.8. Why is Management Succession So Difficult?

81% of all business founders intend to pass their companies on to their children. Just 29% of family business owners have prepared written management succession plans.

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8.9. Exit Strategies

Entrepreneurs planning to retire often use two exit strategies:


Sell to outsiders Sell to insiders

Leveraged

buyout (LBO) Employee Stock Ownership Plan (ESOP)

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