scarb eesbm6e ppt_16

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

Building a New Venture Team

and

Planning for the Next Generation

CHAPTER 16

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 16 - 2Ch. 16: Building a Team & Succession Planning

Leadership

The process of influencing and

inspiring others to work to achieve a

common goal and then giving them

the power and the freedom to

achieve it.

Entrepreneurs must take on many

roles in their companies, but none is

more important than that of leader.


Business Leaders Are…

Innovative

Passionate

Willing to take risks

Adaptable


Effective Leaders

Create a set of values and beliefs for

employees and passionately pursue them.

Establish a culture of ethics.

Define and then constantly reinforce

the vision they have for the company.

Respect and support their employees.

Set the example for their employees.

Create a climate of trust in the organization.

Build credibility with their employees.


Effective Leaders

Focus employees’ efforts on challenging

and driving toward those goals.

Provide the resources employees need to

achieve their goals.

Listen to their employees.

Value the diversity of their workers.

Celebrate their workers’ successes.

Are willing to take risks.

Encourage creativity among their workers.

Maintain a sense of humor.

(continued)


Effective Leaders

Create an environment in which people

have the motivation, the training, and the

freedom to achieve the goals they have set.

Create a work climate that encourages

maximum performance.

Become a catalyst for change

when change is needed.

Develop leadership talent.

Keep their eyes on the horizon.

(continued)


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.


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.

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 6: Franchising and the Entrepreneur

FIGURE 16.1 Annual Growth Rate in the U.S. Labor Force Source: U.S. Census Bureau, 2008.

16 - 9


How to Hire Winners

Commit to hire the best talent.

Elevate recruiting to a strategic position.


Strategic Recruiting

Look inside the company first.

Encourage employee referrals.

Make employment advertisements

stand out.

Use multiple channels to recruit talent.

Recruit on campus.


Strategic Recruiting

Get involved in a college internship

program.

Recruit “retired” workers.

Consider using offbeat recruiting

techniques.

Offer what workers want.

(continued)


How to Hire Winners



Create practical job descriptions and job

specifications.

(continued)


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.


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)


How to Hire Winners




specifications.

Plan an effective interview.

(continued)


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


Planning an Effective Interview

Probe for specific examples in the

candidate’s 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.

(continued)


How to Hire Winners




specifications.


Conduct the interview.

(continued)


Conducting an

Effective Interview Break the ice.

Goal: to diffuse nervous tension.

Ask questions.

Puzzle interviews.

Remember the 25/75 Rule.

Be respectful and keep it legal!

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.


How to Hire Winners




specifications.


Conduct the interview.

Contact references and conduct a

background check.

(continued)


Checking References

Checking an applicant’s 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 résumés.


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.


Characteristics of a

Positive Culture

Respect for work and life balance

Sense of purpose

Sense of fun

Engagement

Diversity

Integrity

Participative management

Learning environment

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 16: Building a Team & Succession Planning

FIGURE 16.2 Composition of U.S. Workforce

Source: Jennifer Cheeseman Day, “Population Profile of the United States,” U.S. Census Bureau,

July 8, 2008, http://www.census.gov/population/www/popprofile/natproj.html.

16 - 25


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.



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

(continued)



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.

(continued)



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.

(continued)


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


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.


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. economy’s net

new jobs over the last two decades.


Family Businesses

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.

(continued)


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.


How to Develop a

Management Succession Plan

Step 1. Select the successor.

Step 2. Create a survival kit for the

successor.

Step 3. Groom the successor.

Step 4. Promote an environment of trust

and respect.

Step 5. Cope with the financial realities of

estate and gift taxes.


Coping with Estate Taxes

Buy/Sell agreement

Lifetime gifting

Setting up a trust

Bypass trust

Irrevocable life insurance trust

Irrevocable asset trust

Grantor Retained Annuity Trust (GRAT)

Estate freeze

Family Limited Partnership (FLP)


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)


Conclusion

Leadership is the process of influencing

and inspiring others.

Leadership shapes company culture.

A succession plan is a crucial element

in transferring leadership.

An exit plan allows entrepreneurs to

step down and benefit most

from the sale of the company.


All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of

the publisher. Printed in the United States of America.

scarb eesbm6e ppt_16

Small Business & Entrepreneurship