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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Building a New Venture Team Building a New Venture Team and and Planning for the Next Planning for the Next Generation Generation CHAPTER CHAPTER 16 16

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Entrepreneur

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Chapter 1:The Foundations of EntrepreneurshipBuilding a New Venture Team
and
CHAPTER 16
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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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Business Leaders Are…
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
Celebrate their workers’ successes.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Three Vital Tasks of a Leader
Add the right employees and constantly improve their skills.
Create a culture for
retaining employees.
Plan for “passing the torch” to the next generation of leadership.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch. 6: Franchising and the Entrepreneur
FIGURE 16.1 Annual Growth Rate in the U.S. Labor Force Source: U.S. Census Bureau, 2008.
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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How to Hire Winners
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Strategic Recruiting
Encourage employee referrals.
Use multiple channels to recruit talent.
Recruit on campus.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Strategic Recruiting
Recruit “retired” workers.
Offer what workers want.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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How to Hire Winners
Create practical job descriptions and job specifications.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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How to Hire Winners
Create practical job descriptions and job specifications.
Plan an effective interview.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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How to Hire Winners
Create practical job descriptions and job specifications.
Plan an effective interview.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Conducting an
Effective Interview
Ask questions.
Puzzle interviews.
Best candidates will have other job offers.
Your job: to convince the best candidates that your company is a great place to work.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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How to Hire Winners
Create practical job descriptions and job specifications.
Plan an effective interview.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Characteristics of a
Sense of purpose
Sense of fun
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch. 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.
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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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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:
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Rewards and Compensation
Intangible rewards – such as praise, recognition, celebrations, and others – can be powerful, yet inexpensive, motivators.
Entrepreneurs tend to rely
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch. 16: Building a Team & Succession Planning
FIGURE 16.3 U.S. Workforce by Generation
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Family 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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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How to Develop a
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.
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Coping with Estate Taxes
Estate freeze
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Exit Strategies
Sell to outsiders
Sell to insiders
Leveraged buyout (LBO)
Ch. 16: Building a Team & Succession Planning
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Conclusion
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.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Ch. 16: Building a Team & Succession Planning
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.
Ch. 16: Building a Team & Succession Planning