Growing Your Business: Making Human Resources Work for You (AGENCY/DISTRIBUTED)

71 Pages·2008·0.664 MB·English

by  Robert Baron (author) & Scott Shane (author)

Growing Your Business b Entrepreneurship and Small
A
r Business Management Collection
Robert A. Baron and Scott Shane o
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• Scott Shane, Editor
Robert A. Baron, Dean R. Wellington Professor of Management and s
Professor of Psychology; PhD, Rennselaer Polytechnic Institute. Professor h
Baron has held faculty appointments at Purdue University, University of A
n
Minnesota, University of Texas, University of South Carolina, University of
e
Washington, and Princeton University. In 1982 he was a Visiting Fellow at
Oxford University. From 1979 to 1981 he served as a Program Director at the Growing Your
National Science Foundation (Washington, DC). In 2001 the French Ministry
of Research appointed him as a Visiting Senior Research Fellow; he held this
post at the Université des Sciences Sociales, Toulouse. He has been a Fellow
of the American Psychological Association since 1978 and is also a Charter Business
Fellow of the American Psychological Society. Professor Baron has published
more than 100 articles in professional journals and 30 chapters in edited
volumes. He is the author or co-author of more than 40 books in the fields of
Making Human
management and psychology, including Entrepreneurship: A Process Perspective
(2nd ed.). Professor Baron holds three U.S. patents and was founder,
president, and CEO of Innovative Environmental Products, Inc. (1993–2000). Resources Work for You
Professor Baron’s research and consulting activities focus extensively on the
social and cognitive factors in entrepreneurship. G
R
o
Scott A. Shane, the A. Malachi Mixon III Professor of Entrepreneurial Studies
w
at Case Western Reserve University. His previous faculty appointments
i
include University of Maryland, Massachusetts Institute of Technology, and n
G
Georgia Institute of Technology. The author of over 60 scholarly articles
Y
on entrepreneurship and innovation management, Dr. Shane’s work has o
appeared in Management Science, Organization Science, Academy of Management u
Journal, Academy of Management Review, Strategic Management Journal, Decision R
Sciences, Journal of Economic Behavior and Organization, and International Journal B
u
of Industrial Organization, among other journals. He has written or edited S
10 books, Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, in
Investors, and Policy Makers Live By; Technology Strategy for Managers and e
S
Entrepreneurs; Finding Fertile Ground: Identifying Extraordinary Opportunities for S
New Ventures; From Ice Cream to the Internet: Using Franchising to Unlock the
Potential of Your Business; Academic Entrepreneurship: University Spinoffs and Robert A. Baron
Wealth Creation; A General Theory of Entrepreneurship: The Individual-Opportunity
Nexus; Foundations of Entrepreneurship; Handbook of Technology and Innovation
Scott Shane
Management; Economic Development Through Entrepreneurship: Government,
University, and Business Linkages; and Entrepreneurship: A Process Perspective
(with Robert Baron). Dr. Shane has served as editor of special issues of
Research Policy on “Technology Entrepreneurship” and Management Science
on “University Entrepreneurship and Technology Transfer.” He currently
serves as editor of the R&D, Innovation, and Entrepreneurship Division of
Management Science. Dr. Shane’s PhD is from the Wharton School of the
University of Pennsylvania.
Entrepreneurship and Small
Business Management Collection
Scott Shane, Editor
ISBN: 978-1-60649-001-3
90000
www.businessexpertpress.com 9 781606 490013
www.businessexpertpress.com
Growing Your Business

Growing Your Business
Making Human Resources
Work for You
Robert A. Baron and Scott Shane
Growing Your Business
Copyright © Business Expert Press, LLC, 2008.
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, photocopy, recording, or any other
except for brief quotations, not to exceed 400 words, without the prior
permission of the publisher.
From BARON/SHANE. Entrepreneurship, 1E. © 2005 South-
Western, a part of Cengage Learning, Inc. Reproduced by permission.
www.cengage.com/permissions
First published in 2008 by
Business Expert Press, LLC
222 East 46th Street, New York, NY 10017
www.businessexpertpress.com
ISBN-13: 978-1-60649-001-3 (paperback)
ISBN-10: 1-60649-001-X (paperback)
ISBN-13: 978-1-60649-003-7 (e-book)
ISBN-10: 1-60649-003-6 (e-book)
DOI 10.4128/9781606490037
A publication in the Entrepreneurship and Small Business Management
collection
Collection ISSN (print) 1946-5653
Collection ISSN (electronic) 1946-5661
Cover design by Artistic Group—Monroe, NY
Interior design by Scribe, Inc.
First edition: October 2008
10 9 8 7 6 5 4 3 2 1
Printed in the United States of America.
Abstract
This book explains why you should grow your business and describes
some of the major challenges of growth. It identifi es several strategies that
enhance the growth of new fi rms. It explains how you can select high-
performing employees and describes various ways of enhancing employ-
ees’ motivation and commitment, including the use of pay systems that
help to retain high-performing employees. It describes various techniques
you can use to increase trust in your new venture and explains why it is
important for you to match your leadership style to the situations you
face in your new venture.
Keywords
Entrepreneurship, growth, human resources

vii
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Similarity Versus Complementarity: Know Thyself . . . . . . . . .1
Choosing Cofounders: Maximizing the
New Venture’s Human Resources . . . . . . . . . . . . . . . . . . . . . .7
Expanding the New Venture’s Human Resources:
Beyond the Founding Team . . . . . . . . . . . . . . . . . . . . . . . . .19
Recruiting and Selecting High-Performing Employees . . . . .23
Motivating Employees: Maximizing the Value
of the New Venture’s Human Resources . . . . . . . . . . . . . . . .31
Retaining High-Performing Employees . . . . . . . . . . . . . . . . .41
Some Concluding Thoughts . . . . . . . . . . . . . . . . . . . . . . . . .49
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

iixx
Introduction
Many venture capitalists are fond of saying that the jockey is more im-
portant than the horse, implying that the key dimension of a new ven-
ture that infl uences its ability to grow and prosper is the quality of the
management team. While we are not sure that the management team of
a venture is more important than the business opportunity in growing a
business, we believe that the success of any new venture depends, to an
important degree, on the knowledge, skills, talents, and abilities of its
cofounders—plus those brought to it by initial employees. Therefore, to
have a high-growth company, you need to put together the right human
resources—the founding team and key hires. In this book, we explain
how to do that.
Choosing excellent cofounders and management team members and de-
veloping good working relationships with them are complex tasks requiring
considerable effort. How, then, can entrepreneurs assemble the human re-
sources needed to launch a successful new venture? To answer this question in
a useful way, we will consider four closely related topics.
First, we will examine the issue of complementarity versus similarity:
Should entrepreneurs choose cofounders who are similar to themselves in
various respects or those who are different in complementary ways, pro-
viding what they themselves lack in terms of knowledge, skills, or abilities?
As we will note later in this discussion, both similarity and complemen-
tarity offer advantages, but we believe that emphasizing complementar-
ity might, in many instances, be a somewhat better strategy because it
provides new ventures with a strong and diverse base of human resources.
In any case, the process of choosing appropriate cofounders should cer-
tainly start with a careful self-assessment by prospective entrepreneurs. The
reason for this requirement can be stated simply: In a very real sense, it
is impossible for entrepreneurs to know what they need from cofounders
unless they (the entrepreneurs) know what they already have. Second,
after considering why and how entrepreneurs should engage in careful self-
assessment, we will examine the task of actually choosing cofounders. This