Assembling the Team: Acquiring and Utilizing Essential Human Capital Entrepreneurship 5 Assembling the Team: Acquiring and Utilizing Essential Human Capital

“Two are better than one;…if they fall, the one will lift up his fellow: but woe to him that is alone when he falleth, for he hath not another to help him up.” --Hebrew Bible

Forming Founding Team Choose cofounders wisely Secure help from outsiders Develop strong working relationships

Human Resources Knowledge Skills Talents Abilities Social capital Of co-founders and early employees are key to success

Success of Founding Team Prior experience in industry Prior experience as entrepreneur Broad social networks Broad range of knowledge and special skills Communication Social competence

Personal Characteristics of Founding Team Members Conscientiousness Agreeableness Openness to experience Extraversion Emotional stability

Added Resources Board of Directors Key employees Advisers Investors Consultants Government programs

Is Bigger Better? On balance, the benefits of increasing the number of employees outweigh the costs. New ventures that start with more employees have a greater chance of surviving. Profitability is positively related to size.

Temporary Employees Advantages Reduced fixed costs Flexibility Secure specialized knowledge Disadvantages Lack commitment and motivation Carry information to competitors

Temporary or Permanent? Flexibility and speed of acquiring new sets of knowledge Temporary employees Commitment and retention Permanent employees

Founding Team Relationships Three factors are crucial in developing strong working relationships among the team: Clear initial assignment of roles Careful attention to perceived fairness Effective communication

Roles The set of behaviors that individuals occupying specific positions within a group are expected to perform, and the authority or jurisdiction they will wield. Divide responsibilities and authority according to expertise and knowledge.

Self-Serving Bias The tendency to attribute successful outcomes largely to internal causes, but unsuccessful ones largely to external causes Often leads people to conclude that they have not been treated fairly

Perceived Unfairness Feelings of Friction and Self-serving bias conflict Feelings of perceived unfairness

Effective Communication Constructive Is considerate Doesn’t threaten Is timely Doesn’t blame Is specific Focuses on performance Offers concrete suggestions for improvement Destructive Is harsh Contains threats Is not timely Blames Is not specific Focuses on recipient Offers no concrete ideas for improvement

Stress Management Emotional reactions Life events Cognitive appraisal Physiological states

Stressors Demands of job Juggling roles Responsible for others

Dangerous Effects of Stress Physical illness Lower productivity Desk rage Burnout

Stress Management Physical tactics Healthy diet Exercise

Stress Management Behavioral tactics Reduce excessive worrying Incompatible reaction procedure Relaxation techniques Step back from stressful situations