1. Chapter 13 Management, Leadership, and Ethics
Entrepreneurship
Chapter 13
Management, Leadership, and Ethics

2. Leadership Qualities Confidence Optimism Self-esteem
Good time management skills—leaders get more done in less time

3. Sample Pert Chart

4. Management Styles Coercive—pressure/commanding
Pro: effective in disasters or with employees who need forceful management
Con: hurts employee morale, creativity
Authoritative—leader sets goal, leads team – “come with me”
Pro: works well if leader is expert
Con: not good if leader is not an expert & is trying to lead people who are
Affiliative—puts people first
Pro: gets employees on board
Con: can fail to give adequate direction

5. Management Styles (cont.)
Democratic—gives employees strong voice in company
Pro: builds morale
Con: can result in endless meetings & stagnation
Pacesetting—sets high standards, challenges employees to meet them
Pro: great when employees are self-motivated
Con: can overwhelm less-committed employees
Coaching—focuses on helping employees learn & grow
Pro: good with new employees
Con: can create resistance among long-term employees

6. How Will You Pay Yourself?
This will affect company financial performance.
Options include
Commission (a percentage of every sale). Treated as a variable cost (varies with sales).
Salary (fixed amount of money paid once a week or once a month/year). Treated as a fixed operating cost (does not vary with sales).
Wage (fixed amount per hour). Treated as a cost of goods sold (COGS).
Dividend—share of company profits. Deducted from net profit (after taxes).

7. Ways to Add Employees to the Business
Bring in partners with complementary skills
Hire experts to work on specific tasks on a contract or hourly basis (“work for hire”)
Hire part-time employees “at will”
Hire full-time employees “at will”

8. Recruitment The Hiring Process Define the job Post the job
Screen resume
Interview candidates
Check references
Negotiate salary
Hire
Orientation
How to Find Employees
Campus recruiting
Agencies
Internet job listings
Executive search firms

9. Laws & Taxes Affecting Employees
Payroll Taxes: Must be withheld from earnings & paid to the local, state, & federal government as wage taxes, Social Security (FICA), & others.
Fair Labor Standards Act: Requires employers to pay minimum wage & not hire anyone under 16 years old full-time among other rules.
Equal Pay Act of 1963: Requires employers to pay men & women the same amount for the same work.
Antidiscrimination Laws: Protect employees from discrimination due to age, race, religion, national origin, color, gender, & physical disability.

10. Encourage Great Employee Performance
Find the right people for the right jobs
Provide fair compensation & good working conditions
Share your vision for the company
Give incentives, such as profit sharing
Offer control over their work
Ensure defined responsibilities

11. Encourage Social Responsibility
Offer employees incentives to volunteer in their communities
Recycle in the office
Donate portion of business profits to a charity that employees support
Refuse to animal test products
Establish a safe, healthy workplace

12. Management
The art of planning and organizing a business so it can meet its goals
Entrepreneurs tend to be creative people who get bored with day-to-day details of running a business. Smart entrepreneurs understand this & hire managers.
A corporation can sell stock to raise capital to hire managers.

13. Management Functions POLDSCCRIM Planning Organizing Leading Directing
Staffing
POLDSCCRIM
Controlling
Coordinating
Representing
Innovating
Motivating

14. Ethical Leadership & Organizations
Your ethics become your company’s ethics.
Your behavior sets the tone for the company’s behavior.
Behaviors may be legal & not ethical.
Ethical business behavior makes good business sense! Customers return to businesses that treat them ethically.
Treat employees well, too. Employees who feel used by their employers will not do their best work.

15. Corporate Ethical Scandals
In 2002 these companies were found to have published false financial statements, inflating their earnings & misleading investors.
Enron
WorldCom-MCI
Tyco
Global Crossing
Stock investors and employees who had put retirement funds in company stock lost millions.
These scandals were failures of corporate governance: the companies did not have rules & safeguards in place to prevent executives from lying, cheating, & stealing.

16. Corporate Governance Never just take company profits to pay yourself.
Do not treat company profits as personal funds.
Choose a wage, salary, or dividend arrangement & document it in your financial records.
Keep accurate financial records, checked once a year by a reputable accountant.
Establish financial controls.
Create an advisory board of people with strong ethics.

17. Human Resources Fundamentals
Compensation & payroll
Benefits
Organizational development
Organizational structure
Employee retention
Succession planning
Education & development
Labor law & HR compliance

18. Useful HR Strategies Diversity—encourage gender, ethnic diversity
Benchmarking—evaluate employees & how their performance compares to competition
Retention—develop programs to encourage valued employees to stay with the company

19. Firing and Laying Off Employees
You cannot fire someone just because you don’t like him/her.
Unsupported firing exposes your company to wrongful termination lawsuits.
Conduct regular employee performance reviews so you have proof of poor performance.
If employee violates rules, inform him/her in writing & keep copy for your records.