“I don’t know what they want from me, it’s like the more money we come across the more problems we see!” – Sean “Diddy” Combs, Christopher “BIG” Wallace, & Mason “Mase” Betha

 

After reading the selection for this week, I was left somewhat perplexed in relation to the duties of a CEO. I mean hypothetically speaking CEO’s are encumbered with the duty to raise capital, hire a team of knowledgeable and experienced individuals and set and hit financial goals for the organization. However, did you know that after slogging, sweating and hustling for your company that the board can simply oust you?!? Me neither, but now we do…. So, now that we’re armed with this information let’s delve a little further into this and get a lesson in Hip Hop simultaneously.

Founder’s must initially strategize how they will acquire capitals through the life cycle of the startup while also bearing in mind that utilizing funds from friends and relatives can leave relationships hanging in the balance if the company fails to turn a profit and loses the investment. Likewise, utilizing angel investors and venture capitalists both, can leave a bitter taste if the business transactions turn unpleasant. Depending on how much funding is granted and for how long, VC’s can somewhat surreptitiously come in and pretty much take ownership of the entire organization (i.e. every round of funding that the VC offers is another round where their ownership stake grows stronger in the company); and, it’s only a matter of time before they assert themselves and establish their own guidelines and protocols for the business. Mo’ Money, Mo’ Problems…

As we’ve noted from previous blog posts, being prepared in business is key! Having the business acumen to know when to make dynamic changes to existing protocol or organizational structure is what sets excellent CEOs apart from average CEOs. Executives who are not able to evolve with the ever-changing environment poses a risk to their company’s progress and profits. If this issue is not diminished, the organization may miss critical deadlines and subsequently lose out on lucrative business opportunities. On the other end of the spectrum however, are CEO’s who do their job (and well might I add) only to find that the board feels that the company needs a CEO with a different skillset to guide and propel the business through its’ next phase of growth. In my opinion, this is guaranteed to happen, and founder/CEOs should prepare appropriately for the time when they may be seemingly snatched from their “baby.” During this period another individual is being championed for the CEO position. While this sounds somewhat harsh, voluntary successions occur all the time and allow the prior CEO to remain in some capacity with the organization as it levels up. Mo’ Money, Mo’ Problems…

While we all like to think that with additional capital comes additional flexibility, as business owners, we have to be mindful that each incremental profit increase also boosts the company’s legitimacy to investors and exposes future obstacles that the founding CEO may encounter (and may not have the appropriate skillset to deal with). Mo’ Money, Mo’ Problems….
As long as we are mindful of the pitfalls associated with entrepreneurship, we can only do our best to plan for the challenging times (i.e. the roller coaster) and any of the scenarios that could potentially rise. In any event…stick to the code…stay true to yourself, stay true to your organization’s mission and try your best to mitigate the nuisances that come with Mo’ Money!

References

   Herrenkohl, Eric. How to Hire A-Players Finding the Top People for Your Team – Even If You Don’t Have a Recruiting Department. Wiley, 2010.

   Wasserman, Noam. The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton Univ Pr, 2013.

 

 

 

 

 

 

 

 

“Build a system to accomplish your goals and hire strong people to work the system.”-Eric Herrenkohl 

 

Words to the Wise…

Other than worrying about how to cohesively bring your “dream” organization together, founders are also burdened with who will assist in managing key positions to keep the business trending and meeting goals that will keep it relevant. While hiring may seem daunting, I, like one of my classmates (Mike Weimar), agree that your organization should operate much like you’re playing a game of chess. “A-players” will undoubtedly want to advance in the company at some point (and will leave if they feel that they are with an organization where they are constantly underappreciated); and, you as the founder have a responsibility to always be prepared to have that conversation with them. In addition, their predecessors should be appropriately coached and conditioned so that when promotion time comes, both can be prepared to make advancements for their accomplishments. This perspective will help to mold “B-players” into “A-players” and motivate their peers and subordinates to continually improve.

 

Wasserman notes in The Founders Dilemmas “if an organization’s tasks are such as can be delegated and if the senior executive manage their employees effectively, increasing structural leverage can increase the firm’s performance as junior employees provide support for senior executives while learning best practices from them.” In addition to allowing subordinate employees adequate time with senior level executives, founders must also spend ample time with these A-players as well to best determine when to make those vital chess moves. Through regular meetings with departmental heads, founders are almost guaranteed to better assess performance and assist when there is a critical need. Moreover, being connected with managers makes for being knowledgeable about the intricacies of the company if the board should ever inquire about anything related to the business.

I plan to utilize the “bureaucracy” blueprint where recruitment is for experience and functional skills and compensation is commensurate with experience. Through incentives such as bonuses, awards (i.e. think certificates recognizing stellar work productivity with a generous gift card) and other rewarding opportunities (i.e. annual banquets) I hope to provide a meaningful experience to all employees and compensate them well in the process. While it is important to specifically recognize “A-players” at these events, it is also imperative to acknowledge that ALL employees are capable of reaching the top position in their department. As Eric Herrenkohl recognizes in How to Hire A-Players, “Many times your B-players are within shouting distance of being “A-players” and just need some nudging to get there.” He maintains that through coaching, setting goals, and providing accountability measures for these individuals, they will assuredly evolve into real game changers for the organization.

To better assess the performance of the company and receive continuing guidance throughout the process I think it is certainly worth it to mention hiring a consultant. If knowledgeable in the field, these individuals can provide invaluable expertise by helping to define organizational structure as well as offer ongoing advice and accountability. By having a reliable consultant and great “A-players”, founders are able to build a system that accomplishes goals because they have hired competent personnel to do so. After all, “Leaders who create great companies never do it alone. They always create a team of A-players.”

 

References

   Herrenkohl, Eric. How to Hire A-Players Finding the Top People for Your Team – Even If You Don’t Have a Recruiting Department. Wiley, 2010.

   Wasserman, Noam. The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton Univ Pr, 2013.

 

 

 

Homogenous Teams are a No, No!!!

More than anyone else, the CEO is accountable for being the “visionary” of the team, meticulously collecting the most fitting individuals who can additionally bring the most desirable skillsets to the table. CEO’s must value diversity and the tremendous effect it plays in the overall success of the venture. Hiring individuals from various backgrounds (i.e. culture, employment experience, education, socio-economic status) promotes several underlying positive factors. As a result, the company is now marketable to this new employee’s social network; and, chances are if he or she enjoys the company enough to work for it, this individual will also promote services/products amongst family and friends alike. After accumulating the necessary social capital for the enterprise, CEO’s must continually plan and confer with these team leaders to maintain relationships, oversee departmental projects and determine how the organization will fit in with the ever-changing economic climate and the unmet needs of customers.

Since the overall successes (and therefore failures) are primarily attributable to the employees that are screened and successively hired, it is vital to hire and keep A-Players. As Eric Herrenkohl notes in How to Hire A-Players, “nothing has a bigger impact on the results of your business and the quality of your life than hiring and keeping A-players.” It is noted that these individuals will play an exponential and not incremental role in the business as they will facilitate the overall growth of the company while also sharpening their skills and developing the talent assigned to their department. Herrenkohl also asserts, “a good A-player can take responsibility for important pieces of the business, oversee other people and bring in new business.” Furthermore, it is imperative to note that once these individuals are accustomed to the culture of the organization, they will be able to “move the ball” well in the absence of direction.

Hopefully, after reading this blog you, the entrepreneur, will better understand the importance of having diverse teams over those with a more homogenous makeup; and, the benefits that come as a result. While it may initially be challenging for diverse teams to coalesce, with small efforts on the part of management (i.e. team retreats or team building exercises) individuals can and will grow their sense of involvement and commitment to the enterprise. This in turn can only be more promising as the venture gains stability and eventually elects to expand to various promising markets.

 

References

  Herrenkohl, Eric. How to Hire A-Players Finding the Top People for Your Team – Even If You Dont Have a Recruiting Department. Wiley, 2010.

 

  Lahm, Robert. “Starting Your Business: Avoiding the ‘Me’ Incorporated Syndrome.” EZinearticles, 18 Oct. 2005, https://ezinearticles.com/?Starting-Your-Business:-Avoiding-the-Me-Incorporated-Syndrome&id=84345.

 

  Wasserman, Noam. The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton Univ Pr, 2013.