Ch. 16 Building a New Venture Team
Ch. 16 Building a New Venture Team MGMT 3850
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This 4 page Class Notes was uploaded by Alora Lornklang on Sunday May 1, 2016. The Class Notes belongs to MGMT 3850 at University of North Texas taught by Brandi Everett in Spring 2016. Since its upload, it has received 21 views. For similar materials see Foundations of Entrepreneurship in Entrepreneurship at University of North Texas.
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Date Created: 05/01/16
MGMT 3850 Foundations of Entrepreneurship Ch. 16 Building a New Venture Team and Planning for the Next Generation 1. Explain the challenges involved in the entrepreneur’s role as leader and what it takes to be a successful leader. a. Leadership is the process of influencing and inspiring other to work to achieve a common goal and then giving them the power and the freedom to achieve it. b. Management and leadership are not the same, yet both are essential to a small company’s success. Leadership without management is unbridled; management without leadership is uninspired. Leadership gets a small business going; management keeps it going. 2. Describe the importance of hiring the right employees and how to avoid making hiring mistakes a. The decision to hire a new employee is an important one for every business, but its impact is magnified many times in a small company. Every new hire a business owner makes determines the heights to which the company can climb—or the depths to which it will plunge. b. To avoid making hiring mistakes, entrepreneurs should develop meaningful job descriptions and job specifications, plan and conduct an effective interview, and check references before hiring any employee. 3. Explain how to create a company culture that encourages employee retention a. Company culture is the distinctive, unwritten code of conduct that governs the behavior, attitudes, relationships, and style of an organization. Culture arises from an entrepreneur’s consistent and relentless pursuit of a set of core values that everyone in the company can believe in. Small companies’ flexible structures can be a major competitive weapon. b. Job design techniques for enhancing employee motivation include job enlargement, job rotation, job enrichment, flextime, job sharing, and flexplace. c. Money is an important motivator for many workers but not the only one. The key to using rewards such as recognition and praise to motivate involves tailoring them to the needs and characteristics of the workers. 4. Describe the steps in developing a management succession plan for a growing business that allows a smooth transition of leadership to the next generation. a. As their companies grow, entrepreneurs must begin to plan for passing the leadership baton to the next generation well in advance. A sucession plan is a crucial element in successfully transferring a company to the next generation. Preparing a succession plan involves 5 steps: i. Select the successor ii. Create a survival kit for the successor iii. Groom the successor iv. Promote an environment of trust and respect v. Cope with the financial realities of estate taxes 5. Explain the exit strategies available to entrepreneurs a. Family business owners wanting to step down from their companies can sell to outsiders or to insiders include. Common tools for selling to insiders include LBOs and ESOPs. Vocabulary Leadership o 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 Servant leadership o A leadership style in which a leader takes on the role of servant first and leader second Job analysis o The process by which a firm determines the duties and nature of the jobs to be filled and the skills and experience required of the people who are to fill them Job description o A written statement of the duties, responsibilities, reporting relationships, working conditions, and methods, and techniques as well as materials and equipment used in a job. Job specification o A written statement of the qualifications and characteristics needed for a job stated in terms such as education, skills, and experience. Situational interview o An interview in which an interviewer gives candidates a typical job related situation to see how they respond to it Puzzle interview o An interview that includes offbeat questions to determine how job candidates think and reason and to judge their capacity for creativity Culture o The distinctive, unwritten, informal code of conduct that governs an organization’s behavior, attitudes, relationships, and style Job simplification o The type of job design that breaks work down into its simplest form and standardizes each task Job enlargement (horizontal job loading) o The type of job design that adds more tasks to a job to broaden its scope Job rotation o The type of job design involves cross training employees so that they can move from one job in the company to others, giving them a greater number and variety of tasks to perform Job enrichment (vertical job loading) o The type of job design that involves building motivators into a job by increasing the planning, decisionmaking, organizing, and controlling functions that workers perform Flextime o An arrangement under which employees work a normal number of hours but have flexibility about when they start and stop work Job sharing o A work arrangement in which two or more people share a single fulltime job Flexplace o 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 at home Telecommuting o An arrangement in which employees working remotely use modern communications equipment to connect electronically to their workplaces. Payforperformance compensation systems o Compensation systems in which employees’ pay depends on how well they perform their jobs Profitsharing plan o A reward system in which employees receive a portion of the company’s profits Openbook management o A system in which entrepreneurs share openly their companies’ financial results with employees Stock options o A plan under which employees can purchase shares of a company’s stock at a fixed price Cafeteria benefit plan o A plan under which employers provide certain basic benefits and then allocate a specific dollar amount for employees to select the benefits that best suit their needs Buysell agreement o A contract among coowners of a business stating that each agrees to buy out the others in case of the death or disability of one Trust o A contract between a grantor and a trustee in which the grantor gives the trustee assets that the trustee holds for the trust’s beneficiaries Revocable trust o A trust that a grantor can change or revoke during his or her lifetime Irrevocable trust o A trust in which a grantor cannot require the trustee to return the assets held in trust Estate freeze o A strategy that minimizes estate taxes by creating two classes of stock for a business: preferred voting stock for the parents and nonvoting common stock for the children Family limited partnership (FLP) o A strategy that allows businessowning parents to transfer their company to their children while still retaining control over it for themselves. Leveraged buyout (LBO) o A situation in which managers and/or employees borrow money from a financial institution to purchase a business and then use the money form the company’s operations to pay off the debt Employee stock ownership plan (ESOP) o An arrangement in which employees and/or managers contribute a portion of their salaries and wages over time toward purchasing shares of a company’s stock from the founder until they own the company outright
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