HR Help for the Entrepreneur

James T. Berger, Managing Editor
August 2007

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In addition to the financial, legal and marketing decisions that some entrepreneurs are forced to make for the first time in their careers, there are also a slew of “people” decisions that come with the territory.

            The Stanford Graduate School of Business’ Center for Entrepreneurial Studies recently held its second alumni entrepreneur’s reunion.  One of the participants was Irv Grousbeck, a consulting professor at Stanford GBS, and co-director of the entrepreneurship center.  Grousbeck co-founded Continental Cablevision, Inc. in 1964 and also is managing partner of the Boston Celtics.  At the reunion, Grousbeck chaired a discussion and introduced 10 “pearls of personnel wisdom.”  (This Wiglaf Journal article is based on information that can be found at:  http://www.gsb.stanford.edu/nnews/headlines/entrep_firing.shtml.)

Here are his 10 ideas:

1. Follow the golden rule for bosses: “Everything is fine unless I tell you otherwise”

No unspoken messages.  If you have something to say, tell him/her directly. He urged entrepreneurs to level with employees and help them understand the company’s changing needs with frequent discussions.  Be fair and financially generous and keep recruiting new executives.

2. Work with employees before firing them

If an employee is not measuring up, put him/her on your “watch list.”  Meet with him/her every two weeks for about two months.  Either there will be improvement or a documented history of performance problems.  Groubeck admits that he fails to rehabilitate three out of four employees.

3. Pay up for the signature

Make sure every employee who leaves signs a general release.  Grousbeck says this is mandatory and might require an extra several months of severance pay.

4. Never skimp on a background check

Go back 10 years.  Tell the candidate you will be digging and invite the candidate to the same about your company.  Also, have the candidate meet as many people as possible.

       5. Ask the $64,000 question, but do it delicately

Rather than ask a reference to tell about a candidate’s weaknesses, ask: “If I were going to supervise this person, what suggestions would you have for me.”
    

6. Pay more for A people

Grousbeck recommends superior (A level) people be paid 30 percent more than B-level people.

7. Assume that employees will find out each other’s salaries and pay accordingly

“There’s more than cash at stake (when it comes to pay disparities),” Grousbeck said.  “There’s trust.  For $10,000 or $15,000, I don’t want to put my trust at risk.”

8. Learn from performance reviews

Nobody enjoys them but they need to be scheduled regularly.  One entrepreneur at the conference pointed out, “it’s amazing what comes out” (of such reviews.)

9. Hire people who already have a job

New hires have a better chance of working out if they are not between jobs.

10. Use headhunters,  but beware of unwritten rules

Among those rules are that headhunters don’t recruit from companies in which they have placed people.  Ask headhunters whom they’ve worked with so you won’t limit your applicant pool if you hire the wrong headhunter.

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Author
James T. Berger, Managing Editor of The Wiglaf Journal, specializes in both finance and marketing and has spent a number in both the investor relations field as well as an account manager and officer at several Chicago advertising agencies.

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