Entrepreneurs find it hard to develop an organisation of professionals. Four practices that can help them make the leap

1. TEAM-BUILDINGANAGEMENT
THE
PROFESSIONAL EDGE
Entrepreneurs find it hard to develop an organisation of professionals.
Four practices that can help them make the leap
102 INDIAN MANAGEMENT — MARCH 2010

2. TEAM-BUILDING
BS FILE PHOTO
AMIT GARG AND VINEESH CHADHA are generally good man-managers. Yet, very few
entrepreneurs are able to attract the right talent
M
ost entrepreneurs are inherently smart and build the right kind of organisation.
people. They recognise that creating Management literature provides few insights
a high-performance organisation in into this issue and does little to help the entrepre-
today’s environment will require them to neur cross this chasm. It is easy to say that a com-
build additional competencies. They also pany needs to develop a people perspective — but
understand that talent acquisition requires difficult to say how one starts. In our interactions
investment in people and formal processes and with several family-run and entrepreneur-driven
systems. They have built their businesses by dint organisations, we find that there are four practices
of hard work and relationship management, and that can help companies make this leap.
TO SUBSCRIBE TO INDIAN MANAGEMENT-SMS ‘IMM’ TO 57007 INDIAN MANAGEMENT — MARCH 2010 103

3. TEAM-BUILDING
Many professionals
are able to self-select
What are we looking for? comes in. “Letting go” always sounds easier than
themselves for a role
Clarity of objectives helps. While entrepreneurs it is. One of the most common grouses that pro-
are good at recognising the need for a broad ca- fessional managers have is that the owner rarely
pability, they often neglect to sharpen their re- relinquishes control — and continues to play a
quirements. Capability gaps can often be described significant role in their function. The flip side is
in broad terms such as marketing or human re- that few entrepreneurs feel comfortable letting go
sources management (HRM). In practice, each of of a function till they are confident that it is in safe
these can have several sub-specialisations — and hands. The other extreme, where the owner com-
a person who knows one part pletely abdicates the role doesn’t
is not necessarily good at an- necessarily work either. There is
other. For instance, HRM may While entrepreneurs a middle ground — and it is im-
mean recruitment, training, are good at portant that there is clarity on
employee engagement, com- this front. The middle ground
pensation and benefits or per- recognising the need needs to be discussed,agreed and
formance management. Each for a broad capability, detailed out by both parties —
of these is a different area of they often neglect upfront. This prevents a lot of
specialisation. Not thinking heartburn at a later stage.
through the specific require- to sharpen their Finally, there needs to be clar-
ment can sabotage the process requirements ity on the measures that will be
from the outset. It is common used to measure performance for
for a business owner to say the new professional managers.
that they need an “HR person” — when they really These metrics must be discussed with the person
need a recruiter or administrator. This failure to at the time of the interview process itself. Many
detail out the requirements is the primary and professionals have a good idea about their capabilities
largest issue for most organisations. and are able to self-select themselves for a role. In
The second,but no less critical,issue that needs case they feel uncomfortable with the metrics, they
to be thought through is the role of the owner/family are likely to object, or attempt to dilute the issue, at
members after the induction of the professionals. the interview stage itself.This ensures that there is
Typically, the owner would have been playing some a significant “expectation setting” that happens for
part of the role — till the time that the professional both the parties and ambiguity levels come down.
104 INDIAN MANAGEMENT - MARCH 2010

4. TEAM-BUILDING
Set the stage internally pears suitable” for the job, it is critical to conduct
In family-run organisations, the hiring of profes- a systematic search process. A simple thumb rule
sionals has multiple implications. It often means is to interview at least five people for every senior
a subtle shift of roles from family members to em- manager hired into the company. By doing so, one
ployees. This can be a delicate issue at the best of gains a better understanding of the options avail-
times — and needs to be handled as such.Also, the able and the suitability to the organisation’s re-
induction of professionals often leads to an in- quirements. Secondly, one must move towards a
crease in the cost structure, while the revenue im- multi-interview process — with a minimum of four
pact takes a longer time. The concurrence of the interviews for senior roles.The owner group should
family members cannot therefore be taken for be active participants in this process.A recruitment
granted. It is critical that the family members are error takes anywhere between six months to two
aligned to the objectives of the leader and put their years to be resolved — so it is better to invest the
support behind the professional managers. With- time up-front and try to maximise the possibility
out this support, the out-
sider will be doomed to fail-
ure. Otherwise, the person
finds that he has multiple
dotted-line reporting rela-
tionships. Some profession-
als start adopting a safety-
first approach towards
everything — making sure
that the family is happy,
whether or not they them-
selves believe in the deci-
sion. Others get frustrated
and get into a negative loop
of cynicism and under-per-
formance. Very few are able
to manage well in such an
environment.
It is also important that
many “hygiene” issues need
to be addressed before in-
ducting senior talent. The
informal mechanisms that
have become ingrained into
an entrepreneurial organi-
sation can become a nui-
sance to the seasoned man-
ager who has become used
Detailing the
requirements is
to certain things being “taken care of”. Simple is- of success. All of this is a divergence from exist-
one of the largest
sues around HR policies, reporting relationships ing practices for most entrepreneurs — who often
issues for most
and office infrastructure can become irritants. hire on the basis of their existing relationship with
Many professionals talk wistfully about how things a person and the quality of references or recom- organisations
were in their old company, and how different (read mendations from other people in their network.This
difficult) it is in their current environment. is a useful practice, but inadequate when trying to
change the DNA of an organisation. Devoting ex-
Hire what you want, not what you get tra time on the interview process has other bene-
When looking out for fresh talent, it is important fits. It allows the entrepreneur to spend time co-
to expand beyond the traditional recruitment creating the agenda for a candidate.We have found
sources. Instead of hiring the first person who“ap- this to be an especially useful practice. It allows
TO SUBSCRIBE TO INDIAN MANAGEMENT-SMS ‘IMM’ TO 57007 I N D I A N M A N A G E M E N T -- M A R C H 2 0 1 0 105

5. TEAM-BUILDING
the entrepreneur to understand the candidate’s ca- moured) compensation. As a result, many man-
pabilities a whole lot better, and gives the candi- agers are quick to abandon the long-term objec-
date a realistic assessment of the organisation he tives that they were brought in for. Instead, they
is looking to enter and the expectations from him. focus on justifying their inclusion and producing
some short-term operational results. This has its
Ensure success merits — but is often misaligned with the entre-
It may seem contradictory, but an entrepreneur preneur’s objectives. The professional is brought
must find ways to ensure initial success for the per- in to create new machinery, not become a cog in
sons they hire. For organisations that are making the existing one. One of the most effective ways to
their first steps towards professionalisation, this resolve this is to create some short-term “wins”for
becomes even more critical. There often tends to the newcomer — allowing the person to strengthen
be scepticism on the value of an outsider in the se- their internal position while taking on more mean-
nior role, and at least some envy over the (ru- ingful long-term objectives. At the same time, the
106 INDIAN MANAGEMENT - MARCH 2010

6. TEAM-BUILDING
entrepreneur must take time to talk to the exist- nificant challenge — and most entrepreneurs have
ing team and clarify the role of the new managers. struggled to make the leap. But for those who have
It must be clear how the newcomer’s role is dif- managed this transition, the rewards more than
ferent from the existing team’s roles and how that justify the effort. IM
role fits in with the future direction of the com-
pany. A frank discussion around the imperatives
Amit Garg (amit_garg@mxv.in) and Vineesh Chadha
ABOUT THE AUTHORS
and challenges of professionalisation can help cre-
ate organisational buy-in and support. This sup- (vineesh_chadha@mxv.in) are directors at
port may prove to be the critical success factor in MXV Consulting.
the eventual analysis. MXV Consulting is a strategy and management consulting
The important thing is to stay committed to the firm with a focus on building sustainable competitive
path even if the first effort does not succeed. Cre- advantage and helping clients become industry leaders.
ating a professionally driven organisation is a sig- www.mxv.in
TO SUBSCRIBE TO INDIAN MANAGEMENT-SMS ‘IMM’ TO 57007 I N D I A N M A N A G E M E N T -- M A R C H 2 0 1 0 107