Entrepreneurial Edge

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In this first start-up, entrepreneurial stage, the organisation is characterised by informality and contingency, with an emergent strategy, fluid structures, flexible job roles and tacit knowledge exchange. There is usually no formal human resources role in this stage; instead, people management issues are dealt with by the owner/entrepreneur.

Learning is mainly experiential and on the job. There is an emphasis on the salary side of reward, with rates decided by the owner, perhaps supplemented with share options or equivalent, but benefits at this stage are unlikely apart from legal requirements. The owner’s vision and values drive practice.

At this stage, people’s engagement tends to be largely intrinsic, coming from the excitement of working for an entrepreneurial company, the opportunity to be involved in different aspects of the business, and both personal and organisational achievements. Recruitment is ad hoc, based on immediate skills requirements. However, applicants’ attitude also plays a large part in recruitment decisions, in particular if they are willing to be flexible to meet the changing needs of a start-up business

Consistent with existing theories of organisation growth, an inflection point is reached as the organisation gets to a size where a level of formalisation is required, with the owner/founder no longer able to manage effectively in an informal way. This inflection point marks a critical stage for people management: are people management activities retained by the owner/founder, or a senior leader, more formally, or delegated to an existing staff member, such as the office manager? Is an HR professional hired at this stage and, if so, in what capacity? What does the owner/ leader, or a senior leader, expect from HR? Do they know the potential that HR could add to the business?

Wherever responsibility for people management lies, it becomes clear that some degree of policies and processes are required to avoid duplication of effort and to ensure alignment of people’s work to organisation goals and direction. These issues need to be effectively managed to sustain organisational performance.


Entrepreneurial Edge Tipping Point and Useful References
Summary of the phase In this start-up, entrepreneurial phase, people management issues are dealt with by the owner/entrepreneur, with no formal HR role. The organisation is characterised by informality with an emergent strategy, fluid structures, flexible job roles and tacit knowledge exchange.
Systems and processes Absence of systems and processes. Operating on tacit knowledge means consistency of output is an issue.
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Resourcing and talent Talent contingency: “there are key skills we need to buy in to get those business off the ground”. Need to recruit operational people quickly as business takes off.
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Reward Contingent reward: emphasis on salary side of reward, with the rate for the job decided by owner. With different employment arrangements, pay may be ad hoc and risk-based. People desire more certainty as the organisation grows.
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Learning and development Experiential learning: people learn through doing and refine approaches to suit the context. Speed and consistency of training for operational staff becomes paramount.
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Vision and values Owner’s vision and values drive practice: the owner/leader’s vision for the organisation and personal values guide both the “what we do” and the “how we do it”. The owner/leader is not able to uphold the values and promote the vision alone with a larger workforce.
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Engagement Intrinsic engagement: people are engaged by the entrepreneurial and challenging nature of the business and a desire to succeed. The entrepreneurial ‘draw’ becomes diluted as the organisation grows.
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Organisation and job design Flexible job roles within a loose structure: ‘everyone mucks in to get the job done’. Chaotic operations with duplication of effort.
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Communication Informal communication: face-to-face and ad hoc. Personal interaction with the owner/leader becomes less frequent, making communication sporadic and inconsistent.
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From our case study research we suggest six insights which we believe are important to support the sustainable long-term performance of SMEs, with implications for practice. Under each insight we pose questions for you to consider – whatever stage of transition your organisation is in – about whether your current HR practices and approaches are contributing to the long-term performance of your organisation. And there is no one-size-fits-all solution, as the most appropriate courses of action will depend on your organisation’s individual situation.

As mentioned in the introduction to this report, we tested out our six key insights for practice both through our case study research and with local SMEs at various events and forums in Singapore (attended by more than 200 SMEs). The feedback from these local organisations was that the insights largely resonated with their experiences. However, we were careful to also remain open to any new and different findings, and we did uncover some subtle nuances to the insights, which we have incorporated into our explanations of them below.

1 – Anticipation is key: readiness and relevance will determine success

To be truly sustainable, it is not enough to just understand the current business priorities and the practices that will enable you to deliver today. Anticipation of the next stage of organisation transition, through having a deep understanding of your organisation’s context, strategy, vision and values, will enable you to revise your current approaches and avoid hitting a ‘crisis point’.

  • What is your organisation’s history of change and transition, as well as your future transition scenarios?
  • What are the limits and the opportunities of your current HR approach that need to be addressed under these scenarios?
  • How will you maintain close relationships with your stakeholders through the different stages of organisation transition, hence preserving your understanding of operational issues?
  • To what extent are people in the business actively scanning the external environment to anticipate trends and opportunities?

Atlas is adopting an interesting approach to talent sourcing, creating an external talent bank.

They aim to establish an employee outreach programme, with employees visiting institutions and schools as Atlas ambassadors.

The senior HR executive explains:

‘We know that recruiting for talent is going to be an issue in years to come so we need to continue to build our employer brand now, making sure people know about us and entice them to want to join us. We know word of mouth is a powerful way to let people know about us as an organisation and our current employees are our best ambassadors. Already many new people join us because of a personal recommendation.’


2 – Organisation values and purpose need to be the constant bedrock of the business

Clearly articulated organisation purpose and values set direction and steer the organisation. But if they are not vibrantly ‘part of what we do’, they can become diluted and even disappear over time. Relentless reinforcement is required to preserve the owner/leader’s founding vision and values, which form the bedrock of the organisation.

  • How confident are you that employees identify with your purpose and are living your values? How do you know?
  • To what extent are your values threaded through your people management processes?
  • How will you enable employees to continue to connect with your purpose as your organisation changes and transitions?

The next few years are set to be an especially exciting time for Home-Fix as the company embarks on an ambitious expansion throughout the region.

‘As it continues to grow, the company is determined to remain faithful to its founding values of diligence, integrity and service excellence. It is also essential that customer centricity remains the guiding philosophy at Home-Fix, continuing to meet and anticipate the changing needs of its customers.’


3 – Skilful alignment of people management insight with leaders’ aspirationsis a critical HR challenge

A deep understanding of the owner/founder’s vision and their expectations of HR’s role needs to be coupled with HR’s detailed diagnosis of both current people management issues and future challenges. HR needs to skilfully co-deliver both of these agendas to achieve sustained organisation performance. The extent of HR’s task will be dependent on the extent of leadership appetite for the more intangible HR issues at different stages of organisation growth, for example engagement and organisation culture.

In May 2011 Hoe Shu Hui joined Mothercare Singapore as the first HR manager.

‘What attracted me to join the company was the executive director’s belief in the importance of good people management. This support made it easier to drive initiatives that I knew were necessary and would support the company in the long term.’

As an organisation expands and more leadership and management layers are added, a further challenge for HR is to then ensure managers appreciate the importance of the people management aspect of their role (not just the technical aspects) for the organisation’s long-term performance.

  • How aligned are the HR and leadership expectations about HR’s role? Have leadership expectations shaped your role in a way that inhibits or enhances the potential for HR to support sustainable performance?
  • What people management imperatives are on your priority list that are not on managers’, but are essential for long-term performance? And, most importantly, how will you get their ‘buy-in’?
  • To what extent are you viewed as ‘a credible business person who happens to know about HR’? How do you know?

Home-Fix’s graduate programme has been designed with a rotation into HR, which means graduates take HR insight with them into other roles they rotate into.

‘We currently have a graduate working for us who was in an HR department for a year and now she is reporting to me as the business development executive. When I talk to her about franchising and other things, she is able to inject the HR element of it.’ Founder and managing director


4 – Simplicity of structure and purity of process preserves innovation and entrepreneurship

The temptation to increase structure and process as an organisation increases in size can result in an overly bureaucratic organisation, both stifling agility and undermining the entrepreneurial spirit on which the organisation was built. Finding the right balance between structure and fluidity is a challenge at each stage of organisation transition, but ultimately the need for processes will be less when organisational values are truly embedded.

  • Are your processes and procedures consuming employees’ freedom and autonomy? How often do you evaluate this balance?
  • Does the level of trust in your organisation, and the extent your values are embraced, support or prevent having looser processes?
  • To what extent do people feel empowered to innovate and drive change in line with business goals?

Hoe Shu Hui, HR manager at Mothercare Singapore, did an audit of the current HR policies and practices in place to identify the priority areas to focus on.

One such area was job descriptions:

‘I think that at this stage of the business, some sort of structure and technique needs to be in place, but at the same time we don’t want it to be too rigid. More structure gives the company stability, but we need to still be flexible enough that we can discuss things, make a decision and still make changes to meet business priorities.’


5 – Sustainable growth involves striking a balance between preservation and evolution

As the organisation transitions between the proposed stages and the operating context changes, it is often necessary to let go of processes or aspects of the organisation’s culture that no longer support its vision and priorities. Rather than being sentimental about ‘what has always been’, don’t be afraid to bring about change for business improvement.

In 2013, Mothercare Singapore’s attention will focus on business processes and, in particular, automating processes where appropriate and applicable, through systems such as enterprise resource planning and customer relationship management.

In the past everything has been on spreadsheets, but automation will increase productivity and accuracy.

‘For example, rather than employees clocking in and out via spreadsheets, the company are looking at investing in thumbprint scanners, as well as new payroll software.’

If organisation transition is associated with, for example, an increase in workforce size and the scale and scope of operations, it’s important that attention is dedicated to identifying the aspects of your organisation you want to retain as you grow. Selfish retention of a ‘one organisation’ mindset, characterised by knowledge-sharing, crossfunctional working and being close to the customer, is vital for sustainability. It is these attributes of SMEs that larger organisations can strive at great cost to embed.

  • Which parts of your culture are truly adding value and which have become part of ‘the way we do things round here’ but may undermine achievement of business priorities?
  • When was the last time you dropped a process that was no longer appropriate for your organisation?
  • What are the advantages of being your current organisation size that you don’t want to lose?
  • How do you maintain employees’ engagement with the business through organisation transition?

2006 was a particularly exciting time for Atlas, with three further showrooms opening at Millenia Walk, Builders Centre and Plaza Singapura.

However, with growth came the accompanying challenges of how to ensure the culture of each location was consistent with the founding vision and values of the company.

‘When a new showroom was opened, a senior person in the organisation, who understood the principles of how the company operates and the high standard of customer service that was required, would be asked to lead the new team.’


6 – Look beyond immediate operational issues and take the opportunity tolay the organisation’s cultural foundations for the future

When presented with an issue, putting processes in place may solve it in the short term. However, it is important to consider whether a process-driven response alone will support the longer-term goals of the organisation. With each presenting issue there is a golden opportunity to look beyond immediate solutions and build on the organisation’s cultural foundations. For example, when putting recruitment processes in place, there is an opportunity, at the same time, to make sure you are defining ‘cultural fit’ and identifying long-term skill requirements as well as the immediate technical skills needed.

  • How often do you put a process in place and then move on to the next challenge?
  • And when did you last put a process in place without considering if it was the right thing to do for the organisation in the long term? Did the process truly address the underlying issues?
  • Thinking about a current issue in your organisation, what are the opportunities for going beyond process to develop the organisation’s culture?

Serene Tan (HR manager at Jason Marine) explains,

‘In the past, we focused more on the competency interview rather than the values. But we see that we have a unique culture and need to recruit the right person for our culture and values. This approach also helps retention so we can hold onto our key talent, making it easier to move forwards, rather than having a high turnover which chastises operations.’

Home-Fix have been creatively looking ahead and considering their long-term skill requirements, making learning and development an embedded part of their culture.

By 2011, Home-Fix staff had been undertaking the WSQ (Workforce Skills Qualifications) national credential training created by the WDA (Singapore Workforce Development Agency) for quite a few years. The company decided it would be beneficial to become a retail WSQ in-house approved training organisation so that employees can complete the training in-house at Home-Fix.

‘When staff have completed the training to the correct standard, Cheong Kee (founder and managing director) issues them a certificate bearing the ATO and WSQ logos, which are recognised across the retail industry.’

In addition, because in a retail environment it can be difficult for store managers to release shop-floor staff for training, Home-Fix decided to invest in an e-learning approach, making training more flexible around employee and business needs. Home-Fix took part in a pilot programme, ‘HEARTWARE: The Game’ that involved providing five stores with a tablet loaded with training applications. Sales in the pilot stores increased by 4.3% a few months after the training programme was launched.