Entrepreneurial Firms As HR Wastelands (Part II)

Our last blog (http://www.stonewoodgroup.com/blog/article/139/) described the majority of entrepreneurial firms as decidedly cramped spaces for HR professionals to stretch their functional legs. However, there are circumstances that can nudge organizations to engage more meaningfully with the function. Here are three:

1. When labor markets are highly competitive

It was recently reported that in the last quarter alone Google hired an average of 28 people per day. That is an impressive number given Google’s standards of excellence and the reality that it must compete with the likes of Apple, Facebook, LinkedIn and scores of other firms for the right to hire high end talent. For organizations such as these, escalating bidding wars is a dangerous and expensive hiring strategy. Such firms pursue more sophisticated initiatives aimed at becoming workplaces or choice. They put together sophisticated benefits, work environments, development programs, career paths and corporate cultures. This requires HR leadership of an altogether different calibre.

2. In instances of High Turnover

It is not uncommon in founder-led firms to find entrepreneurial brilliance offset by certain less-than-lustrous personalities and leadership styles. These are ‘special’ people who can be their firms’ best and worst assets. Turnover can be high in such organizations, and if it becomes problematic, more seasoned, sophisticated HR professionals are often sought to stop the bleeding. The key to success in such roles however is not intimacy with HR best practices but rather proficiency in gaining the confidence of, and influencing, the entrepreneur at the center of the organization and its turnover woes. Few entrepreneurs boast the self-awareness to recognize this and thus hire the wrong HR resource for the job. For those ill-fitted executives the room such environments provide to stretch their legs is illusory as the likelihood is high that once stretched their legs will be chopped off.

3. Scaling challenges:

Finally, more sophisticated HR is often introduced when a high growth company starts to trip over its existing processes and corporate culture. For example, the founder of GAP Adventures can regularly be found in the press regaling his firm’s corporate culture and the competitive advantage it offers. Among its well-publicized ‘policies’, GAP staffers throughout the organization are able to vet hires for culture fit, including the most senior hires in the firm. If candidates stumble anywhere along the selection gauntlet they are rejected, no matter if the founder himself champions the candidate. Such consensus based decision-making, noble as it may be, brings with it scaling challenges. As acknowledged in a recent article, the firm has been attempting to hire a Vice-President of Marketing for the past 6 months and has gone through more than 600 resumes. Despite several candidates being deemed ‘acceptable’ to the founder/CEO, none have been able to successful navigate the full selection process. And though the absence of this marketing resource is becoming a competitive liability for the firm, the founder refuses to intervene, insisting that the integrity of the company culture must prevail. And thus this firm, whose founder considers HR to be ‘evil’, enters a phase where the scalability of some of its practices are in serious question. They are not the first firm in the world to deal with such issues and many a very competent senior HR executive could help. Sooner or later something will have to give…

About the Author

Robert Hebert is the founder and Managing Partner of StoneWood Group Inc., a leading executive search firm in Canada. Since 1981, he has helped firms across a wide range of sectors address their senior recruiting, assessment and leadership development requirements.

Contact Robert by email at rhebert@stonewoodgroup.com or call (1) 416-365-9494 EXT 777