Organizing Human Resources in a New Company

Imagine that you are considering starting your own firm. You’ve been contacted by a college acquaintance – a brilliant biology student-who tells you that while in graduate school she developed a procedure in the lab that she believes has considerable commercial potential. This classmate makes it clear that she has little interest in or expertise at managing people, and she wants you to join her in founding a company in which you will handle the management chores and she will be responsible for developing the technology and product applications. You’ve always wanted to get in on the ground floor of such an entrepreneurial venture, and you are convinced this acquaintance has the sort of brilliance that could lead to tremendous success. So you decide to think hard about her offer.

Needless to say, there are lots of things you’d better start thinking about concerning product development, financing the venture and managing cash flow problems, and (perhaps somewhere down the road) production and marketing.

If you have no interest in ever building your own company or working in a start-up, there are some very good reasons, both pedagogical and practical, for looking at human resource management in young emerging organizations. First, one can be led considerably astray when the theory, research, business press articles, and managerial testimonials available to guide you are all based exclusively or primarily on the experiences of relatively large, long-lived organizations, as is true in the domain of human resources management. There is simply much more information available about the human resources practices and performance of established enterprises than there is about new ventures, and many popular and influential management books have sought to derive broader insights and principles by examining the characteristics of companies that have remained successful over long periods of time. Those studies can be illuminating, but they have some drawbacks from both a scholarly and a managerial vantage point.

From a scholar’s perspective, the danger in drawing inferences from long-lived or seemingly successful organizations is that one typically lacks information on the enterprises that have failed over the same period. One suspects, for instance, that the vast majority of successful firms have had chief executives, and a large number no doubt have had mini-blinds on their office windows. But one would be reluctant to conclude that these characteristics contribute to organizational success, particularly because it is quite likely that most firms that failed over the same period also were led by CEOs and had mini-blinds on their windows.

From a managerial and policy perspective, studies of leading-edge human resources practices in well-established corporations are also of limited value. Even if such studies can cast light on effective human resources management in other large corporations, they are of less help to the entrepreneur wishing to draft a human resources blueprint for a new organization or for the manager striving to achieve excellence in a smaller, emerging enterprise. Moreover, the vital role that small, young, rapidly growing organizations play in generating new jobs within the economy has been widely noted, which underscores the importance of understanding human resource management in emerging companies for those concerned with employment policy and economic development.

There is another important reason for looking in some detail at the evolution of human resources management within young emerging organizations: It provides a powerful lens for examining the organization. It is stressed the importance of crafting personnel policies that are closely aligned with the organizational context and that display strong internal consistency. It is noted how organizations can benefit by structuring employment relations that leverage the cognitive and cultural “baggage” or expectations that employees bring with them from other social roles and experiences. Examining the birth and early evolution of employment practices in new organizations can provide important insights into all of these processes.

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