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Influence of Human Resources on Entrepreneurship Within Organizations
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Careful examination of the entrepreneurial-managerial transition that companies go through as they grow. Looks at the role that human resource management plays in transforming organizations to actualize the vision that originally inspired the company.... More...
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11 Pages / 2475 Words
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Paper Abstract:
Careful examination of the entrepreneurial-managerial transition that companies go through as they grow. Looks at the role that human resource management plays in transforming organizations to actualize the vision that originally inspired the company.
Paper Introduction:
The Influence of Human Resources on Entrepreneurship within Organizations
Introduction
A budding company receives its initial organizational 'shape' from its founder or founders. In the most real sense possible, the creative vision that catalyzes events and individuals, provides the initial entrepreneurial burst that forms the company or organization in question. Any organization, in passing from the conceptual to the actual, moves through an entrepreneurial-managerial transition, in which the momentum that helped form the company must in some part be transferred to organizational realities (Flamholtz, 1986; Roberts, 1987). These realities are manifested in managerial sub-structures, the purposes of which are to
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When acompany is expanding or shifting its priorities, the communication linksbetween important individuals, become blurred or displaced. & Lorsch, J. Evolution and Revolution as Organizations Grow. Also involvedinteractively with other company structures, human resources can help buildand support clear targets, and keep organizational dialogue open (Simons,3/4-95). Steven Jobs, founder of Apple Computer, was suchan individual. With theresultant loss of focus, the roles that individuals understood withincompany structure, formal and informal, become confused. In the first case, within an evolving entrepreneurial organization, orduring the chaos associated with a company trying to change direction, theresulting problems can be very similar. It is awholesale embracing of corporate culture that includes developing aconsensus about the organization's purpose, its scope and process(Rothstein, 1995). 13,1995).Conclusion Entrepreneurship and creativity within an established corporatestructure takes the route of goals established to enhance the companystanding, and thus individuals within the company. Marketforces can answer this more successfully than human resources.The Entrepreneurial Factor The question remains, can human resources influence or allowcreativity and entrepreneurship to flourish in the organizationalstructure? Empowerment can bring thecreative or entrepreneurial aspect of the successful business down to thelevel of the individual; for the company in flux, it may not be as useful. By example, Lotus Development Corporationinstituted a grapevine system, by which anyone in the company, cancommunicate with anyone else to discuss subjects anonymously (Greiner,1972). In order to survive the errors that are bound to occur in such astate, internal structures must be put in place to maintain whatever worksfor that company. Likewise,Jan Carlzon of SAS took the unprecedented step of informing his employeesdirectly, through the use of small booklets, of the changes beingundertaken in the company, and what was to be expected, and his idea provedto be effective (Kao, 1991). A newcompany will not have, nor make the best use of, human resources. In shaping new policy, communicatingerrors in perceived policy, inviting comment, or expressing concern withinthe company environment, human resources can aid by optimizing availablelines of communication (Kotter, 1995). The large corporate environment can be psychologically'downsized' by creating individual units within larger departments, andreward systems can be restructured so that recognition of work well done isperceived on more than just a fiscal level (Kidder, 1981). Englewood Cliffs, New Jersey:Prentice Hall.Kidder, T. (1995). Harvard Business School.Rothstein, L.R. Communication goals must be constantly reset, whileorganizational history needs to be monitored to maintain consistency. March-April.Lawrence, P. Amore broadly based method of accomplishing creative or entrepreneurialchange, is empowerment. Human resources development can make job allocationdecisions based on internal information (Kao, 1991). If human resources can lock these 'smallcompany' ideas into policy, then creativity and entrepreneurship within acompany can be nurtured.The Entrepreneurial Factor within the Established Organization Human resources can therefore aid in the continued development ofcreative enterprises within organizational structures, by supplying thematerial of personal and internal planning techniques. Anyorganization, in passing from the conceptual to the actual, moves throughan entrepreneurial-managerial transition, in which the momentum that helpedform the company must in some part be transferred to organizationalrealities (Flamholtz, 1986; Roberts, 1987). pp. (1985). 8 -88. As important as communications were toimpel employees to follow through, in empowerment, everyone needs to beappraised of what is going on, step by step. 13, 1995). In the interim, empowerment has moved from one level ofbureaucracy to another, like a slowly rising tide of change, eventuallyconvincing individual after individual to join in. Everything, including success, turns on eventualities.In an environment where a corporate business structure has not solidifiedor is in flux, the concept of empowerment may be too broad to impartvision, to communicate roles, or to consolidate change (Simons, 1995). Along with these eventualities should come the idea ofconstructively considering what growth means for the company in question.How can too much growth change the companies focus? These environments fall into two basic categories: theevolving or chaotic organization and the company that has achievedstability. Human resources, in essence, mustbe applied correctly to be effective. January-February.Simons, R. 13.Flamholtz, E. In addition, cross-functional communications adds to the development of individuals within theorganization with diverse experiences and skill levels. (1991). Specifically, the process must flow from individuals like middlemanagers and company leaders. In essence, empowerment tries to getat the 'small business' structure by transferring responsibility, but notreward structure. When profits are rolling in, therelative success of an evolving endeavor can create the opportunity forlapses in judgment. pp. Belief systems must be broad enough to appeal tomany different groups within an organization, such as salespeople,production workers, clerical personnel, and all levels of management(Simons, 1995). For example, the Nucorcorporation, a successful steel-making company has it's one-story companyheadquarters in Charlotte, North Carolina. (1995). New York, McGraw Hill.Kao, J.J. Once again, thehuman resources department must be prioritized and empowered to take thenecessary steps.Human Resources: The Nuts and Bolts While the purpose for departments like shipping and receiving may seemclear, all departments must be staffed by a kind of central intelligence.Adhering to the core purposes of human resources requires a strategy thatcontributes to the organization and the individuals within. Human resources, ifproperly established in the beginning, can provide the fodder necessary tonourish an entrepreneurial attitude. In Mayof 1992, James Olsen, the general manager of Hewlett Packard was given theentrepreneurial task of moving his microwave division into the coming hotmarket for digital video communication devices. Homewood, Ill.: Richard D. This includes use of the companynewsletters, suggestion boxes and grapevines, plus the socializationinvolved when new employees are hired on. Human resources also must provide internalcommunications via company newspapers, informational meetings, grapevines,and organizational background provided to new recruits. (1984). Theunderlying logic in all of this, is to encourage the kind of environmentthat spawned the organization in the first place. If the human engineering is correct, the desired effect will ensue.In the most general sense, human resources can influence, in a supportiveor nonsupportive way, a creative flux within an organization. (1986). In Harvard Business Review. How to Make the Transition from an Entrepreneurship to a Professionally Managed Firm. Jossey-Bass, SanFrancisco.Kotter, J.P. The middle manager sits at the apex of a triangle, with hisentrepreneurial task at one corner, and the organizational context of thecompany occupying the other corner. It is usually theleadership of management or corporate champions that directs the existingcorporate structure towards accomplishing these goals. Soul of a New Machine. Reportedly, whenemploying communication techniques, companies routinely underestimate by afactor of ten, the effort needed to create change (Kotter,1995). It requires of human resources the skillsand experiences inherent in the process of careful staffing, careerplanning, and cross-functional communications that develop diverseexperience and skill levels. In essence,the managerial structure of any company is paramount in actualizing thevision of the founder(s).The Business Environment Before undertaking the role and subsequent effect of any humanresources department, the environment that the department is operating inmust be understood. Specifically in a supportive role, human resources can beexpected to communicate core values and corporate mission. Just as in afunctional human resources department, several plans or contingenciesshould already be in place to expect the unexpected in terms of marketforces, temporary losses, and competition. In the case of company newspapers, human resources can, through asocially excepted means of information dissemination, inform everyone ofwhat is going on company wide. He moved through the various layers of company bureaucracy,carrying the message to all involved, and getting all involved. BibliographyBusiness Week. From Burnout to Balance. The relative importance of the human resources department, in anygiven company, cannot be underestimated. Careerplanning and internal human resource planning can achieve a sense ofcontinuity and rationality, when organizations must stand the buffeting ofmarket changes. In other words, flexibility isthe watchword. It does not operate ofand by itself. Lastly, the abilityfor those in human resources to consider problems in a 'small company'frame of mind, to cut redundancy, is important (Greiner, 1992). However, like a well-made car,all the internal workings are dependent upon each other to operate withefficiency. Inorder to allow continued entrepreneurship within a stable environment, theproper environment must be prompted in various ways. Within the twoscenarios already discussed, this involves planning for perceived needs,appraisal and compensation of employees, improving the work environment,which includes monitoring and enhancement of the relationship betweenemployees and staffing (Kimberly, 198 ). In the second case, the stable business environment creates differentsorts of problems. (1981). The office is staffed by 23people, and guests are greeted at a lunch counter across the street(Business Week, Feb. When a company is expandingrapidly, or attempting to reallocate its strengths and resources, it canfall prey to several difficulties. On theother hand Nordstrom's salespeople provide exceptional customer service, inthat they are selected and trained to act in an entrepreneurial manner.The difficulty with empowerment is that the boundaries between corporatecontrol and individual responsibility need to be carefully monitored, inorder to be constantly effective (Simons, 1995). 2 -31. Companies thatexpress a chaotic state of growth, whether through recent success or a dueto market pressures, are already riding the very edge of entrepreneurialenergy. In some sense, the success of such a move is much moredependent on the efficient operation of human resources, than themanagement or leader lead changes. & Dvorak, J. Go-Go Goliaths. These structures include, among other things, a workinghuman resources department. Lastly, and mostobviously, unless adequate emphasis is given to the role of the humanresources department before the onset of these problems, the road back toorganizational health is at least, problematic (Jaffee, 1985). Hypergrowth, The Rise and Fall of the Osborne Computer Company. It can not, forinstance, take the place of an organizational champion like jobs, or createorganizational structures outside of itself. Insome cases, the need for a consensus of vision is blocked by individualsused to acting in old 'rear guard' action, safeguarding their jobterritory, because a sense of personal security is more salient thanoverall company security. First of all recruiting individuals who can hit the floor running isimportant. March-April. 59-67. As empowerment seeks to harness the abilitiesof all, moving forward in a productive lock-step, decentralization ofdecision making, using the same individuals that human resources has hiredand acculturated, sometimes works better. In either case, there are known, developmental problems thatcan be anticipated and dealt with (Kimberely, 198 ). The Entrepreneurial-Management Transistion. In terms of socialization, new employees need tobe taught the original vision, values, and priorities of the founders, inorder to 'plug' into the company's cultural environment. Anestablished company will hopefully have the experience and know how to usehuman resources to its best advantage. Inadequate long-term planning is passed over in lieu of short-term, emergency planning (Osborn & Dvorak, 1984). Josey-Bass, san Francisco.Greiner, L. Also, a realistic approach to growth in any successfulbusiness ought to be in place. If employees believe, by watching the actions of seniormanagement, that the creative tasks involved are viable and conceptuallycan be tied to existing company policy, then success is probable. The Empowerment Effort. Organization and Environment. This not to say that company leaders ormiddle managers always succeed. The leader sits atop the same apex as the middle managerdid, and employs the same aspects of human resources as before. When a company is on therise, or in transition, a kind of 'group think' can evolve, which isolatesthose in command from the changing realities of the marketplace. He or sheuses whatever communication routes that are available to drive homeempowering messages, evoking the company culture, and championing the taskahead. Boston, Little, Brown.Kimberly, J. Managing Creativity. This is also how the power implicit in a company's humanresources department is applied that determines (and with what success) howthe creative and entrepreneurial currents within are directed. (1987). The process may taketoo long to succeed (Rothstein, 1995). (1995). Human resources is an important organ in organizationallife, but not necessarily the nexus of change. In the Harvard Business Review. The belief systems, that shouldalready be inculcated in the company structure, must operate off theactions of managerial decisions, and pull the ends of the triangle toward awell-enunciated goal. (1963). The ultimate task for a company leader, is to create slack, bystirring the troops. In the most real sense possible, the creative visionthat catalyzes events and individuals, provides the initial entrepreneurialburst that forms the company or organization in question. These realities are manifestedin managerial sub-structures, the purposes of which are to hold the line infollowing the inspiration for forming the original company. Company newsletters are a good example ofan internal cultural tie. The process is very similar when an entrepreneurial leader takes thelead in a company making a shift or trying to accomplish some internalcreative task. Within an evolving entrepreneurial organization, or a stable companystructure in which new entrepreneurial ideas are taking shape,communications are a key concern. The process is unwieldy, andprone to failure. Early warning systems, such as suggestion boxes and grapevines givemanagers and human resources managers a feel for what is really going onwithin the organization. Empowerment implies that every individual in anorganization has more responsibility for towing the company line. At Sportsgear, the empowerment movement was undertaken to gain moreinformation on customer needs and achieve a higher level of customersatisfaction. Irwin.Osborn, A. Within an eleven monthspan, Hewlett Packard was manufacturing and delivering video computers toPacific Telesis, BellSouth, Southern New England Telephone, the governmentof Singapore, and Time-Warner's cable group in Orlando (Business Week, Feb.13, 1995). Lastly, in the nuts and bolts area of human resources planning, thesubject of rewards must be addressed, The key question must be, issuccessful risk taking being rewarded in an appropriate manner? Granted, this an extreme example, but an establishedorganization with a well-functioning human resources department, and amiddle manager with a strong sense of mission, should be able to move withthe same approximate speed. In HBR, July-August,The IBM Fellows Program, HBS Case Services, #9-488- 14, Boston, Mass.Jaffe, D. Human resources exists in a supportive role, and can amplify theenergies and vision of individuals already at work. Feb. Cost cutting efforts are ignored in the heat of themoment, or decisions that need to be made in a well-thought out manner, arehurried. As a human resources development tool, this allows a give and takeof information usually present in only small companies. (1995). At Nordstroms, a company well known for itsindividual attention to customer needs, empowerment had caused floormanagers to pressure individual clerks to under-report hours worked,incrementally bringing the overall per store profit margin up. Control in an Age of Empowerment. The Organizational Life Cycle. The nuts and bolts of humanresources responsibilities revolves around these core purposes. A stable company environment, whereentrepreneurial goals are being set by intraprenerial individuals, requiressome of the same backstopping as the nascent company. Leading Change:Why Transformation Efforts Fail. But human resources can only assumean intermediary role, as the wire that carries the current to an electriclight. However necessary human resources may be to a company trying toaccomplish internal change, it is not always sufficient or successful. As culturecreates the environment for work, new employees must assimilate the companyline quickly, and blend in (Lawrence & Lorsch, 1963). Builder's Emporium was temporarilyrescued, only to be lost in a more competitive market. People that are self-starters and require as little training andsupervision as possible, are a boon to the whole company structure. If human resources has had to gear up inhiring more employees in a rushed environment, it should have occurred tothose in human resources that an end, or switch in direction willeventually come. By somehow showing the combined workforce, that thetask ahead is possible, that the resources and time needed are available,things begin to evolve. (1972). In Harvard Business Review. In following established policy or mission, human resources canact as the corporate rudder or as the corporate brake. At Nucor Corporation, theindividual plant managers are cleared to make many decisions on their own.Rivalries between the 21 existing plants, takes the place of middlemanagement or company leader as the goal-setters (Business Week, Feb. The Influence of Human Resources on Entrepreneurship within OrganizationsIntroduction A budding company receives its initial organizational 'shape' from itsfounder or founders. Berkeley, Idthekkethan Publishing Company.Roberts, M. The corporatechampion can revitalize a staid work force, thus empowering individuals tofollow through. Within this context, theentrepreneurial spirit can carve out new territory within establishedorganizations (Simons, 1995) . (198 ). One of the chief roles of human resources is to provide personal thatcan competently do the job. The function of human resources isestablish a consistent flow of material and planning techniques to assistthe corporate structure, not run it. Using thevehicles of company newspapers and company functions, belief systems andthe boundaries of empowerment can be communicated. pp.
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