Thursday, 19 October 2017 16:24

The Most Successful Startups Have Hands-On Founders


Startup founders with a hands-on management style are more likely to retain employees and see their firms thrive, new research shows.
The results are particularly applicable to knowledge-intensive technology firms, where human talent is the main resource that affects firm performance, the researchers say.

Founders are usually very busy people—they recruit key employees, raise funds, find a board, develop partnerships, set strategy, and design the organization, to name a few responsibilities. What often falls by the wayside as founders get pulled in all directions, according to the researchers, is intensive mentoring and monitoring of staff.

“Because many young companies face both technological and market risks, founders may prioritize dealing with these challenges rather than the more mundane aspects of human resource management,” the paper says. “Our findings suggest that … more intensive people management is a worthwhile investment of a founder’s time.”

Effective human resource management is more than just keeping the paperwork flowing. “You also need to focus on the strategic part of managing people to make sure they are working on the rights tasks, that they’re getting the feedback they need, and they’re happy in the firm so they’re less likely to quit,” says Rembrand Koning, an assistant professor in Harvard Business School’s Strategy Unit who was a coauthor of the study.

"Our findings suggest that … more intensive people management is a worthwhile investment of a founder’s time"

Koning’s working paper, released in May, is titled Learning to Manage: A Field Experiment in the Indian Startup Ecosystem. The coauthors were Aaron Chatterji and Sharique Hasan, both of Duke University’s Fuqua School of Business; and Solene M. Delecourt from Stanford’s Graduate School of Business.

In studying 100 founders of Indian software companies, they found that those who exert more hands-on management—keeping close tabs on workers with regular evaluations, setting expectations, creating shared milestones, and tracking progress toward key goals—run better-performing companies.

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