FRIENDS AND STRANGERS: EARLY HIRING PRACTICES AND IDIOSYNCRATIC JOBS
Howard E. Aldrich
CB #3210 Hamilton Hall
Chapel Hill, NC 27599-3210
We examine how entrepreneurs' actions during their very first few hires influence the structure and survival of their firms. We focus on the role of idiosyncratic jobs, defined as jobs which are designed around individuals, as well as the ways in which early hiring practices interact with various discontinuities experienced by entrepreneurial firms.
We are conducting in-depth interviews with entrepreneurs in several industries in the Research Triangle area of North Carolina. Founders are asked to tell us about their backgrounds, the history of their firms, and the story surrounding the employment of each person they have hired. In several cases, we have also examined company financial, marketing or employment documents. So far, we have spoken with people from 14 firms, in the environmental consulting and personal computer training industries. We have had less luck studying the trucking industry. The median age of firms in our sample is three years, and the number of employees ranges from 1 to 18.
Our results show a common orientation toward using early hires to build operational capabilities within entrepreneurial firms. We also find a pattern of excluding middle level employees: entrepreneurs tend to hire very senior people, and very junior people, thereby creating a demographic gap in their organizations. This has implications for how well organizations adapt to their environments and how well they exploit employee skills over time, particularly employee skills which may be "hidden' in a current job assignment.
The results of early hiring decisions effect how entrepreneurs experience and respond to various discontinuities common to entrepreneurial firms. we examine six discontinuities: depletion of the original piece of business on which the firm was founded, moving from a purely operational to a marketing orientation, revenue fluctuations, attempts to raise outside capital, voluntary turnover, and growth spurts. In general, these discontinuities provide the main context in which entrepreneurs attempt to improve how well junior employees' skills fit with changing circumstances. Changing senior employee skills to match emerging tasks is a more gradual and interactive process.
A variety of events affect the original coalescence of organizational boundaries. Some events are coincident with the experience of discontinuities, whereas others are simply events through which entrepreneurs recognize that other people are viewing the organization as bounded and distinct from the entrepreneur. Recognition of the boundedness of their organizations provides opportunities for entrepreneurs to engage in decision making and planning at the level of the firm, rather than just at the task level,
In general, entrepreneurs engage early on in a series of unplanned hiring and employment activities which have implications for organizational structure, capabilities and survival. Institutional conditions and opportunistic behavior play a stronger role than do planning, analysis, or prior experience.
This study makes a contribution toward understanding the effect of early human resource practices on firm survival. Some of the earliest and most important decisions an entrepreneur makes are who to hire, and how to make use of the human resources acquired. It is apparent that these decisions are often made with little or no thought to the lasting implications they may have for the firm and its survival. Entrepreneurship education may need to place more emphasis on how people starting organizations are trained to think about hiring and employment practices.
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