T+D October 09 // Intelligence //
The Rare Breed of Entrepreneurs
By Ann Pace
The portrait of the quintessential entrepreneur is far different from real life.
Microsoft founder Bill Gates may seem like the typical entrepreneur: the son of an attorney and philanthropist who dropped out of college and began his first company at age 21.
However, the newest research on the background of entrepreneurs shows that Gates’ demographics put him in the minority. According to a study conducted by the Kauffman Foundation, most entrepreneurs in the United States today tend to be middle-aged, well-educated, and come from lower- or middle-class backgrounds.
Kauffman surveyed 549 company founders in a variety of industries including aerospace and defense, computer and electronics, healthcare, and other services. The research provided insight into the backgrounds, motivations, and experiences of entrepreneurs.
“The fact that the majority of entrepreneurs come from diverse, blue collar, lower class backgrounds was a surprise,” says Vivek Wadhwa, associate director for the Center of Entrepreneurship and Research Commercialization at Duke University and senior research associate at Harvard Law School. “But it makes sense when you consider their motivation to rise above their upbringing and go after the things their parents didn’t have.”
Fifty-two percent of respondents reported being the first in their families to launch a business. The majority of respondents—75 percent—indicated their desire to build wealth as a motivating factor in becoming an entrepreneur. Additional reasons cited include capitalizing on a business idea, owning a company, and the appeal of startup culture. Eighty percent of respondents stated that their inability to find traditional employment was not at all a motivating factor when they started their business.
The average age of company founders was 40, which confirmed previous research. In addition, nearly 70 percent of respondents indicated that they were married when they launched their first business, and nearly 60 percent of respondents had at least one child. These findings contradict the common stereotype of a childless, unmarried, workaholic entrepreneur.
“People should be encouraged that it’s not too late to become an entrepreneur,” Wadhwa says. “The middle-aged and family-minded are the norm, not the exception.”
And the timing couldn’t be better for the rise of the entrepreneur. Wadhwa compares economic recessions to a forest fire, clearing the land and making way for new seedlings to grow.
“Entrepreneurship is a risky endeavor, and most people fear the risk and possible failure involved,” Wadhwa says. “In a recession, the risk is gone. You have less to lose, less competition, and you don’t have to offer huge salaries.”
The study shows that entrepreneurs are seasoned learners, both from formal education and on-the-job experience. Ninety-five percent earned bachelor’s degrees, and 47 percent held more advanced degrees. Seventy-five percent worked as employees at other companies for more than six years before launching their own companies.
The role of the learning function through workplace training and leadership development is integral for the maturation of the next generation of successful entrepreneurs. Wadhwa explains that Kauffman’s upcoming entrepreneurship study explores the factors behind a successful entrepreneur. Industry experience is at the top of the list, followed by the entrepreneur’s management team, and then luck.
T+D October 09 // Engagement //
Engagement Matters
By Dean Smith
Engagement takes its rightful place at the core of organizational success, regardless of how the economy is doing.
You’ve witnessed them at their desks going through the motions or making negative comments to co-workers. They don’t like change and during prosperous times they cruise under the radar.
It’s no secret that most companies have an issue with disengagement, but according to recent research, less than one-third of the U.S. workforce is engaged.
As the economy slowly recovers from the worst recession in more than 30 years, employee engagement continues to play a significant role in ensuring the viability of an organization. When every customer interaction counts, engagement means survival.
A report published by the Human Capital Institute (HCI) titled “The Economics of Engagement” asserts that companies who invest more in talent management perform better financially, but convincing senior management to make engagement a priority is difficult.
“Pay attention to talent during a recession,” says Allen Schweyer, who authored the study and has been measuring the effects of talent management within organizations for many years. “If you don’t, you’re leaving a big chunk of productivity on the table.”
For one of Schweyer’s clients, that cost was $1.8 billion. Overall, a 2008 Gallup study reported that $350 billion is lost annually in the United States alone on damage done by disengaged workers. Schweyer is also concerned about the recovery.
“What happens if you lose 20 percent of your top performers when things get better?” he asks.
Engagement remains a challenge to address within companies because it is difficult to define, measure, and influence. In a 2008 ASTD study on the subject, the Institute for Corporate Productivity (i4cp) defined engaged employees “as those who are mentally and emotionally invested in their work and in contributing to an employer’s success.” The report identified exit interviews and tracking turnover as the two most highly selected measures—both occurring after an employee has left.
Organizations that demonstrate a commitment to employees from the start stand to benefit from employees with greater focus.
“Investments in training and development always rank at the top of what makes them engaged,” says Schweyer.
The HCI report establishes a relationship between engaged workers and their role in driving better engagement with customers. With its great benefits package, family leave policy, and decent hourly wage, Costco has built trust among its workers by treating them well in good times and in bad. As a result, their customers have weighed in with their wallets.
Ultimately, the responsibility for engagement rests with senior management. Values, culture, and commitment from leadership play a major role in creating an engagement partnership with employees.
According to Schweyer, you may treat your employees well but not your customers. You also may treat employees poorly and your customers well. Neither scenario will last long-term.
“Treat your people and your customers well,” he says. “Organizations that have both will succeed.”
T+D October 09 // Dollars and cents //
Gender Gap in Canadian Finance Persists
By Aparna Nancherla
While the wage gap for women might be closing slowly, critical sectors like finance are showing no signs of progress toward greater equality. Canada is no exception.
The Canadian capital markets industry, which includes all areas of finance that involve issuing, trading, and selling stocks or bonds, shows a lack of growth in the proportion of women employees despite unprecedented job growth over the past decade.
Women held 17 percent of client service positions in the Canadian capital markets industry in 2008, the same percentage as in 2000, according to a recent report titled “Catalyst’s Report to Women in Capital Markets: Benchmarking 2008,” conducted by Catalyst, a research agency.
“If you look at the entire field and put all the positions together, the line positions make up the predominant professional client-facing roles. The 17 percent number is the strongest representation of the fact that we’re not moving ahead because these are the positions that we need to move the dial on,” says Martha Fell, CEO of Women in Capital Markets.
When looking at positions by rank, the study found that there were no dramatic changes in female representation at any level, with the proportion of women growing smallest at the highest levels. Women’s share of positions at the managing director level and above dropped from 11 percent in 2000 to 9 percent in 2008. The percentage of women in branch management dropped 6 percentage points to 15 percent. Women working as investment advisors held steady at 16 percent, up by only 1 percentage point since 2000.
In the investment business, women’s share of client service positions was 20 percent, the same as in 2000, even though the total number of line positions increased considerably since 2005. Women working in sales positions dropped to 26 percent compared with 34 percent in 2000. In addition, the proportion of women in middle office positions dropped to 43 percent, the lowest percentage since 2000. Men obtained 63 percent of the 634 new positions in middle office ranks since 2005.
“I think a lot of people need to recognize that it’s not just going out and recruiting women from the universities; it’s figuring out how to ensure that they’re being mentored, that the pipeline all the way through is represented by women, and that management is supporting those efforts for diversity,” Fell says. “Because if we don’t, then we’re going to lose that ability to attract women into the industry.”
The problem of supporting diversity initiatives does not come from the top, Fell says. Many CEOs are very supportive of championing women in capital markets, “but the accountability does not fall low enough in the organization to have an impact on front-line managers.”
In the retail business, the findings were equally gloomy. The total number of line positions increased 8 percent since 2005, but the percentage of women remained at 16 percent, the same percentage as in 2000. The study follows up on research done at six major Canadian banks in 2000, 2002, and 2005.
Fell adds that firms could also explore the issues of gender bias and stereotyping to uncover possible obstacles to retaining and advancing more women. Conducting exit interviews to discover the reasons for departure could help organizations counter high turnover among women and unearth new solutions such as changing divisions or instituting a more flexible work week.
T+D October 09 // C-Suite //
Executives: Slow to Friend?
By Michael Laff
Thanks to social networking, there are more ways to connect with that reclusive CEO, but you’d better do some investigating before firing off that friend request.
Plenty of managers are hooked into Facebook. The line between one’s professional activities and personal communication are blurring increasingly all the time. For executives, however, the pace of change is slower. When they leave the office, they prefer not to be “friended” by their staff, clients, or vendors.
According to a recent survey by OfficeTeam, it’s not that executives aren’t spending any time on Facebook. It’s just not with the intent of interacting with colleagues.
While the percentages were close, when compared with managers, a greater number of executives said they would be uncomfortable receiving a Facebook friend request from someone with links to the office—colleagues, subordinates, clients, and vendors need not apply, or rather, click “add as friend.” Among the responses, which ranged from comfortable to not comfortable at all, executives answered “not comfortable at all” at a greater frequency than other possible responses.
“People want to maintain separation between their professional and personal associates,” says Robert Hosking, executive director of OfficeTeam. “If a manager posts photos about a trip with his family over the weekend, then three people at work might know what he did.”
Hosking says the demographic of new Facebook users is much older than expected as middle-aged users are joining the site.
Users can exercise greater control over who accesses their profile, but Hosking advises using common sense before posting wacky keg party photos on a profile page. You should ask yourself whether this is a photo that you wouldn’t mind a potential employer viewing. He says that Facebook users should manage their profiles to assure that photos or content that proves embarrassing not be connected to you in any way.
“If you have to think about whether it’s appropriate, it’s probably not,” Hosking says.
T+D October 09 // new at the office //
Talk to Me Later
By Michael Laff
In a world that devised a host of digital distractions comes an office tool that blocks out all of those pesky face-to-face inquiries.
Designed to help employees focus on productivity, a new product called Cube Guard hit the market. Instead of raising the menacing “hold on” forefinger, you can just unfold some tape and let co-workers know you need your space.
Some assembly is required. Customers mount adhesive plates on both sides of their cubicle entrance and suddenly there’s no need to block the entrance with a plant or a pile of documents. For those who work in larger cubes, the tape can be expanded up to 50 inches.
The visual effect looks a bit like the yellow crime tape that reads “Police Line Do Not Cross.” However, the plates are formatted for the corporate world.
Customers can opt for the iconic 70s-style gold and black smiley face or they can create their own “not now” sign. Suggested designs include a skyline or mountain retreat that will soften the brush off.
It’s an ideal product for the call center supervisor who can’t be troubled with complaints about an unclear script or angry credit card customers. Need a co-worker to proofread an important contract on deadline? Hey, just leave it at the corridor and come back later.
And yes, at $14.99, it’s priced for restricted budgets.
T+D October 09 // fast fact //
Boost in Productivity Gives Rise to Optimism
The Institute for Corporate Productivity (i4cp) released its latest Productivity Confidence Index (PCI) results. Overall, the index rose in the second quarter from 20.3 to 22.1, indicating more optimistic expectations for productivity in the coming months.
i4cp’s index is based on the degree to which companies believe employee productivity will rise, fall, or stay the same over the next six months. The scale runs from -100, which indicates that a company expects productivity to decrease, to a high of 100, which indicates that a company expects productivity to increase.
The larger the company, the more expectations improved. Organizations with 10,000 or more employees witnessed the largest growth in workforce productivity expectations, from 18 to 30.9.
Overall, 62 percent of respondents expect productivity to rise in the next six months, compared to only 53 percent in the last quarter. The increase in productivity expectations aligns with the Bureau of Labor Statistics Second Quarter report on Productivity and Costs, which revealed a 6.3 percent productivity increase in the business sector, the largest since 2003.
In addition to measuring workforce productivity expectations by organization size, the PCI is segmented by job level and market performance. High-performing organizations had a score of 40.9, up from 37.7 last quarter. Low-performing organizations’ expectations increased from -7.7 to 0.9. The news wasn’t all positive. Executive-level expectations dropped slightly, from 30.6 to 29.7, though expectations of supervisors, managers, and directors increased from 16.6 to 18.6.