The Wall Street Journal sent along three articles (all in their free space for bloggers to use) that speak to team building in a growing company. For many high growth businesses it all comes down to creating the right culture and building critical systems.
The first article offers some useful ideas on how small businesses can help retain key employees by having a little fun.

Team-building exercises are used as way to get employees to stick around. Often, though, they consist of co-workers grudgingly playing group games. But the efforts may be a more natural fit at small companies than at larger ones, where they may feel forced.

The article offers three simple examples of fun stuff that entrepreneurs use to help in team building — a treasure hunt, a derby-car race (think pine wood derby on steroids), and a after work parties.
There a lots of ways to let loose, have fun, and build camaraderie. Bowling outings, golf tournaments, softball teams, setting up a basketball hoop in the parking lot, talent contests, are just a few of the other activities that I have seem small business owners use effectively.
The second story also looks at the power of culture in entrepreneurial firms. It is about a small business owner who has be able to create remarkable employee retention in an industry notorious for high turnover.

Almost all of the telemarketing-services firm’s 350 full-time employees earn an hourly wage. And the work, the president and chief executive admits, is often “repetitive and monotonous.” Even so, turnover at the Atlanta-area company was 27% last year and is consistently under 30%, compared with an average of 43%….Mr. Wilson, 47, credits an emphasis on training, as well as efforts to foster a caring environment — a sharp contrast to other call centers where employees are often treated as commodities, he says.

Building a good company culture is a powerful tool to retain employees. In spite of what we may think, it is not all about the money for employees. They also want a good place to work.
The final story looks at a high growth company where turnover was part of a system upgrade that many emerging companies need to address at some point along the way.
As recently as three years ago, 60% of the employees at technology company Protus IP Solutions Inc. quit annually.

Perhaps worse, Chief Executive Officer Joseph Nour wasn’t sure why. Though employees usually completed exit interviews, notes from those conversations often were shoved into a drawer….
Step one in stemming the problem, says Mr. Nour, was hiring Janice Vanderburg as director of human resources from a bigger, more-established employer. Ms. Vanderburg says she walked into a company lacking in structure and processes. One example: Some employees were eligible for profit-sharing incentive pay and didn’t know it. No one had explained it to them.

As a business grows, culture needs to be consciously managed, and critical systems need to be intentionally built. These are two of the reasons that seemingly successful growing companies fail.

My column in this week’s Tennessean examines the importance of advisory boards.

There was a time when outside members serving on the board of directors of small businesses was fairly common. The entrepreneur would invite people such as his banker, consultants, their attorney, their CPA, and other business owners from the community to serve on the board.
But with the advent of the limited-liability corporation and its more flexible structure, and with the general increase in litigation involving members of corporate boards, adding outside members on boards of directors has become less common.
However, outside advisers can bring important benefits to a small, growing company.

My column in today’s Tennessean examines the transition that entrepreneurs eventually face when moving from bookkeeper to controller, and for some entrepreneurial firms that grow large enough, from controller to CFO.

Entrepreneurs who experience significant growth in their businesses may eventually hear this advice, be it from their CPA, their banker, or other entrepreneurs. Financial management in a growing business can become strained. Eventually, the time will come when the entrepreneur needs to upgrade the team. But, what exactly does a controller do in a business? And how do you know when you need one?

There are two key steps to building a strong workforce. Get good people in the front door and make sure they don’t just walk out the back door.
Several recent studies have highlighted the difficulty that small businesses are having in finding qualified workers. That is, they are having a tough time getting workers in through the front door.
A new survey suggests that many small business owners have done an effective job of keeping their workers from walking right out the back door to another employer. According to a National Federation of Independent Business Small-Business Poll released yesterday on unemployment compensation, nearly half of all small businesses, 49 percent, experienced no employee turnover during the past 12 months.
In a period of low unemployment that is remarkable. Creating a positive culture, offering good working conditions and good jobs, and fair compensation all play a roll in retaining workers. It seems that many small businesses must be getting this right.

When it comes to employee compensation and job tenure, size does matter, according to a study released today by the Office of Advocacy of the SBA. The study found that all other things being equal, employees of larger companies have longer job tenures than those working in smaller ones. Moreover, the study found that service and manufacturing occupations pay more in larger businesses.
The study determined that each additional year of tenure on a job reduces the probability of turnover by 81 percent. It also established that the offering of benefits reduces the probability of an employee leaving in a given year by slightly more than 26 percent.
Recent surveys by the NFIB have reported that finding qualified workers continues to be a challenge for most small businesses, although easing a bit due to the sluggish economy.
What this study tells us is that even though small firms may be able to offer creative and attractive non-financial benefits, such as more flexible work conditions, more interesting work, etc., in the end what matters most is the money.

As a business grows, attracting key team members becomes critical to success. However, since you often can’t compete with the salaries that key people may be able to get from larger companies, you have to find ways to create value for potential team members beyond their monthly paychecks.
In a new collection at eVenturing, the challenge of compensation for key employees is examined. Once again, the folks at Kauffman have put together a great set of articles, stories, and tools to help owners of growing companies.

I will be leading an on-line chat today on growth with Charles Hagood, co-founder of The Access Group and Healthcare Performance Partners. It is being hosted by the Tennessean, but is open to anyone across the country and around the globe! Charles, an alum of our MBA program, has a fascinating story and can provide some useful insight into managing a growing business.
To join in the chat, just go to the Tennessean’s website. There will be a link in the left column of the front page. The chat will start today at 1:00 p.m. CDT. Please join in the discussion!!

Eric, a regular at this site, sent me this question via e-mail over the weekend:

I recently saw a presentation by Vinod Khosla who left an interesting quote of “other companies hired what they could easily and left every other thing as weak links…” (in reference to Sun’s founding executive team). What “links” do you think a good company needs to fill?

This quote hits at one of the key aspects of sustaining growth — building a strong team.
Who any given entrepreneur needs to add to their team depends on several issues:
– The entrepreneur should always build a team that complements his or her strengths. I was strong on the strategic aspects of marketing and in financial strategies, and my partners were strong in healthcare program development. That meant we needed to fill in the gaps in areas that we were weak as a founding team.
– The very next person you need to add to your team is always the area that is causing the most pain for your business as it grows. This can differ greatly from company to company. Rarely do you have the money to add everyone on the team at once. So be strategic. What is the area that is most critical to grow your business the next 10-20%? Or, what is the “link” that if you do not fill it, you may not survive the stresses and strains caused by your current growth? That is the position you need to fill first.
– Consideration must also be given to competitive criteria. For example, we sought to have our healthcare facilities accredited at the very highest level. We knew it would give us a huge competitive advantage. So we hired someone who could help us achieve that goal. We could not afford to pay him the actual salary that he was worth, so we crafted an equity and bonus package that made it possible.
– Different industries require different talent in teams. For some, IT is critical — so that may be your key “link.” For others it may be a controller that can keep costs in line and allow them to be more competitive on bidding.

Getting mentioned in the Wall Street Journal is generally considered a good thing for a business. However, if you are not prepared for the surge in demand that such publicity can bring it can also spell disaster. (I had cautioned about this in my previous post below on the small putter manufacturer whose putter was used by Masters winner Zack Johnson).
The Tennessean offers the cautionary tale about Cyndi Collett and husband Chris Tait’s new product — a brand of environmentally friendly towels and blankets called Bamboo Comfort. A mention in the Wall Street Journal did not work out the way that they had at first hoped it would.

But sweet success has its dark side, as the couple quickly learned.
After The Journal article came out more than a year ago, orders flooded the Web site of their store, Mad Mod. Shortly thereafter, they had no Bamboo Comfortto sell, and it stayed that way for four months.