(a) What human resource problems tend to arise as new company moves from an entrepreneurial form of organisation to a professionally managed organisation and why does this transition often create difficulties? Provide some examples to support your account.
When an organisation moves from entrepreneurial form to professional management, a number of human resource issues arise.
Firstly, the scope for improvisation and experimentation diminishes - professional management requires planning and resource commitment. The introduction of professional management system brings efficient procedures but also removes employees' scope for discretion. They are obliged to work under pre-defined routines that may inhibit their innovative capability.
The transition is often associated with change in company's culture. Entrepreneurs who are used to the flexible mode of working - retain autonomy and independence, continually modify objectives and explore opportunities - often find themselves restrained by the bureaucratic organisational structure in professional management system. This often causes key staff leaving and consequently loss of core skills and knowledge.
There are various differences between entrepreneurial and managerial approach which give rise to the human resource issues during transition. For example, entrepreneurs seek opportunities and improvise or iterate strategy to mobilise resources and create value whereas professional management set goals, authorise budget and make detailed plan to capture value and preserve/enlarge assets. Entrepreneurs engage in risk reduction to minimise effects whereas professional management are often cautious and risk adverse. Such discrepancies in culture in two forms of organisations result in early recruits unsuited for new jobs after reorganisation and management unsuited to new managerial style.(b) Can the problems associated with rapid growth in a new technology-based company be anticipated and averted? Provide examples to support your account.
The problems associated with rapid growth in a new technology-based company can be anticipated and averted in a number of ways. Firstly, management should recognise patterns in company's phases of growth to enable them to be responsive to any upcoming issues. Management should allow transition period for employees to adapt to the professional operating procedures and educate staff the benefits of adopting an efficient management system. The company should remain flexible and reactive to market change and continually re-position itself in the market. In order to retain competitive advantage, management of such companies should plan for a variety of scenarios and set up procedure for detection of new opportunities. Companies should not restrain themselves from other potential opportunities even if they do not currently possess the resources or capability to realise the venture. Equally important, companies should learn from earlier problems to stimulate change of direction and allow avoidance of making similar mistakes in the future.