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Hiring, managing and dismissing employees require skills incubation programs do not always impart to their clients, but those skills are important – even if entrepreneurs don't realize it. Properly exercised, say experts in the field, human resources management can positively shape the entire culture of incubator client companies.

Human resources: Skills companies overlook at their peril

August/September 2012

by Dennis E. Powell

“Business would be easy if it weren’t for people,” W.L. Lyons Brown III, founder and CEO of Altamar Brands, has famously said.

Human resources management can be a lot like a minefield: From outside, it doesn’t seem very remarkable, but unseen danger lurks there. And as with a minefield, the rewards of successfully navigating the field of human resources come largely through the bad things that don’t happen. But getting client companies to acquire the necessary skills and pay proper attention to personnel matters can be one of the toughest tasks facing an incubator manager. “The issue of how to start and maintain an effective HR function from the first hire and beyond is, in my experience, totally ignored,” says Bill Schutters, entrepreneurial support director at the Kentucky Highlands Business Innovation and Growth Center in London, Ky. “Yet, payroll costs typically are the largest expenditure of the business.”

Schutters explains to entrepreneurs that success is dependent upon achieving competency in five areas: finance, marketing, products and/or services, organizational management (including human resources) and entrepreneurial – how the entrepreneur fits in to the picture. “Under HR, there are many rich areas of knowledge such as building a people culture; recruiting, hiring and motivating; managing benefits; how to use subcontractors; and the list goes on. Paying attention to this area can have huge impacts.”

Because entrepreneurs are often highly motivated with clear expectations of how their companies should function, many do not see the need for human resources training. “Those who need it the most tend to be unwilling to hire anyone, since no one would be as good as they are in all 52 jobs they are performing,” says Michel M. Bitritto, director of New Jersey Meadowlands Commission Business Accelerator of Lyndhurst, N.J. But unless an entrepreneur is truly running a one-person business, the HR aspects of business operation must be learned, she says, because sooner or later, the company will have to hire employees. And how they do that can make or break a company.

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Keywords: Equity and royalty agreements, Access to capital, Client services – general

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