346 ENTREPRENEURSHIP
Inducements. The final factor in team composition is the range of inducements offered
to potential members. These take the form of both material and nonmaterial rewards.
Material rewards include equity (stock in the company), salary, perquisites, and bene-
fits. It is vital that most of these rewards be contingent on performance, even in the
early stages of the new venture when performance and profits may still be in the future.
Moreover, the entrepreneur should consider the total rewards offered to the potential
TMT member over the life of the opportunity. This will obviate giving too much too
soon and will solidify the team member’s long-term commitment.^22
Nonmaterial rewards can be equally important. A person may relish learning about
the new venture creation process. People who someday will be entrepreneurs themselves
may agree to participate in a start-up business as preparation for their own endeavors.
Being a TMT member is also a sign of upward mobility, distinction, prestige, and
power—an additional inducement for many.
In the final analysis, the TMT will probably consist of both familiars and unfamiliars.
Some will be recruited for the team because they are strategic resources. For example, in
the biotech industry where genome research is so highly specialized, companies are com-
peting to recruit biotech personnel for their TMTs. “All of the top-level scientists have
probably been locked up [by companies],” reports Stanford University Nobel laureate
Paul Berg.^23 The scientists themselves are the key resources in such companies. Firms
cannot enter unless they have acquired this scientific expertise.
People can also be added to the TMT in a “just in time” fashion, as needed.^24 In the
early stages of a start-up—when there is the most uncertainty and the entrepreneur
wants the support of trusted people—familiars are probably the best choice. Later, team
members can be recruited specifically for their money, connections, skills, and experience
as those resources are required.Maintaining Top Management Teams
The recruitment of the top management team is only the beginning. As the transition
to professional management continues, team members must learn to work together and
this takes time, especially if the group is composed of individuals from diverse back-
grounds and cultures. A great deal of research has been conducted to determine the
properties of highly effective work groups.^25 This section offers an overview of the prop-
erties as they relate to new venture TMTs.Goals. It is essential that the goals of the TMT be the goals of the new venture. Re-
search shows that agreement within a TMT on what the goals of the firm should be is
positively related to firm performance.^26 However, over time the TMT will develop its
own goals and objectives, subject to the overriding vision of the entrepreneur. Theseence, some commonality between the top
two leaders in a firm is essential. “They need
to share some of the same style so they can
communicate effectively,” observes Steve
Katz.SOURCE:Adapted from Dale Buss, “Dynamic Duos,”
Business Week Online, Winter 2005. Retrieved from the
Web March 4, 2006.
http://www.businessweek.com/print/magazine/con-
tent/05_49/b3962401.htm?chan=gland
http://www.orbitaldata.com.