Advice for CEOs

What Human Resources policies and practices will help emerging growth companies get the most productivity and value out of their people? All entrepreneurs would acknowledge the principle that the success of their enterprise depends on the performance of their employees. But many entrepreneurs still find reasons to put human capital issues in the back seat. They may think that the kind of employees they want are motivated simply by the challenge and excitement that comes with building an innovative business model or technology. Or that the chance to get in on the ground floor of what might one day be a big company that pays high salaries is sufficient to energize their work force. They might say that they don’t have the resources to support rigorous processes such as providing feedback on employee performance. They may worry that such performance reviews will create an expectation for raises that the company can’t afford. And some entrepreneurs may--rightly or wrongly--associate formal HR processes with big, bureaucratic organizations--the opposite of what they want their company to be.

Middle market private equity is a topic on which Newport Board Group has deep expertise. Our Chair, Doug Tatum, is Immediate Past Chairman of the Board for the Association for Corporate Growth (ACG), a global not-for- profit organization representing middle market private capital investors, intermediaries and the middle market deal community. Our partners have extensive experience running companies owned by private equity and serving their sponsors as portfolio company operating partners. We know the PE scene very well. But that is only one aspect of our familiarity with PE. We also talk to and serve a great many promising companies that are or could be targets for acquisition by PE. We asked our partners what they hear from entrepreneurs and their investors about PE-- whether or not our partners agree with these views. We got some interesting responses.

Entrepreneurs tend to be optimistic by nature. As a new year begins there is ample ground for many entrepreneurs to feel good. The latest signs of an improving economy were strong enough to help persuade the Federal Reserve to raise interest rates recently--for the first time in nearly a decade. A boom in valuation of technology-based companies, private as well as public, is driving expansive optimism in that sector.

CEOs of emerging growth and middle market companies have many ways to get advice. But most of these approaches such as courses at business schools or all day seminars require time away from the office that many CFOs can’t afford. Imagine that you could have coffee with a group of 10 CEOs who are ready to share some pithy, hard won advice based on their many years of experience leading and building companies. Newport Board Group asked a group of our CEO partners what advice they would offer in this situation. Here is what they said.

Although middle market companies account for over half of U.S. jobs and a third of tax receipts, their issues are often underrepresented in governmental policy-making.The Small Business Administration represents the interests of small companies, at least those looking for the various kinds of SBA financing.

Starting your own business may not be as difficult as you think.