The Impact of Labour Shortage
on Human Resource Management
An analysis of Fast Growing SME’s
by means of Growth Stages
by
Caroline C.E. Koorn
Rijksuniversiteit Groningen
November 2008
Faculty of Economics and Business
MSc Business Administration,
Small Business & Entrepreneurship
Summary
The multiple case study presented in this paper analyses the impact of the current labour shortage on human resource management in small and medium sized companies. The Dutch economy experiences a growing shortage of labour. The focus lies on fast growing sme’s because they are an important stimulator for the economy. In this paper growth is being divided in five growth stages
instead of using only the term growth. To handle adequately organisations prefer to know what problems they can expect in which stage, so they can minimize the impact on their growth. Two case companies are used to test the theory with real life settings and they are analysed with the help of interviews. The results of the case study confirm that it is important to distinguish the growth stages because human resource issues change according to it. The results also show that the current labour
shortage has an impact on human resource management in sme’s. According to literature training and development are most important in fast growth companies, the case study reveals that the main problems are issues regarding recruitment, retention and to some extend training. Especially
Content
1 Introduction ... 5
1.1 Relevance of the topic... 5
1.2 Research objective and questions... 7
1.3 Labour shortage in the Dutch economy... 8
2 Growth... 11
2.1 Companies and growth ... 11
2.2 Definition and importance of fast growing companies ... 12
2.3 The organisational life cycle ... 13
2.4 Growth models... 14
2.4.1 Churchill & Lewis ... 14
2.4.2 Greiner... 15
2.4.3 Combined growth framework for fast growth companies... 17
3 Human resource management... 19
3.1 Hrm and small companies ... 19
3.2 Definition... 20
3.3 Growth and HRM... 20
3.4 Recruitment, selection and retention in sme’s... 22
4 Methodology ... 25
4.1 Case study ... 25
4.2 Sample ... 25
4.3 Research Sub questions ... 27
4.4 Conceptual model ... 29
4.5 Data collection... 30
5 Analysis... 32
5.1 Analysis of general problems for fast growing companies ... 32
5.1.1 Analysis of Concept 7... 32
5.1.2 Analysis of Management Facilities Group... 34
5.2 Analysis of hrm problems for fast growing companies... 37
5.2.1 Analysis of Concept 7... 37
5.2.2 Analysis of Management Facilities Group... 40
5.3 Analysis of the growth model ... 43
5.3.1 Analysis of Concept 7... 43
5.3.2 Analysis of Management Facilities Group... 46
5.4 Analysis of the labour shortage... 48
5.4.1 Analysis of Concept 7... 48
5.4.2 Analysis of Management Facilities Group... 49
6 Conclusions ... 51
6.1 Discussion ... 51
6.2 Conclusion ... 54
6.3 Recommendations for further research ... 55
6.4 Practical implications ... 55
References ... 56
Appendix... 61
1. Interview questions... 61
2 Sample background... 63
Table content
Table 1: HR topics in literature... 7
Table 2: Combined growth model... 18
Table 3: Growth stages and hrm problems ... 24
Table 4: Main problems... 36
Table 5: Main hrm problems ... 42
Table 6: Impact of labour shortage ... 47
1 Introduction
1.1 Relevance of the topic
Small and medium sized companies are important for economic growth and account for a large percentage of the gross national product and the job creation in the world (Williamson, Cable & Aldrich, 2002; Barber, Wesson, Roberson & Taylor, 1999). A small percentage of these sme’s are
growing relatively fast and they will be referred to as fast growing companies. Many researchers have proved that fast growth of small and medium sized enterprises (sme’s) is accompanied with many problems and challenges in the area of human resource management (Markman & Gartner, 2002; Churchill & Lewis, 1983; Greiner, 1972; Kazanjian, 1988; Rutherford, Buller & McMullen 2003).
In this thesis we will shed a light on these fast growing small and medium sized companies in combination with human resource management (hrm), which consists of all the policies, practices and systems that influence employee behaviour (Noe, Hollenbeck, Gerhart, Wright, 2003). Research of Dodge, Fullerton & Robbins (1994) shows that from all internal problems growing companies face, human resource issues account for 12%. This amount is even more according to Chan, Bhargava &
Street (2006). They state that that hrm challenges are 20% of the business challenges. Previous research is being done in times when there was no sign of a labour shortage. Today things are different and the hrm issues can be influenced by the labour shortage (Henkens et al., 2008). If this is the case companies need to know what the impact is from the labour shortage on hrm issues
because it can restrain them from growing. An important difference of this study compared to others
is that here growth is not being seen as a sole phenomenon but instead it is being divided in stages.
Growth is a process of several years and can not be defined in one word so commonly known growth models like Greiner specify growth in stages. If you define growth stages with their specific
characteristics, companies can identify themselves with a stage. In previous research the high growth is mostly not being specified by stage but only in general. In this thesis the assumption exists that it is better to divide general growth in stages and then research if there are different problems to identify (Rutherford, Buller & McMullen 2002). At the moment we find in literature only general issues about growth but if there are existing different problems in the stages then companies need to now that so
they can handle according to that. If they know what problems they can expect in which stage they can take precautions for it.
problems. Churchill and Lewis (1983) made a model especially for growing companies and these two
models will be combined in one to get a better growth model focused on fast growing companies and hrm. Most available literature on this subject is in regard to large companies which is a totally different approach. With the exception of Heneman et al., (2000) and Rutherford, Buller & McMullen (2003) there has not been much new literature on this topic.
As we can see from literature, hrm problems are an important subject for fast growing sme’s (Stam,
Gibcus, Telussa & Garnsey 2007). The amount of fast growing Dutch companies is quite good compared to other countries but the current Dutch sme’s have to cope with a labour shortage (de Kok, Uhlaner & Thurik, 2006). For the past three to four years there is a shortage of skilled labour. It is very hard to find loyal and skilled people and companies are fighting for the best candidates (Henkens, Remery & Schippers, 2005; Wright, 2008). The ageing workforce is a serious issue and
combined with the retirement of the baby-boomers this will be one of the main hr focus points today (“Top Challenges facing,” 2008). These baby-boomers are represented in higher qualities then young people with the latest knowledge (Bollérot, 2002). Another factor is the fast growing economy. Labour shortage can have a direct negative effect if it leads to stopping and shrinking of activities and
can affect our healthcare and safety in the long run. (Manpower, 2008). It can restrict companies in their growth and indirectly this has its implications for the economy.
Not many researchers did research about hrm problems in sme’s and in regard to labour shortage because this phenomenon is relatively fresh. Another factor is that most researchers do not specify
growth in stages. So there will be not much research available about the impact of labour shortage on hrm in combination with the growth stages.
Specifically on hrm topics there is a demand for research according to Heneman, Tansky & Camp (2000). The table below shows that entrepreneurs would like to see more information about the hrm
HR Topics
Recruitment, sel., retention Special pay programs Compensation Training Hr role/strategy Employees Importance according to CEO’s in % 31 13 12 9 8,5 7,5 In SME literature in % 12 3 10 7 20 14
Table 1: HR topics in literature
If we look at their research we see that recruitment, selection, retention and special pay programs are under represented in sme literature and we can assume that there is a demand for more
research on these topics. The reason why companies would like to have more information about this, is because of the high costs of making wrong hires (Hornsby & Kuratko, 1990). The other four
subjects are or overrepresented in literature or fairly distributed.
1.2 Research objective and questions
The main goal of this research will be providing insight into the hrm issues in different growth stages at growing, medium sized companies in the Netherlands, who are coping with a labour shortage, through the use of literature research and empirical research, based on in-depth interviews with entrepreneurs and hrm staff.
According to this data we can question if particular hrm problems are still the number one problem in fast growing sme’s now they are influenced by the current labour shortage in the Dutch economy and second, if the problems change depending on the growth stage the company is in and restrain the company from growing. This will lead to the following research questions:
What are the dominant hrm problems for fast growing Dutch companies in times of labour shortage?
To get an answer on these questions empirical research will be done to check if theory and practice
are the same. A multiple case study is being conducted consisting of two cases. Interviews are being conducted as the research method because questionnaires give less in-depth information. The results of these interviews will be compared with the theory and conclusions will be drawn from it. The research will focus on fast growing medium sized companies with:
• More than 25 employees
• An employee increase with 60% or more each year within three years.
• Their headquarters located in Holland
The following section will give an overview of the structure of this thesis. First it will start with an
introduction and brief overview of the subjects being researched and why they are interesting. In the first chapter, theory will be presented about the labour shortage in The Netherlands. The second chapter will be mainly about growth. A definition will be given for fast growing companies, as well as their importance for the economy. In this chapter the two growth models from Greiner (1972) and Churchill and Lewis (1983) will be explained in more detail and combined in one model.
Hereafter chapter three discusses the theory on the different hrm aspects and will start with a definition and an introduction to hrm. At last the subject of recruitment, selection and retention will be discussed because these will likely be the subjects which are problem factors due to the labour shortage. In the fourth chapter we find an explanation of the method used to test the literature for this research and an empirical part with results. A conceptual model will be presented, as well as the
research question. The results will be the outcome of in-depth interviews held at two fast growing companies. These interviews are going to be analysed, discussed and a conclusion will be presented in chapter six.
1.3 Labour shortage in the Dutch economy
Insufficient labour market
Economists prospected that from the end of 2005 there was going to be an insufficiency in the labour force (Castaldo, 2008). A labour shortage will affect sme’s in a greater extend compared to
Kim, & Seoung, 2008). In these industries entrepreneurs and recruiters do everything they can to
attract and retain enough people.
At this moment the Dutch labour market is in desperate need of skilled people (Henkens et al., 2005). The participants on the labour market are ageing and these baby-boomers will retire in the future and then there will be not enough people to replace them (Ekamper, 2006; Bollérot, 2002). Especially
middle and higher educated people will be needed (Wright, 2008; “Top challenges facing”, 2008). Even though women are working more and employees from the new members of the European Union are coming to the labour market there will still be a labour shortage in the next few years (Congres INPUT, 2008). This can have important implications for the future. The CEO of Manpower warns us that if we do not take action now, the profits will be lower in the near future and the
customers will be less satisfied, so productivity will lessen and the innovation will be under pressure. But he also states that the consequences can be even worse concerning our health care and safety (Manpower, 2008).
To manage this, HR needs new strategies and systems to come up with more creative solutions because the traditional ones will not be enough (Henkens et al, 2005). In regard to the labour shortage, different solutions exist (Bollérot, 2002). The issue is not about decreasing the demand for labour with outsourcing and new technology but use labour in a smart way and with that increase productivity and lower the absence through illness. But according to Manpower (2008) we are at the
end of increasing the productivity. The labour participation should be higher, part-timers should work more hours, child day-care should be more accessible and the age to retire should be higher.
The labour shortage: Causes and Precautions
A large insurance company named Delta Lloyd did research (2008) in Dutch sme’s about their worries
about the labour shortage. They found out that almost half of the entrepreneurs (47%) are going to take precautions for the upcoming labour shortage. 40% are going to take retention precautions to try to keep people in the company (Delta Lloyd, 2008). A couple of reasons for the impact of the labour shortage on sme’s are that people’s negotiating position is getting better and better and the
prospective employees are becoming more demanding (Henkens et al, 2008). The fact that the working population in the Netherlands is becoming smaller, forces companies to put more effort in attracting new employees but also in keeping their knowledge workers (Henkens et al., 2005). Not only the new employees know that they can find the same or better at the competitors but also the current employees. This is especially important for small and medium sized companies because they
the best candidates on the market. Another reason is that the point is that fast growing sme’s do not
have deep pockets in the beginning of their growth, which makes it hard to attract new people (Barringer, & Jones, 2004). If the competitor is offering a higher wage they move and the enterprise can not grow as fast as it wants to because of the lack of skilled employees. The same accounts for the people who are already in the company. They can easily go to the competitor as well.
So it is important to put some effort to keep your employees by offering them interesting tasks, studies and good future perspectives (Belkin 2003). A market conform salary is necessary to attract new staff with experience from other mature companies. It is not possible to pay what other small companies in the industry are paying because then they will not attract the people they want to have. A fast growing company can not afford to loose their knowledgeable workers because they can
2 Growth
2.1 Companies and growth
Problems related to growth
If companies are experiencing (fast) growth they have to deal with numerous problems and issues in regard to hrm. They do not have formal hr procedures like large companies. During growth small and medium sized companies are designing their hrm processes and it becomes necessary because the organisation gets more formal. In his research Balkin (2003) refers to earlier research of Kotter en Sathe (1978). According to them there are four hrm problems typical for a fast growing company:
1. Important decisions must be made quickly
Under conditions of rapid growth, business decisions must be made quickly. Less than perfect information is available to make decisions because the company is low in the experience curve. The information that is available must flow rapidly across departmental and functional lines and there
must be a feeling of teamwork between employees so information gets shared and is quickly available for decision makers. The employees should be rewarded for their risk taking and making decisions under high levels of uncertainty.
2. Job demands expand continually
The fast growth leads to larger job demands. The job content changes constantly as new responsibilities, complexities and working conditions are added.
3. Constant change is inevitable
Change is inevitable for growing companies, as besides coping with changing job demands, the staff has to get used to changing working conditions, working relations, organisational structures, products and markets.
4. Resources are scarce
The fourth and last issue is that growth goals place heavy demands on the firm’s resources. Most resources are coming from operating profits and focus on investments in r&d, new plants and material, market research or advertising. Employees may feel overworked and under-rewarded because there is no money left for things like, extra holidays, company cars or first class travel.
Reasons for growth
failing to do so. Some owners choose to stay small and do not want to grow for several reasons.
Reasons for this can be the owner him/herself or external factors like the amount of competitors which can influence the owners/entrepreneurs decision to make sustainable growth a priority or not (Chan, Bhargava & Street, 2006). Growth can have negative effects, for example, rapid growth in the number of employees hinders knowledge transfer; it might alter a company’s internal structure and dilute or erode its original culture and entrepreneurial spirit (Markman & Gartner, 2002). The
motivations of the owners of small companies according to growth are influenced by a wide variety of values, perceptions and desired outcomes (Sadler, Smith, Hampson, Chaston & Badger, 2003).
Companies can grow because of two options, either the entrepreneur wants it or it is unavoidable not to grow because of external pressure (Masurel & Montfort, 2006). Because large companies have
higher survival rates and company size and advantages of scale and scope are related (Porter 1985), company size is seen as an important indicator of company health and the market potential. Some companies make sure they have a strong organisational culture focusing on growth so they can use all their energy for their innovative competences, which in the end will form new products or
technological innovations. Other companies want to grow to protect themselves against the competitors, simply because they are afraid to loose there good market opportunities (EIM, 2003).
2.2 Definition and importance of fast growing companies
A fast growing company is a young and ambitious company and not afraid of the competition
(Nylund, 2007). In these companies the entrepreneur is de driving force behind the company (EIM, 2006). To be excellent it is important that they think inside out, have extremely good knowledge of the market and being fearless of risk taking.
Fast growing companies are small and medium sized companies:
1) where the turnover has increased by 60% or more within three years
2) where the number of employees has increased by 60% or more within three years 3) where the turnover and the number of employees have increased by 60% or more within three years.
4) where the number of employees lies between 25 and 1000 (EIM, 2006).
In fast growing companies quarterly revenues, even though they are important, have a lower priority
than the growth goals of the company. This indicates that some short term goals have to be
sacrificed for long term profit goals of the company. Yearly and quarterly profits can have substantial fluctuations in time because large amounts of money will be invested directly in the company.
Companies have to adjust faster and faster to the rapidly changing environment, competitors, new
technologies and shortage of labour. These developments facilitate a high degree of flexibility and innovations, in particular at fast growing companies which are very important for the economic growth in the Netherlands and account for a great deal of the employment growth in most countries (Brummelkamp & te Peele 2007; Moreno & Cassilas 2007; Markman & Gartner, 2002; Sundermeyer, 1993). Close to 1 out of 10 jobs is being created by a fast growing company (EIM, 2006).
2.3 The organisational life cycle
Rutherfort et al., (2003) did research about the way hrm problems vary over the organisational life
cycle. They found some interesting information about the growth phase because they divided it in growth stages and found that hrm problems differ in each stage.
Training problems are highest in a high growth stage and a bit less during moderate growth. In this high growth stage compensation problems are not very high due to the large cash flow.
Unexpectedly recruiting problems showed to be highest in no growth firms instead of the high
growth firms. High growth firms demonstrated the most challenges with development. They
experience a great amount of communication problems because the owner can no longer train every employee him/herself and formalisation is the next step. High growth firms had the lowest levels of retention problems because their environment is attractive to many people even if they earn less. Moderate growth firms had the most problems with retention issues, probably because the fast
changing atmosphere is not challenging enough for the money they get in return.
In this work growth is specified in two phases, moderate and high. But according to the authors of the next two growth models it is better to specify it in more than two stages.
Problems
No growth Recruiting
Moderate growth Training, Retention
2.4 Growth models
In the next section there will be discussed and integrated two growth models to place the link between growth stages and human resource issues. In literature we can find many different growth models but Greiner (1972) is the one most famous. Greiner’s (1972) work is more extended than the regular growth stage models and has clear hrm problems exposed in the different phases so it is of
great use for the expected hrm problems in fast growing companies. The model of Greiner will be integrated with a model from Churchill & Lewis (1983) to design a framework which is applicable for fast growing sme’s and the accompanying hrm problems.
In the next section I will highlight these two important models for this study to give a background. So a combination of a regular growth model which addresses hrm with a growth model for fast growing
companies gives an excellent combination.
Most of these models are based on life cycle models. Just like products and industries, companies have a life cycle as well. Companies who operate in a fast growing market also have their products in the growth stage of the product life cycle (Balkin, 2002). These lifecycles form a good basis for the
empirical part of this study. With help of these models we can have a closer look at the different growth stages a company goes through and see if there are different hrm problems in different stages of growth.
In the next section we will first describe the growth model of Churchill and Lewis which is made for
fast growing sme’s and specify what they say about fast growing sme’s and hrm. The second model is from Greiner, he states that in a specific stage of the model the problems in regard to hrm are higher than in the other phases. At the end of the chapter the two models will be combined in one table to have a better overview of the models and their content.
2.4.1 Churchill & Lewis
Churchill & Lewis (1983) designed a model for small and fast growing companies, existing out of five stages: existence, survival, success, take-off and resource maturity. In the following part every stage
will be explained.
The most important issues in the existence stage are: 1. Can we become a viable business
2. Can we expand from that one key customer to a broader sales base 3. Do we have enough financial resources to finance the start-up phase
staying alive. During the survival stage it is mainly about revenues and expenses. The
owner/entrepreneur is still making all the main decisions but they hired a manager to supervise the small amount of new employees.
The company grows in size and profit and arrives at the success stage where the entrepreneur has to choose if he/she wants to use the company as a platform for growth or not. The organisational structure is decentralised and managers take care of the operational and strategic planning. At this
time the owner and the company are growing further apart. Often the person who brings the company to the success stage is not successful in the next stage because he/she wants to grow to fast and there not is enough money for that or he or she can not delegate well enough (Davila, 2004). In the take-off stage the most important problems are how to grow rapidly and how to finance that growth. Questions arise inside the area of delegation and money. Can the owner delegate the
responsibility to the others to improve the managerial effectiveness? Can the company generate enough cash to satisfy the great demands high growth brings and does the owner tolerate the high dept equity ratio with the accompanying risk? In this stage the most new employees will be attracted and according to Heneman et al. (2000) this will be the point where most hrm issues arise.
Eventually a company reaches the resource maturity stage and there the main concerns are to consolidate and control the financial gains and to retain the advantages of small size. The owner and the business are quite separate and everything has been professionalized including human resource management.
The next growth model explained is from Greiner and is more a general growth model but it focuses on the main hrm problems during the different growth stages.
2.4.2 Greiner
Greiner’s model from 1972 is a general growth model but with a lot of hrm parts included. Every crisis in the model has to do with hrm therefore this model is chosen. Combined with the previous model it will give a good explanation of different growth stages.
Greiner states in his growth model that every growing company should find the solutions for future success in their own company and the changing states of development. If the management does not
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The specific problems growing companies have to face are strongly associated with the company and its position in a specific growth stage (Kazanjian, 1988). In his model Greiner states that every phase
is a reaction to the previous phase. Phases are characterized by a growth process (evolution) and the evolution creates a crisis phase (revolution) which on its turn creates the next evolution. Evolutionary periods are relatively short in fast growing companies.
HRM problems are present in every stage of Greiner’s model. This becomes especially clear if we look
at the crisis parts which are all hrm related issues. When growth starts, the growing number of staff can not be managed only through the use of informal communication. New staff is not motivated by an intense commitment for the product, service or organisation (Greiner, 1972). The second phase, direction, will be characterised by a more informal and impersonal communication because of the increasing hierarchy of titles and positions (Kazanjian, 1988; Greiner, 1972). In the autonomy crisis
the direct leadership style can better be directed towards the growth the company is experiencing. But in the end it will be inappropriate to lead a bigger, more diverse and complex organisation. The middle managers want more autonomy and the company reacts to that by increasing delegation (Thakur, 1998) which in its turn leads to the third phase, delegation and then a control crisis emerges.
2.4.3 Combined growth framework for fast growth companies
The best way to combine these models is to integrate them in a new framework existing of 5 stages. This is being done to make it easier to distinguish the different issues companies are facing
throughout the time. The research will be clearer when you can tell entrepreneurs the characteristics
of a phase so they can identify their company with the phase. Then they know what kind of problems they can expect in which stage. Growth is too big a phenomenon to be captured only in the word ‘growth’. It is necessary to divide it in different stages because companies experience growth differently. A larger company will experience different growth (and problems) if it starts to grow fast
when it is already quite large than a really small company which starts to grow fast.
From Churchill and Lewis their growth model the stages are used because these are developed specifically for fast growing small companies. As in their model the framework consists of five growth stages so it is broad enough to capture the different growth parts companies go trough. The
characteristics from these stages are the description Churchill and Lewis gave them.
From Greiner’s model the crisis parts in the framework are taken. The last two stages are named differently to make the content of that stage clearer. The crisis period can be seen as a problem period and from this problem period the hrm issues are filtered out from the general problems and we can find them in the hrm issue box.
All these aspects of the two growth models combined leads to the framework presented below.
Phases Characteristics Crisis Hrm issue
Existence
The owner does
everything and there are no formal systems and planning. The first growth starts to come.
Leadership
New employees are attracted and they need good leadership. The owner is maybe not capable of this. Strong leader has to be attracted.
Survival
It proved it is a workable business entity which can serve it customers. Focus lies on revenues and expenses. Owner makes important decisions
Autonomy
Change of leadership style because organisation becomes larger, more diverse and complex. Lower level workers are specialists and want more autonomy or they leave the organisation. Company moves to more delegation.
Succes
Decision to be made to grow more or stay stable and profitable. As a result of the autonomy crisis the organisation
Control
structure becomes decentralized.
coordination techniques are required.
Turbulence
Use of formal systems for greater coordination in the decentralized organisation. Owner needs to delegate the responsibility. Strategic and operational planning is visible.
Staff
Every level is complaining about the other and about the
bureaucratic paper system. Formal and rigid systems are not suitable anymore because the organisation becomes too large. Top professionals are being attracted.
Stability
Social control and self discipline take over formal control. Team actions are present and the previous formal systems are simplified.
Unknown ?
Table 2: Combined growth model
The next chapter will give more information about hrm and especially hrm topics in regard to the labour shortage. These will be recruitment, selection and retention because these topics are
expected to be related with fast growing companies and hrm problems in times of a labour shortage.
The question now arises in which stage(s) of the model are the hrm problems the biggest and does the current labour shortage affect this? Chan et al. (2006) state that attracting management and staff, in short recruitment, is the most important problem/challenge for growing companies. So from this perspective it should seem that the answer would be the second or the third stage but we do not
3 Human resource management
3.1 Hrm and small companies
After the start up of a new company, becoming an organisation and the hiring of the first employees, issues like human resource policies will arise, which influence the success of an organisation
(Barringer & Jones, 2004; Baron, 2003). According to Baron (2003) the inability of the entrepreneur to manage the human resource issues in a good way is an important factor in the failing of many companies.
Small and medium sized companies differ in hrm compared to large companies:
1. The structure and culture of sme’s is more informal and the owner has a large influence on the company and the hrm in the company if present at all.
Due to the lack of formal policies and procedures it is hard to identify the amount of hrm applied in sme’s. The highest priority of the hrm department, if present, is the recruiting and selection of new employees to fill the growing group of new jobs (Balkin, 2003; Bullar & Napier, 1993). During this process there is no or little attention for the external environment and strategic issues are not taken into account in the development of hr programs but as companies grow this will change slowly
(Bullar & Napier, 1993). This growth also assures the development of the necessary organisational processes like action control systems. Especially in the human resource systems there is a lot of advantage of the formalisation because it clears expectations, facilitates coordination and makes controlling easier with organisational rules and employee roles (Davila, 2005). External financiers have a share in this as well they prefer to see tight control to formalized systems.
2. Smaller companies in general have more trouble recruiting new employees compared to large companies (Williamson, 2000; Bullar & Napier, 1993).
They usually lack formal hr policies or systems (Barringer, 2004; Cardon & Stevens, 2004). This is
caused by the fact that small companies can not, like large companies fall back on their name, reputation or market share. Small companies on the other hand usually fall back on their informal social network, especially if the organisation is new, which can limit the growth potential (Barringer, 2004; Barber et al., 1999).
3. They do not have the financial potential to use the formal hr policies, which
large companies use.
This is why they often seem to have a ‘muddle trough’ recruitment strategy. They say it is more efficient to use recruitment resources which use little to no long term or advance commitment, like newspaper ads, direct solicitations, informal references, or staff ads instead of recruiting on
campuses. Small fast growing companies do not start a long time in advance with recruiting staff for a position which is not yet available, like most large companies do. Small companies include the owners/entrepreneurs of the company in the process of hiring new employees when the company is not growing so fast yet. As soon as the organisation grows bigger this will be done less frequently.
3.2 Definition
Human resource management means managing the people in an organisation. It refers to the
policies, practices and systems that influence employees’ behaviour, attitudes and performance (Noe et al., 2003). Hrm consists of several important practices which all together lead to the companies performance. The different practices are analysing and designing work, determining human resource
needs, attracting potential employees (recruitment), choosing employees (selection), training and development, rewarding employees, evaluating performance and creating a positive work
environment.
Effective hrm is strategic and improves business performance by contributing to employee and customer satisfaction, innovation, productivity and development of a favourable reputation in the
business community (Noe et al., 2003).
3.3 Growth and HRM
Research shows that growing companies face different problems. According to de Kok et al. (2006)
empirical research confirms that in general, smaller firms make less use of professional HRM practices than larger firms. For example, smaller firms make less use of formalized recruitment practices, provide less training to their employees, and are less likely to use formalized performance appraisals. Despite the size effect, research suggests that far from being homogeneous, small firms
• attracting management and staff,
• human resources management
• employee development
• management/executive development
• succession planning, staff retention
Together they account for 20% of the business challenges and are at second place. The first place,
with 37% is for the managing of growth and development. They make a difference between the amounts of employees in a company. From 10 till 100 fte’s hrm problems/challenges is 9,5 % of the total challenges. As soon as the company gets bigger, the percentage is doubled. With 101 till 300 fte’s it is 21.2%.
Research by Kanzanjian (1988) pointed out that human resource is ranked second or third from five as dominant problems in the different stages of growth. Kotey & Slade (2005) argued that the ability to recruit extra staff and to delegate responsibility to them is one of the most important skills for business growth (Balkin & Swift, 2006). Fast growing companies have to attract new employees very quickly, which creates a need for new organisational structures to lead the big stream of new
employees in a good way (Greiner 1972). In many classifications of organisational problems, the unavailability of the necessary labour, capacity or experienced human resources is being excluded (Terpstra & Olsen, 1993). The entrepreneurs who started the business have most of the time no management knowledge, in particular not about human resource management, which is especially critical in these kind of organisations. Some writers state that effectively managing human resources
is one of the most crucial problems for small companies (Tansky & Heneman, 2006). According to them personnel, compensation and rewarding issues are the most relevant issues for future success of the company. Entrepreneurs state that the most important factors for their success are the development of high potential employees, who can practice different roles in different growth stages
and matching the organisational culture with the people (Heneman et al. 2000).
Company growth theories point towards the positive correlations between firm size, complexity, and professional HRM practices. As firms increase in size and complexity, they typically develop more layers of management and more formalized and/or systematized procedures and policies in order to
process information more effectively within the organization. There are various explanations for this finding. For example, larger companies have a greater demand for human resources, and therefore, a greater demand for specific HRM practices such as recruitment, selection, and performance
A big difference between small and large companies is that big companies have professional
recruiters working for them so that they make fewer mistakes when recruiting people. In small companies this is different; if they make the wrong decision it is going to be a costly process and will be noticed faster than in a big firm. Selection is very important for small ventures (Hornsby & Kuratko, 1990) because in a small firm it will not take a long time to discover that somebody is not functioning. But on the contrary there are researchers, for example Bullar & Napier (1993) who say
that the labour costs in entrepreneurial high growth companies are of relatively low priority. They state that to attract the sufficient and often highly technical talent it does not really matter how high the labour costs are as long as they can attract those people and survive with their help.
Like most authors they do not specify about which growth stage they are talking. Bullar and Napier (1993) state that labour costs are not so important during fast growth, so that means the company
has already grown a lot because otherwise it would not have enough money to finance the growth. It would be better to specify the growth stage the company is in if labour costs do not make a
difference because that is not the case in all stages of growth.
3.4 Recruitment, selection and retention in sme’s
Recruitment
‘Human resource recruitment’ is every activity in a company focused on identifying and recruiting of potential employees (Noe et al., 2003). It is expected that as firms grow, the skills and abilities required to perform various functions and activities would no longer be available from the familiar
and informal recruitment sources preferred by the owner-manager (Kotey & Slade, 2005). As firms grow there will be an increased use of formal hiring procedures (Barber, 1999). According to Bullar & Napier (2003) recruitment and selection of employees was by far viewed as the most important hr activity to their success by fast-growth firms. The expectation is that in times of labour shortage the
growth of a company is being restricted by the fact they can not hire enough qualified people.
Smaller companies do not make up a profile of what kind of candidate they want to have but instead screen the available applicants on the labour market (Williamson 2000). Another way of recruiting is according to the usual way, like personnel advertisements, recruiting brochures, university
Selection
It appears that ceo’s/entrepreneurs of sme’s care a lot about the competency of their personnel and matching these competencies earlier with organisational requirements than job requirements (Heneman et al., 2003). With competences we mean; believes values and interests instead of knowledge, skills and abilities. This means that the growth-oriented ceo/owner is not so worried about the traditional hrm practices/techniques like interview methods for staffing or job evaluation
procedures in compensation. These traditional hr subjects focus on matching knowledge, skills and abilities from the person with the job requirements. But they more value matching the personality characteristics than only skills, knowledge and abilities, with the values and culture of the company.
Retention
It may be obvious that if there is a hrm manager available this person gets less training than
somebody in the same position at a large company (Barber et al., 1999). To recruit and retain people the recruiter does not have to offer a high salary but instead they have to offer good benefits and advantages which show the vision of the company. It has to be clear to the potential employee what
the growth goals, career perspectives, the leadership style, training possibilities are as well as the level of respect for the personal freedom and work life balance. Another important point is the quality of work life and advantages like child day care or an informal dress code (EIM, 2003). Fast growing companies hire young staff most of the time because these young professionals can adapt quicker to the rapidly changing environment. It is an open environment and the emphasis is on
enjoying your work (EIM, 2003).
Growing companies have to hire the right people for the right place but this is especially hard when there are not enough potential employees available on the market. During growth the human resource department has to use a different type of employee in these circumstances (Vickers, 2007).
Later in the start-up phase the most common problems have to do with the hiring and firing of people. After this the company will become larger and the demand for new employees grows as well. At this point the focus shifts from attracting and hiring the right people to developing these people, managing the paperwork and compensation and benefit issues. In the high growth stage evaluation,
labour relations and affirmative action activities are not viewed as critical to the firm. These issues will come in the picture when the firm matures (Rutherford et al., 2003).
According to literature growth is not often defined in growth stages what in this paper is being seen as mandatory. These different growth stages have their own hrm problems which are probably being
becoming a larger focus point for fast growing small and medium sized enterprises. The case study
that is further detailed in the next chapter will show us if these assumptions are right.
Growth stage Stage 1 Existence No formal systems, owner is in control, leadership crisis Stage 2 Survival Workable business entity with the focus on revenues and expenses. Autonomy crisis Stage 3 Succes Decision to grow or stay stable. Decentralized structure. Control crisis Stage 4 Turbulence Strategic and operational planning. Delegation is main issue. Staff complains about bureaucracy Stage 5 Stability Team actions are present. Previous formal systems are simplified. HRM issues according to theory Not really present Formalization (Barber, 1999) Recruitment (Balkin, 2003; Bullar & Napier, 1993). Training and Development (Rutherford et al. 2003) Recruitment (Balkin, 2003; Bullar & Napier,1993). Delegation (Greiner, 1972) Training (Churchill & Lewis 1983) Assumed HRM issues for sme’s influenced by the labour shortage Not really present Recruitment (Henkens et al., 2008) Selection (Hornsby & Kuratko, 1990) Formalization Recruitment Retention (Henkens et al., 2008) Training Development Recruitment Retention (Henkens et al., 2008) Delegation Retention (Henkens et al., 2008) Training
4 Methodology
4.1 Case study
For this thesis a case study research is being chosen because it investigates a contemporary
phenomenon within its real life context (Yin, 1989). Case studies can be used to accomplish various aims: to provide description, test theory, or generate theory (Eisenhardt, 1989). Here theory is being tested to see what the most important problems are for fast growing companies in times of labour shortage and if they change according to the growth stage the company is in. This will be done by
following a set of pre-specified procedures (Yin, 1989; Creswell, 1994). Case study is a research strategy which focuses on understanding the dynamics present within single or as in this case multiple settings. The evidence from this case study will be more compelling and the overall study is therefore regarded as being more robust compared to a single case study (Yin, 1989; Eisenhardt,
1989). Case studies typically combine data collection methods such as archives, interviews,
questionnaires, and observations (Eisenhardt, 1989). In this paper the data will be collected only by telephone interviews in two fast growing companies. The interview questions are exploratory and the information drawn from it will be historical (Eisenhardt, 1989). The evidence of the case study will be qualitative (e.g., words), rather than quantitative (numbers) or both, due to the time frame.
4.2 Sample
The data for this study are taken from case studies at two fast growing companies. These companies will be (former) sme’s who have grown according to the definition of this paper, so 60% or more turnover or employee growth. The two companies differ in size and there is a possibility that we can see a difference in the results. The smaller company is an IT company that survived the internet
bubble and therefore it is interesting to look at how they survived. The larger company is a company from the marine industry, an industry which is not very often written about in literature, for that reason it will be interesting for a case study. Another reason is that this company is already quite big which makes the chances higher that they have serious issues in accordance to growth. Both
companies are located in a more remote area which makes it even harder to find employees than for
example in Amsterdam.
Management Facilities Group
The first company is named Management Facilities Group and located in the north of Holland in
employ 1050 people. The Marine Division, the central and absolute core business of the
Management Facilities Group, organises the daily management of the fleet, comprising product-(oil) and chemical tankers and multi-purpose(dry cargo) vessels. The area in which the dry cargo vessels operate is mainly Northwest Europe and the Mediterranean Sea. These vessels sail with bulk, wood products, steel products, pieces goods, containers and project cargo among others. The product and chemical tankers sail mainly in Northwest Europe. The shipping groups Marin Ship Management and
Flagship Management Company apply the concept of integral management. It starts with the supervision of the building of new vessels and goes on to the organisation of personnel, technical and financial matters. The staff is separated into office workers (56 persons) and staff who are working on the ships (998 persons). The last few years there has been a huge increase in staff and this is still the case.
Management Facilities Group was chosen because it is operating in an old and mature industry compared to the other companies. It is also not located in Amsterdam and surrounding area but in a more remote geographic area. This sector is not so common for research about fast growing
companies as the IT sector therefore it is interesting to include this company in the research.
At Management Facilities Group four people are interviewed. First of all the CEO of the company, she is also the founder of the company. The second person interviewed is her right hand, the
management assistant. She started working for the company one year after their start-up, so for the past 12,5 years. Third is the manager nautical and technical department and he is working for the company for the past 10 years. To get a perspective from an outsider the fourth person interviewed is a hrm consultant, attracted by the company. She has been working with MFG for the past year.
Concept 7
The second company is an internet technology company called Concept 7 and is located in the north of the country in Paterswolde, close to Groningen. It was founded in 1999 by five students and now has 25 people employed, with the first employee joining in 2004. Concept 7 is a specialist in user friendly websites and they are one of the only specialists in this segment. In the market they are one
This company is chosen because it is small compared to the other company and in a different growth
stage according to the model. It is expected that this company will give a different view on things compared to the other company. Another point is because it is a specialist in what it is doing and one of the only ones on the market. This can give a different outcome on the hrm area. It is also
operating in a turbulent market that is not fully grown.
There are four people being interviewed in Concept 7. From these four people, three are in the management. They are three of the five people who started the company so they are all owners. Two of them are now CEO and the other one is usability expert. The fourth person is the office manager and she has been working for the company since 2006 and is the longest working employee for Concept 7. Besides receptionist and secretary she is also responsible for a small hrm part in the
company.
4.3 Research Sub questions
The present study contributes to our understanding of the hrm problems across different growth stages in a sample of two fast growing firms. First of all we want to know what problems are dominant in fast growing sme’s. Research on this topic from Dodge et al. (1994) and Chan et al.
(2006) points out that hrm problems account for 12% to 20% of the total problems fast growing companies have to cope with. But did these facts change during the last years because of the labour shortage in the Dutch economy? This question is the first sub question:
Sub question 1: What are the dominant problems fast growing companies have to cope
with?
The previous question addresses the problems in general. We can ask the same question again but then in regard to hrm. So the second sub question will be:
Sub question 2: What are the dominant hrm problems fast growing companies have to cope with?
Sme’s who are growing experience different stages of growth. The dominant problems might change
Lewis’ model and the crisis stage, which is at the same time the dominant problem area, from Greiners model. 1. existence/leadership 2. survival/autonomy 3. success/control 4. turbulence/staff 5. stability/unknown
In these 5 stages there can arise different hrm problems or the problems stay the same during the different growth stages. This model serves as the input for the third sub question:
Sub question 3: What hrm problems are dominant in which growth stage in regard to the
model?
The Dutch economy has noticed the consequences of the growing economy and the ageing of the labour force. It is getting harder and harder to find skilled and loyal employees. The dominant
problems might have changed compared to a couple years ago due to the current labour shortage on the Dutch labour market. Therefore sub question four will be:
Assumed Impact of labour shortage:
Recruitment Stage 5 Stability
Previous formal systems are simplified and much teamwork.
Stage 2 Survival
Workable business entity with the focus on revenues and expenses
Stage 3 Succes
Company grows very fast. Decentralized structure.
Stage 1 Existence
No formal systems, owner is in control
Stage 4 Turbulence Strategic and operational planning. More delegation and bureaucracy
Assumed Impact of labour shortage: Recruitment, selection, retention Assumed Impact of labour shortage: Recruitment, selection, retention
Assumed Impact of labour shortage:
Retention 4.4 Conceptual model
In the previous sections we explained the presence of growth stages and the fact that hrm problems might change due to the growth stage the company is in and the impact of the labour shortage on it.
4.5 Data collection
Data is being collected with the use of interviews. The interviews are held by telephone to give the interviewees more flexibility. This is due to the fact that employees in a fast growing companies are
assumed to have a higher workload than regular and therefore it is easier to call. Calling is more flexible for changes and takes less time from the interviewee then a face-to-face interview. Also it is easier to arrange an appointment for a telephone interview than for a meeting.
At each company four people at different positions are being interviewed. Who will be interviewed depends on the availability of the persons, the time they are employed and the preference of the researcher. The persons interviewed will be women and men to get no bias due to sexes. The interview time is between 30 and 45 minutes.
The questions for the telephone interviews are derived from the sub questions and are being asked in the same order. They are first written down in Dutch and then translated to English to be
approved by the supervisor. The first interview was at the same time a pilot interview and some questions have been changed and the order of the topics has been changed. It turned out that it was better to ask if there is a hrm manager present in the company in the middle of the interview instead
of at the end. This because due to the previous questions the answer would already been given. After revising the questions they were used to interview the other seven interviewees. At that time not all interviewees were known but half of them were.
Next to the answers on the questions the interviewees gave extra background information on some topics and this is being incorporated in the answers. The analysis takes place in the same order as the questions. The questions asked by the interviewer are open-ended questions so the interviewee is encouraged to tell as much as possible about the subject. The questions are divided by subject, known as general problems with fast growth, hrm problems with fast growth, the impact of the
labour shortage and hrm problems compared to the growth stages. The questionnaire used for this research is based on the literature. The first questions are about general problems and included the problem areas:
• client management and marketing
• managing growth and development
• financial management
• external environment
• human resource management.
The second part is about more specific hrm problems:
• recruitment • selection • retention • motivating • training • compensation
• the pressure of labour costs on the company
This is based on research of Heneman, Tansky & Camp (2000). The following questions are about the presence of a hrm manager and questions about the labour shortage and their opinion about it. It ends with a description of every growth stage and the question what the most important issues were
5 Analysis
5.1 Analysis of general problems for fast growing companies
Sub question 1: What are the dominant problems fast growing companies have to cope with?
5.1.1 Analysis of Concept 7
According to a Concept 7 director the main problem is liquidity in the early growth stages. The important part is to have enough working capital. He states that:
“You have to keep in mind the payment time for your debtors because you want to grow fast but you need money for that. (…) You want to serve every client but you have to keep in mind the payment time. (…) Otherwise there is no money for the growth and you also have to make sure that you do not invest too much otherwise you will go bankrupt.”
The financial part is for a small fast growing company one of the biggest problems because you want to satisfy every client and keep them but then sometimes you forget that the payment period can be
3 months and you have to survive those 3 months. The CEO acknowledges:
“You are continually pre-financing and if you have new employees they will only cost you in the beginning.”
Human resource management as a large problem in the early growth stages appears to be the second problem according to one of the CEO’s:
“Human resource management is an issue but not the biggest one in the beginning”. But we have to keep in mind that this company has grown to 25 people. At this moment the human resource problems are becoming bigger and bigger and the finances are becoming less of a problem. So it could be that after a certain amount of employees there is shift in important issues from
finances to hrm. The office manager is taking some of the hrm tasks together with one of the owners who studied human resource management. The office manager comments:
“I am in charge of the employee files, the days offs, a specific bike plan and the absence
trough illness.”
For client management and marketing the usability expert and entrepreneur/owner both said that:
”The most important questions are how are you going to divide your attention and to who. This because you want to grow in the amount of clients.”
During growth important decisions have to be made regarding which clients to keep for the future and which clients will not grow with the company. Concept 7 is now at the point where they need to think about implementing a customer relation system but this has not been seen as a problem more
“Because you are so busy with running the company you forget your own website and
because this is what we do it is our business card as well. It should be a good example of what we do so we really had to schedule time to work on our own website.”
When you are so busy with the whole company you forget your own website easily but that is not acceptable for Concept 7 because that is their competitive strength.
Leadership has not been a huge problem for Concept 7 during their growth because from the
beginning they hired external advice from fellow entrepreneurs. Two out of the five entrepreneurs is director now and all five of them are still owners. According to the office manager:
“For me it was never unclear who I had to go to from the five entrepreneurs. But I do think that for some people it was not really clear who to go to in case of questions or issues.” Because the five guys started together they were all in charge, so after a couple of years they had to
change the structure. Two men became CEO’s and the others stayed owners. One of the directors comments on this subject:
“The leadership process was one of trial and error because it was new to us as well to lead other people, but luckily we hired external strategic advisors since the beginning that helped us a lot”.
There had not been much trouble with the external environment.
The management of company growth and development was a factor which caused problems as well, even though they had attracted external advice. The director says:
“We really underestimated the management of growth and development but it was good to bump our head and learn from our mistakes”.
This implicates that they did not see it as a problem but as a wise lesson for the future. The usability expert comments:
“What you see is that you want to become more and more flexible and for that reason you
have to go to a team-based structure instead of a functional cluster. Changing this is more a culture issue than a structure issue”.
5.1.2 Analysis of Management Facilities Group
For the Management Facilities Group (MFC) acquisition was one of the most important problems during the first growth. At the moment they are still growing but now problems have shifted compared to the first growth stage. The director explains:
“In the beginning acquisition was the main problem… now the clients know where to find us so at the moment the problem is more hrm, attracting new employees to continue our growth.”
According to her the managing of the company growth and development was one of the biggest challenges at the time of growth:
“A couple years ago we forecasted that we would employ 1000 people and what the consequences were going to be for the people in the office. Luckily we anticipated very well on this and managed to attract new people before the time we really needed them” Managing growth and development was a big issue when serious growth started to come off the ground. First MFG needed to find enough clients and when after a while the clients knew where to find them the next issue turned out to be, how to manage the growth. The management assistant
explains:
“When you are a small company everybody’s face is pointing in the same direction. In times of
growth and new employees some faces will be turned the other direction. To handle this, procedures have to be made and put on paper.”
MFG had to make the organisation more bureaucratic and the managing part became more
important to get everybody going in the same direction. The decision making part changed for a large deal as well. The management assistant comments:
“We were a small company where the decisions were made with a small group of people. During growth more managers were involved in the decision making process and had to lead more people. To try to keep the same speed of decision making and procedures you need to adapt to the changing situation.”
Everybody in the team needs to adapt according to the growth. Lots of things will change and this process needs to be managed carefully in order to get the best outcomes.
Financially there were not many problems even though the investments in the ships are huge. The
same can be said for leadership. The reason for this is that the entrepreneurs from MFG were growing personally as well. Growth is not only a matter of the company but as well from the people. If the entrepreneurs do not grow themselves it will be difficult to manage the company and the growth. The director confirms:
At MFG the early entrepreneurs are still working in the company at this time. They followed the
same growth path as the company did. This is one of the crucial things to do when it comes to growth in a company. If the managers in the company are not willing or able to grow with the company this will have its effect on the overall performance. But this is not only a prerequisite for the top management. The management assistant comments:
“All the people in the organisation should grow with the organisation. It can be that people you hired in the beginning are not coming along the growth path of the company”.
If it turns out that certain people are not able to grow along then you should replace these people. It is not only bad for the company itself but also for the people who most of the time, are not enjoying their work as they did before when the company is changing a lot.
For MFG the external environment has not been that much trouble during growth. Locally there are
some minor issues but not more than that. The parties involved in the trouble are always
governmental organisations. Most issues are about (changing) government rules and regulation. HRM is certainly a problem at the moment but in the early growth that was not much of an issue. Now the director herself is HR manager as well with help of an external HR manager. The external HR
manager comments:
“With the current labour shortage it is really hard to find the right people but you have to stay critical in your search….the fact that you can not find enough people is a serious threat for the
company its growth”.
So at the moment the hrm aspect is a serious issue but if we look at the beginning of the growth then
we can conclude that the issue was less important. Due to the current labour shortage it is much harder to find good people. With the growth of the company it was necessary to have an hrm manager, the management assistant adds:
“At the beginning there was one person responsible for the hrm for both the office and the ships but that was too much work. Now that person only focuses on the employees for the ships and we are looking for somebody for the office.”
For MFG this is not so easy because the hrm manager should have knowledge about the marine world. These people are not easy to find. The manager adds:
“HRM is one of the most important problem issues in our company due to our specialized business and the current labour shortage.”
Concept 7 MFG
1st stage Finances Acquisition
2nd stage Hrm Managing growth
and development
3rd stage Hrm Managing growth
and development Hrm
4th stage Hrm
5th stage
Table 4: General problems
According to the answers on the questions we could divide the problems in different stages. What we see is that the two companies have different problems in the first two stages. This is due to the fact that by the time MFG started to grow fast the financial part was already taken care of. For MFG
5.2 Analysis of hrm problems for fast growing companies
Sub question 2. What are the dominant hrm problems fast growing companies have to cope with?
5.2.1 Analysis of Concept 7
“For Concept 7 we need specialists who have the drive to work for us and who are enthusiastic about their work and our company”.
This quote from the director can be seen in two ways. The first one is that for Concept 7 it is not so hard to find good skilled people because they are a specialist in their field and people really want to work for them. The second one is that because of the speciality they have a hard time finding these skilled and enthusiastic people at a time when the market is already small. Both ways are true for
Concept 7. On the one hand it is hard to find these prospective employees but on the other hand people find Concept 7 themselves and then you have the people at the gate who are very much driven for the work. One of the CEO’s explains:
“The people we look for are specialists and those are not easy to find on the market”.
They also give a bonus to their own employees if they suggest somebody and that person is hired, in
this case they do not spend money on an external company so they give it to the employee. When Concept 7 has a vacancy there is a strict selection. The director acknowledges:
“From the people who eventually are being invited for an interview still 80% falls off because
they are not good enough or simply because there is no click with the rest of the team. This latter is a very important part for our company. The work atmosphere should be excellent and this is not the case if we hire a highly skilled person who is not fitting in. But this works, unto certain levels, the other way around as well, if somebody has a great click but lacks something then that person could
be hired and given a training.”
At Concept 7 the selection is taking part on the basis of the persons themselves as well as on the skills, which makes it extra hard to find the best employees. The good part is, that the people who
are working for the company have a high commitment and are very motivated. A different point of selection is the skills the employees should have. Somebody who comes straight from school should be good enough but at Concept 7 they would rather have people with work experience. The usability expert explains:
“Concept 7 is putting high demands on their employees. (…) According to us the current students do not have the sufficient skills for the work learned at school. The level they have when they leave school is sometimes a bit disappointing to us and for that reason we prefer people with work
