CHAPTER 3 REVIEWING PERSONNEL
From an investor’s viewpoint, a company is little more than the people who work for it.
Companies succeed because the people make the company succeed. A company usually
fails because the people fail. An entrepreneur alone cannot carry a company very far;
there must be a group of people dedicated to the success of the corporation. The
entrepreneur can be a quarterback and can call some extremely good plays, but without
the complete team—all the employees working together—no entrepreneur can succeed.
One of the most important areas for an investor to investigate is company personnel.
What is the true work ethic inside the company? What is the group culture? How do the
company’s personnel shape up in comparison with the competition? In this chapter we
look more closely at the due diligence involved in checking out the personnel of a
HAW IS THE COMPANY ORGANIZED?
Academicians have studied company organizations for years. Academic and popular
press have reported revelation after revelation regarding the corporate culture. Each
season, a new group of buzzwords seems to appear to describe corporate
organizations. If you are to understand the company and how it operates, you must
understand how the company is organized.
CORPORATE ORGANIZATIONAL CHART
Organizational charts are necessary in even the smallest corporations in order to
delineate the relationships between various people and to spell out each staff member’s
responsibilities. Organizational charts give a clear visual presentation of the
corporation’s hierarchy. Every organizational chart should indicate who is at the head of
production, marketing, and finance. In the early stages of the company, one individual,
usually the president, may play several of these roles, but it is understood that
somewhere in the life of the company a person will be hired to perform each function.
Some small companies don’t have organizational charts, and when they don’t, you
should construct one while talking to the entrepreneur. Draw a chart and put people’s
names on it. Determine who reports to whom and exactly who is responsible for what
functions in the company. In turn, it will give you a very clear understanding of how the
people interact and how the corporation functions. Although some academicians argue
that organizational charts are not necessary or, at the least, that they rarely reflect the
total interaction in the company (and we concur with the latter criticism), most
investors think a chart is a good beginning. It may be that one individual reports to two
people for certain jobs in which that individual is currently carrying out two functions. It
is rare, however, to find that job functions have not been delineated in a larger
organization. When they have been delineated, it’s fairly easy to construct an