A new study from a Tippie College of Business researcher provides management lessons that can help newly public businesses survive long-term. 

For starters, have an HR exec. 

In 1997, researchers surveyed executives from 183 of the 802 companies that went public the year before. Twenty years later, they reached out to the surviving 93 businesses to see what management lessons they could offer. 

They found…

—Maintaining the urgency of the IPO and valuing employees are keys to long-term success.

—But too much—or too little—of either urgency or valuing employees can lead to failure, as too much urgency leads to burnout and too much focus on employees leads to lack of inertia and mediocrity.

—Having an HR exec increases the likelihood of success, as that person can keep leadership focused on implementing the right balance, both at the time of the IPO and into the future.

Miranda Welbourne Eleazar, assistant professor of management and entrepreneurship in the Tippie College of Business, said that the values of the firm’s founders are imprinted at the time of the transformational event of the IPO. The level of sustained commitment to these values determines whether the firm succeeds or fails long-term. 

While valuing employees is a standard human resources practice, the methods for optimizing that sense of urgency or the need to do so are not well known, so the research team also focused on practical strategies to help leaders find this balance to continue growing their businesses. Among those strategies…

—Strike a balance between urgency and employee focus without overdoing either. 

—Hire a strong HR exec who can help implement strategies to achieve these goals. 

— Consider HR as a strategic tool, not an afterthought. Too often the human side of a business is ignored by managers during an IPO. They should integrate HR into their plans to focus on how employees are managed and rewarded. 

—Encourage employees to feel a sense of ownership and investment in the firm, pushing performance while making employees feel valued.

The study is published in the journal Personnel Psychology.

Media contact: Tom Snee, 319-384-0010 (o); 319-541-8434 (c); tom-snee@uiowa.edu