Brief Overview:
In this assignment, you will be providing recommendations to a local Startup here in Melbourne: ChemCloud https://www.chemcloud.com.auLinks to an external site.. In conjunction with the founders of the business, we have created a case study that outlines relevant information about the organisational context and goals. The questions in this assignment are real challenges that the leaders are grappling with right now!
Your task will be to answer specific questions and provide evidence-based recommendations to the Founders. These recommendations will need to be based on a thorough review of relevant research (please don't just go to ChatGPT to get generic information; they have come to you for thorough, research-based advice that is tailored to their needs). This is a research assignment so you will need to go beyond the core materials provided in this subject to gain a deeper understanding of the challenge and possible alternatives that the founders could pursue.
Your insights will help the founders to understand the options available; unpack relevant research perspectives; and make informed decisions. You can make a real impact!
First Step:
Watch the interview between Emma and Hector Williamson (Co-Founder of ChemCloud) that provides background about the task. Hector also provides information about the organisation's core values: Excellence and Customer-Centricity.
Case Study Details:
Seizing an opportunity.
ChemCloud was founded in 2021 by friends Hector Williamson and David Wright. David managed his family's industrial chemical manufacturing business while Hector was a consultant at BCG, supporting ASX20 companies to improve their procurement processes and launch digital products. David had seen firsthand how chemicals could drive product innovation and delight customers; but, he had also endured the headaches that came from dealing with daily transactions trapped in a world of phone calls, emails, faxes and spreadsheets. ChemCloud was born out of the founders’ belief that there had to be a better way. When they didn’t find it, they decided to create it themselves.
Welcome to ChemCloud: a digital procurement and sales marketplace that makes it easy to discover, buy, and sell chemicals. Through the platform, buyers can source all of their chemicals and raw materials from trusted suppliers, make payments, then track the location of their order and schedule production with confidence. Suppliers can create quotes and manage payments and delivery in a streamlined way. ChemCloud reduces waste by connecting chemical distributors and manufacturers at the right time. See figure 1 for ChemCloud’s product description.
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Figure 1: ChemCloud Product Description (Source: Crunchbase, 2024)
Getting started.
Hector and David began working on the ChemCloud idea at the end of 2020, starting off with customer interviews to define the problem they needed to solve. With these insights, they were able to create mockups of the platform to test with customers, quickly realising that this was a viable business opportunity. In 2021, both founders quit their jobs to go “all in” on the business. David had the industry experience, Hector had the product management experience but they needed to find a software engineer to build the product.
Assembling the startup team.
The founders considered two options to build the technology:
- Contract it out: work with contractors or a third-party organisation until they had enough traction as a business to attract talent in this area.
- Build it in-house: Recruit a Chief Technology Officer by offering up a significant equity stake in the business to make the opportunity appealing.
The market for software engineers was fiercely competitive and the founders were realistic about their chances of attracting the talent that they needed at such an early stage. They were also concerned that their own lack of technical knowledge would make it difficult to assess and compare candidates, which could lead to a poor hiring decision and the need for costly rework down the track. With this in mind, they decided to approach a Digital Studio in Melbourne that could supply 3 pre-vetted software engineers to build the ChemCloud platform. Despite many potential investors advising against this pathway as it can be seen as outsourcing a critical part of the IP of the business, this partnership gave ChemCloud access to full-time software developers for 18 months, which meant they could quickly get the business up and running. David has said that the “partnership was invaluable. Not only have they helped us to build our technical platform, but the [model] has enabled us to accelerate our business faster than we ever imagined” (Wright, as quoted in Small Business WorldLinks to an external site., 2024).
Once the initial work was completed and the business had demonstrated product-market fit, the Digital Studio helped the founders find a CTO and allowed them recruit one of its own contractors as a permanent employee. During this period, ChemCloud raised Seed Funding to add product features and bring more team members on board.
Aligning the organisation.
Fast forward to June 2024: ChemCloud has a team of 8. See figure 2 for the breakdown by role focus.
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Figure 2: Team breakdown by role type (June 2024)
The business performance has been strong. Gross sales through the platform grew 2x in FY24 and are projected to double again in FY25. At the same time, ChemCloud is introducing a subscription model for features on the platform.
With their growing team, the founders are looking more closely at their people processes. They recognise the need to adjust and formalise HR practices to help ChemCloud attract, manage, develop and retain a high performing team. Specifically, Hector and David have come to you for advice on two areas of their business:
1. Reward and Performance Management
The success of ChemCloud relates purely to customer adoption – measured by gross sales and number of subscribing customers. Every team member contributes directly or indirectly to the sales results, however, some employees have more control over sales performance than others. The founders would like to know how reward packages should be developed to tie team members' compensation to the business performance, but also ensure that team members can exercise a degree of control over their compensation (i.e. making sure that this is a fair and reasonable reward strategy).
Your task:
- Provide advice to ChemCloud founders regarding the reward strategy for their employees. The response should take a clear position on whether or not ChemCloud should implement variable rewards for team members (also termed pay for performance, performance-based or performance-related pay, incentives or ‘at risk’ rewards) as well as provide detail on the specific reward types, structure and implementation considerations. Remember that there are a range of variable reward options, each with its own merits and limitations. If you do not advocate for variable rewards for ChemCloud, be clear on the reward strategy that you recommend instead.
- Recommendations must be based on a review of relevant academic research and theory. They should also take into consideration the business context of ChemCloud including the types of roles and unique startup environment.
- Consider the goals of an effective reward system (discussed in seminar 7). Also, remember that a good reward strategy has a degree of consistency in the overarching approach but individual packages may vary according to the employee’s role and management level. (i.e. depending on what the research tells you, you may wish to adopt the same structure for all employees or you may wish to differentiate between senior employees and junior employees; employees with a direct impact on sales vs. indirect impact on sales or other distinctions that you feel are appropriate.
- Also consider making complementary recommendations relating to other HRM practices and processes (such as performance management) to align with your reward strategy.
2. Diversity, Equity and Inclusion:
The founders are contemplating the diversity of their team. Talent acquisition is a challenge for early-stage tech startups given the shortage of available candidates; limited resources; and uncertain employment proposition when competing with established companies. Hiring often occurs opportunistically until the organisation has established a brand and value proposition that can attract a diverse candidate pool.
From the outset, the ChemCloud team has encompassed diverse skills and experience (also termed ‘acquired diversity’ – see Hewitt, Marshall and Sherbin, 2013) but acknowledge that there is room to enhance the ‘inherent’ diversity (such as gender and ethnicity). Research tells us that diverse teams are more innovative than homogenous teams, so how can the founders make sure that they acquire and support a diverse team as ChemCloud grows?
- A) Briefly outline the benefits of diversity for an organisation like ChemCloud. Is this the right time to focus on diversity, equity and inclusion?
- B) Make practical recommendations for increasing the diversity of the startup team. Consider approaches to recruitment, selection, job design and/or HR strategy. Make sure that these are appropriate for ChemCloud’s stage of maturity.
- C) We know that the benefits of a diverse team can only be gained if the work culture and practices are also Inclusive and Equitable. What should ChemCloud do to enhance inclusion and equity?
- In your recommendations, discuss timing, phasing and cost where relevant. Make sure your recommendations are practical and consider the challenges that startups face with attracting talent.
- Recommendations must be based on a review of relevant academic research and theory. They should also take into consideration practical examples from comparable organisations to demonstrate the congruence of these recommendations with the organisational context.
Additional guidance:
- Theory in practice: In this assignment, you will be demonstrating your ability to synthesise and apply research perspectives to make practical, feasible recommendations that a startup could implement in the real world.
- Additional research: You will need to conduct additional research on top of the references provided in the subject. See the "further reading and resources" as a starting point.
- Balance: Where the research is mixed, please discuss the potential risks and alternatives to give the Founders an understanding of the bigger picture.
- Format: The report should be presented like a professional consulting report. Please integrate visual aids such as diagrams, summary tables, graphs, headings or bullet points to highlight your key messages. Please include an executive summary at the start of the report (this will not be included in the word count). See here for short adviceActions on reports and an example of a consulting report EditActionsto see the 'look and feel' of the format.
- Referencing: All sources of information must be cited and referenced according to the APA format.