ESSEC EXECUTIVE EDUCATION

Advanced Master Program

Strategy & Management of International Business
Class of 2018 – 2019

PROFESSIONAL THESIS
for the Advanced Master graduation
SMIB ESSEC 2020

Hypergrowth in startups : What Are The Pitfalls To Avoid To Sustain Business While
Going Through an Hypergrowth Phase? The Case of Epsor
By RICHARD Alexandra

Date of the thesis defense: 7th November 2019

Chair of the jury: Stefan GRÖSCHL– ESSEC Professor and Founder of Co-Chair Leadership
and Diversity
Thesis supervisor: Stefan GRÖSCHL
Guest, jury member from the company Epsor: Julien NIQUET - CEO

Not Confidential
 1. Executive Summary

France is a ‘Startup Nation’, more and more startups are created each year (10 000 in 2018,
13 000 estimated in 2022). With all these startups blossoming, new issues and challenges raise
as they enter their hypergrowth phase, with a the massive acceleration of recruitment, sales, and
activity in general.
The purpose of this professional thesis is to assess the pitfalls startup should avoid while in
hypergrowth. The goal is to frame the concept of startup and hypergrowth, in order to explore
the themes of leadership and culture, knowledge management and human resources
management. The literature review will enable to postulate hypotheses regarding the trends on
these three subjects, which will then be analyzed in regards to the case study of a French Fintech
called Epsor.
Overall the case study tends to validate the hypotheses established, reinforcing the fact that
internal communication enables the leaders to assess their vision and goals to the team and
strengthen the company’s culture. In addition, it confirms that a structured Human Resources
Management with a formalized recruitment strategy is a powerful tool helping a startup go
through hypergrowth successfully. Finally, A Knowledge Management approach seems to
enhance productivity and help maintaining skills, know-how and culture of a firm.
 2. Acknowledgements

First, I would like to thank my thesis director Stefan Gröschl, Founding Co-Chair Leadership
and Diversity for being such a supportive and comprehensive mentor throughout this thesis
redaction. His precious advice helped me get the best of my experience to translate it in this
thesis.

I owe a special thanks to the founders of Epsor, Julien Niquet, Benjamin Pedrini & Julien
Murgey for welcoming me in their innovative fintech for my internship as their right arm. This
experience has been one of the most valuable I ever had the opportunity to take, and allowed
me to get a deeper understanding of a start-up challenges and stakeholders.

I would like to express my gratitude to all my colleagues at Epsor for making this experience
such an incredible journey. Your support, understanding and help was highly appreciated.

Finally, I owe a last thanks to my relatives, particularly to Thibault and Baptiste who were great
readers, advisors and support during the redaction of this professional thesis.
 3. Table of Content

1. Executive Summary ........................................................................................................... 2

2. Acknowledgements ............................................................................................................ 3
3. Table of Content ................................................................................................................ 4
4. Introduction ....................................................................................................................... 5
5. Literature Review .............................................................................................................. 6
5.1 Start-ups & SMES ................................................................................................................6
5.2 Hypergrowth..........................................................................................................................7
5.3 Factors stimulating hypergrowth ........................................................................................8
5.3.1 Leadership & corporate culture ........................................................................................................ 8
5.3.2 Knowledge management ................................................................................................................ 13
5.3.3 Human Resources management ..................................................................................................... 18
5.4 Conclusion............................................................................................................................20
6. Case study: Epsor ............................................................................................................ 22
6.1 Methodology ........................................................................................................................22
6.2 Presentation - Epsor............................................................................................................22
6.3 Leadership & corporate culture ........................................................................................23
6.3.1 Leadership and internal communication ........................................................................................ 23
6.3.2 Corporate culture ............................................................................................................................ 25
6.4 Knowledge management.....................................................................................................26
6.4.1 Onboarding Week........................................................................................................................... 26
6.4.2 Knowledge Base ............................................................................................................................. 28
6.5 Recruitment strategy ..........................................................................................................30
6.5.1 How to recruit? ............................................................................................................................... 30
6.5.2 Global recruitment strategy ............................................................................................................ 31
6.6 Conclusion............................................................................................................................33
7. Discussion & Recommendations .................................................................................... 35
7.1 Common observations ........................................................................................................35
7.1.1 Leadership & Culture ..................................................................................................................... 35
7.1.2 Knowledge Management ................................................................................................................ 36
7.1.3 Human Resources ........................................................................................................................... 37
7.2 Limits of this study ..............................................................................................................39
7.3 Recommendations ...............................................................................................................39
8. Conclusion ....................................................................................................................... 41
9. Bibliography .................................................................................................................... 42
10. Appendices ....................................................................................................................... 47
 4. Introduction

France is a 'Startup Nation', conducive to the creation of startups: there were more than 10,000
in France in 2018. This figure continues to increase, with 13,000 startups estimated in France
in 20221. Indeed, France is the country where the population is most likely to want to start a
business in the next 3 years (18% of population in France, 15% in the United States, 12% in
Ireland)2.

However, 44% of startups shuts down in their first three years of existence, and 50% in their
first five years. The reasons for these failures are numerous: difficulty of recruitment,
administrative complexity, cost of work, etc. 3 There are many challenges and pitfalls to avoid
in the development of a startup, especially when going through an hypergrowth phase. This
phase generates a multiplication of the problems encountered due to the massive acceleration
of recruitment, sales, and activity in general.

It is therefore necessary to prepare the startup and teams to accommodate to hypergrowth not
to be quickly overwhelmed. The preparation to hypergrowth is a deep transformation of the
company. It needs to shape and structure a clear Human Resources strategy in order to recruit
efficiently and fast. In addition, there is a need to stock knowledge : with an increase in
recruitments, the turnover may also be affected, with two challenges : the transmission of
knowledge to new employees, and the loss of knowledge during the first departures. Eventually,
the last essential subject to care about is leadership, and more importantly the corporate culture
of the company, which might be diluted due to the high employment.

In order to explore startups in hypergrowth, and more deeply these three subjects that are
Leadership and culture, Knowledge Management and Human Resources, this thesis will first
conduct an analysis of the literature on these matters to identify trends and theories.

In Chapter 6, it will explore the case study of Epsor, a French Fintech in hypergrowth. This
case study will focus on the major implementations in terms of Leadership and culture,
Knowledge Management and Human Resources during these last 6 months, when Epsor started
its hypergrowth phase.

Finally, Chapter 7 will put in perspective the literature review with Epsor’s case study to
validate or not the hypotheses established in Chapter 5.

1
Chaltiel A., Point d’étape sur l’écosystème startup français en 2019, https://medium.com/@AdrienChl/point-
détape-sur-l-écosystème-startups-français-en-2019-4c0defa4180
2
Global Entrepreneurship Monitor 2017/2018
3
EY, La performance économique et sociale des start-ups numériques en France, Baromètre 2017
https://www.ey.com/Publication/vwLUAssets/ey-thumbnail-barometre-france-digital-2017/$FILE/ey-barometre-
france-digital-2017.pdf
 5. Literature Review

In order to better understand hypergrowth in start-ups, an analysis of the existing literature was
carried out. This analysis will explore in depth the concepts of start-up and hypergrowth to
better define them. Then, a focus will be made on three particular subjects where leaders can
easily fall into traps: Leadership & culture, Knowledge Management and Human Resources
Management. These three subjects are key in a start-up development and hypergrowth phase
and is a matter on which leaders should be vigilant in order to ensure a sustainable growth.

5.1 Start-ups & SMES

The French Ministry of Economy and Finance has renamed startups the "young sprouts" of the
new economy. It raises the difficulty to distinguish start-ups from other emerging SMEs of the
old economy. Start-ups would be small businesses working with the Internet. If the precocity
of these companies is certainly one of their fundamental characteristics, it remains that they are
different from their counterparts of the old economy by the innovation on which they rest. The
new economy is often compared to a virgin space that remains to be explored (Ferre, 2000;
Godeluck, 2000). Start-ups are expeditions through unknown lands: each one advance with an
innovation - whether a product or a sales method - that would allow it to enter new markets.

Such innovative companies, however, take a major risk of going in search of a niche market
that might not exist. In fact, nothing assures the entrepreneurs that their innovation will find
buyers. Rare are the attempts of identification which precede the expedition: the market studies
are almost impossible in this economy which is not yet fully explored. Driven by faith in the
discovery of a market, entrepreneurs are forced to build business plans with a delayed economic
model: large losses in the short term finance an try - more or less risky - which must lead to the
discovery of miraculous markets (Xardel, 1997). Many business plans thus foresee to start by
losing money before actually be profitable.

Therefore, start-ups are companies that bet on the value of an innovation and its reception by a
potential market. Unlike traditional SMEs that are cautiously built, interacting with the market;
start-ups operate according to the logic of the game of poker. In fact, the bet on innovation that
entrepreneurs, investors and employees paid in stock options take is risky and at high stake. It
is risky because it is unsure that the market exists and because the delayed economic model
does not make it possible to verify it. It is then of a high stake since the sums invested are very
important. Thus, it is the stakes and the risks taken which clearly distinguishes the start-ups of
the classic SMEs. Start-ups are thus different from SMEs in the old economy by three of their
characteristics: innovation, the type of bet and the need to use investors. These characteristics
result in several consequences for the operation and organization of the company, especially
when a start-up enters its hypergrowth phase.
In this professional thesis, we will consider equally SMEs and start-ups as we want to focus on
the impact of hypergrowth on these small structures.

Their particularities therefore are a reduced organizational size, a strong centralization around
the owner-leader, a common entrepreneurial vision, a very low degree of formalization of
management and production activities, increased flexibility in the face of change, and a
relentless vulnerability to competition at all levels (d’Amboise and Garand, 1993).

5.2 Hypergrowth

Hypergrowth has been studied for more than a decade and is getting more and more covered.
Indeed, Henrikson and Johansson identified 20 studies dealing with the phenomenon of
hypergrowth between 1990 and 2010, while Coad and al. (2014) count 100 for a period from
2010 to 2014.

Medoff & Birch defined hypergrowth firm as those reaching at least 20% growth in annual
sales, during four years, for a revenue base of 100 000 $US. For Delmar and al. (2003),
hypergrowth firms are the 10% most performing in regard to sales and workforce growth. For
the OECD, hyper-growth firms are start-ups under 5 years of age that achieve an annual growth
rate of over 20% in employment over 3 years and started the business with 10 employees.

Identifying hypergrowth companies is complex. There are numerous definitions and

explanations. It could be defined as an exaggerated form of business growth, marked by a very
fast increase in size. The methods for measuring this rapid growth are multiple and subject to
debate: increase in the number of employees, in turnover, in the balance sheet total; measured
in value or realized in growth rate. The debates are numerous to define a company in
hypergrowth, to the point that it is difficult to leave a consensual definition.

Fischer and al. (1998) characterize it as a company that has grown more than 20% a year for at
least five years. Upton and al. (2001) describe it as companies growing faster than 80% of
companies in the same country. In the works of Betbèze and al. (2006), several possibilities of
definition are proposed: revenue growth can be either more than 45% in four years, or more
than 100% in four years, or more than 10% each.

The diversity observed is based on various criteria used to measure it: turnover and / or staffing
(Brüderl and Preisendörfer 2000, Coad and al., 2014) in absolute or relative value relative to
the sector (Ambroise and al. 2010), sales (Birch, 1979, Birch and Medoff, 1994), duration of
the phenomenon (3 years for Moreno and Casillas, 2007, 4 years for Brüderl and Preisendörfer,
2000, 5 years for Coad and al., 2014), assets (Diambeidou and Gailly, 2011).
Then, hypergrowth is generally considered as a rapid growth phenomenon, in a limited amount
of time, in terms of sales, revenue & workforce.
However, as stated by Delmar and al. (2003) :

“Sales are sensitive to inflation and currency exchange rates, while employment is not. It is
not always true that sales leads the growth process. For high-technology start-ups, and the
start-up of new activities in established firms, it is possible that assets and employment will
grow before any sales will occur.”

Delmar is therefore emphasizing the workforce growth over sales to evaluate growth in a
company, as sales can occur must further than recruitment.

There are two types of models defining the growth of SMEs. Some present it as a process
modifying the parameters of the SME, which goes through different stages of growth (Mustar,
2002, Delmar and al., 2003). In contrast, we find models of variance, rather based on reasons
explaining the high growth (Julien, 2002, Chan and al., 2006, Wiklund and al., 2009). Chanut-
Guieu and Guieu (2011) describe the hypergrowth trajectory as a succession of phases, during
which the company is modeled (between 3 and 6 phases), depending on a scope of factors such
as strong leaders and late structuring of the human resources and financial functions. Delmar
and al. (2003), following Churchill and Lewis (1983), criticized these models in 6 stages,
considering that hypergrowth SMEs are experiencing heterogeneous development.

We will therefore consider hypergrowth as a fast increase in workforce on a limited period of

time (2-3 years). It is interesting to develop our understanding of the factors that stimulate
hypergrowth to help entrepreneurs ensure their growth will be sustainable, such as management
& culture, knowledge transfer and recruitment.

5.3 Factors stimulating hypergrowth

5.3.1 Leadership & corporate culture

Leadership and internal communication

One of the main characteristics of SME’s strategy and management is the strong influence of
what can be gathered under the name of proximity effects. If it allows faster decision-making
shortcuts and heuristics, the proxemic law (Moles and Rohmer, 1978), which states that
"fundamentally, axiomatically, what is close is, all things being equal, more important than
what is far away, be it an event, an object, a phenomenon or a being "(Torres, 2003), translates
into filters of perception and action. The sense of urgency induced by this perceived short-term
importance results in Lorsch (1986) calling "strategic myopia" when SME’s managers become
prisoners of short-term operational decisions and work in a hurry. This can turn into a flight
forward (Wang, Walker and Redmond, 2007) or result in a real feeling of "invulnerability"
(Roux-Dufort, 2010).

This feeling of urgency is often sensed in SMEs going through hypergrowth. Hypergrowth is a
crisis representing a tough moment in a company's life, with a loss of the usual reference points.
This crisis usually results in a state of instability of all the functions of the company and is
characterized by a socio-emotional state of the community, marked by psychological
phenomena such as feelings and emotions that are difficult to master (Mucchielli, 1995). In
these moments of instability, internal communication can be a powerful managerial tool.

Internal communication, which can be defined as all transmissions and internal exchanges of
information of a general and operational nature, pursues a variety of objectives that may be
relevant in times of hypergrowth. Whether to explain the organization (Henriet and Boneu,
1990), to establish common references favoring the sharing of values between members of the
company (Thévenet, 1988) or to develop the participation of employees, internal
communication allows information to circulate better.

The great popularity of internal communication since the 1980s, does not affect all companies
in the same way. While large companies have usually developed a real internal communication
strategy, SMEs seem to have remained on the sidelines of this phenomenon.
This is caused by the specificities of SMEs. The individual specificities of SMEs are due to the
often familial nature and the particular role that the leader holds. Central pillar of the company
(D'Amboise and Garand, 1993), it is around the leader that the information flow is organized.
Decision-making (Saporta, 1989, Julien and Marchesnay, 1992) is also linked to the leader,
since he often exercises decision-making power autonomously, by highlighting his profile and
his values, which become an element of his vision and his entrepreneurial will.

Lastly, the organizational specificities of SMEs are due to the small number of functional
services, tertiary jobs and hierarchical functions, which favor unofficial internal communication
practices (Mintzberg, 1982, Kalika, 1987), a large part being left to relational (Mahé de
Boislandelle, 1988, 1993) and in particular in direct contact (Lévy, 1988). SME leaders are
often slightly preoccupied with the circulation of information in their company and more
generally with the organization of internal communication (Bachelet, 1995).

However, it is essential to maintain a link between the founders and employees, but also to
ensure information flows between everyone. This would allow a deeper understanding and
planning of the firm. The hypergrowth phase shakes a company’s internal processes and
communication habits since the workforce is rapidly increasing, making it impossible to
maintain old processes; or rather forces it to implement real processes.

It can be said that internal communication will have an indirect impact on the results of a
company through the attitudes and behaviors of employees, notably through 6 factors (Michon,
1994):

1. Information
Information is at the heart of the business. Its mastery makes it possible to spread messages of
any kind and to facilitate the flow of information. There are different types of messages
concerning the daily working life, the future of the organization, the social and collective life,
and the affective life of the organization.
 2. Conviviality
Conviviality is the base of the construction of a good relationship climate between people who
belong to trades, to functions, to different sites. The desire to communicate and interact with
others is a factor that avoids exclusion from the social and collective life of the organization.

3. Participation
Participation allows everyone to be a player in the company. Participation is a recognition and
mobilization of all skills in the context of management based on human resources.

4. Federation
Federation is everyone's commitment to shared goals and shared values. The federation
translates into a group spirit. It expresses itself through mutual help and collective solidarity.

5. Involvement
Involvement represents the investment of his energy in the professional field. This driving force
makes it possible to orient and increase individual energy in a collective sense. The implication
reflects the personal commitment to the service of the company and its objectives.

6. Identification
Identification expresses adherence to the company's personality, culture and identity. It is
reflected in a sense of belonging that is all the stronger when one identifies with the
organization. It can only be internalized or expressed by signs such as emblems, logotypes, and
other objects of focus.

In conclusion, the added value of internal communication in hypergrowth SMEs is first to

ensure a wide dissemination of information with the danger of leading to an "overabundance"
that will produce the opposite of the desired effect. The added value will be greater if the
company adopts a management more focused on human resources. Internal communication will
then aim to share the values and culture of the company and will rely on participative
management to unite all staff around common objectives. It will embrace the goal of
involvement and seek to develop a sense of belonging, to develop a good relationship climate.
Therefore, employees will feel listened to and legitimate, hence reinforcing motivation and
retention.

Corporate culture

Culture is a system of representations and values shared by all members of the company. This
means that everyone in the company adheres to a common vision of what the company is, its
economic and social role, the place it occupies in relation to its competitors, its mission in
regards of the clients, staff and shareholders. Its most famous definition comes from Schein
(1985) : "The corporate culture is a model of basic assumptions, which a group has discovered,
invented and developed by learning to deal with the problems of external adaptation and
internal integration, and which have been sufficiently tested to be considered valid and
therefore to be taught to new members as the right way to perceive, to think in relation to these
problems ". This definition presents culture as a tool to facilitate adaptation to external changes
and internal integration.

In the field of management, the corporate culture is often examined in relation to the
performance of the company and the efficiency of its management. According to Kanter (1982),
the innovation capacity of the firm is affected by cultural norms, practices and structure.
Corporate culture can also affect the level of risk-taking (Burgelman and Sayles, 1986), and
pro-activity (Miller and Frisen, 1984). Cornwall and Perlman (1990), show the effect of culture
(which supports the company's vision, mission and strategies) on entrepreneurial activities such
as risk-taking, exploration of opportunities and innovation.

It leads Covin and Sevin (1991) to this observation: "Because organizational culture provides
the context within which entrepreneurial postures may or may not emerge, the primary
direction of influence will likely be from organizational culture to entrepreneurial posture".
Kuratko and al. (1993) argue that organizational culture is central to building an entrepreneurial
spirit. As for Birkinshaw (2003), he proposes an organizational entrepreneurship model in
which organizational culture and management style are fundamental elements.

This corporate culture can be divided in three types of culture:

1. Hierarchical culture
Hierarchical culture is characterized by the structuration and formalization of work. This culture
focuses on the internal stability, rules, and values that are associated with conservative oriented
strategic posture (Zammuto and Krakower, 1991). It gives a lot of importance to the
formalization of the production procedures, controls and crisis management. Hierarchical
culture is based on a mechanistic structure that is generally not favorable to entrepreneurial
activities.

2. Market culture
Market (or development) culture is geared towards achieving results (results-oriented) through
maximizing production. Its core values are productivity, competitiveness, profitability,
decision-making and success. Cameron and Quinn (2006) clarify the term market culture: "The
term market is not synonymous with marketing functions with consumers in the marketplace.
Rather, it refers to a type of organization that functions as a market [...], it is focused on
transactions with external constituencies such as suppliers, customers, contractors, licensees,
unions, and regulators [...], the values that dominate market-type organizations are
competitiveness and productivity ".

3. Group culture
Group culture is characterized by the friendly atmosphere in the workplace, and the sharing
between individuals. Its core values are flexibility, trust in human potential, commitment and
the development of human resources. The goal of the company is to develop team spirit, sense
of belonging and participation. According to Pearce and David (1983) and Jennings and
Lumpkin (1989), an innovative enterprise is characterized by a participative management style.

In SMEs or start-ups, the hierarchical culture is obviously not often found. Market culture is
essential but group culture is the most widely spread as it gathers all employees together and
make them part of a bigger and deeper goal. This corporate culture can be a powerful tool to
motivate collaborators and infuse a useful dynamic.

One may wonder whether the culture is manageable and whether a company top management
can choose and manage the value system of its employees itself. For David Dunkerley
(Dunkerley and Casey, 1983), however, culture is produced by the negotiations of social actors.
Therefore, it has the nature of an emergence, that is to say of a phenomenon resulting from the
set of individual interactions, without any of them being determinative. As such, this
phenomenon would not be totally controllable by a specific group of actors.

However, management effectively controls many of the means that condition the enterprise
culture: selection, control system, communication system, etc. She can "build" heroes, create
legends, provide models. Indeed, some famous American multinationals provide brilliant
examples of particularly well - controlled cultures. But to be an effective management tool, this
corporate culture must be unanimous amongst the teams (Lemaitre, 1984), as it has clear effects
on many subjects such as :

Talent Selection
By selecting a staff that is beforehand carrying a number of cultural traits of the company, it is
easy to simplify the problem of its adherence to the corporate culture. Many companies have
included among their recruitment criteria this kind of pre-existing conformity index, whose
appreciation is most often left to the intuition of the people who will interview the candidate.
Although crucial, this criterion often remains implicit. It is not included as such in the list of
recruitment conditions. It is probably also with this type of criterion in mind that some
companies are more likely to hire family members of already employed staff or candidates
recommended by company employees.

Trainings
In some companies, a major part of the training is aimed at learning the values and
representations of the company. This particular training helps the individual conform to the
system, teaches him to think according to certain axes, to take into consideration certain criteria,
such are the deeper goals of apparently technical or general teachings. Companies which are
aware of the importance of these factors invest a lot in the training of their managers, this
training must of course be primarily internal, to ensure the reproduction of the model.

Control System
The control system of the company is by nature a system of valorizing results and strengthening
performance. When formally evaluated, the executive may lose sight of the overall objectives
of the organization and seek above all to optimize the criteria on which he himself is evaluated.
This is why it is essential that a correct link exists between the overall objectives and the
measured performance criteria for the different functions at the different levels of the hierarchy.
And it is also important that each collaborator remain sensitive to the overall performance of
the company, and it goes through corporate culture.

In conclusion, leadership clearly shifts from the early stage of a start-up to the hypergrowth
phase where it needs to be more comprehensive, listening and formalized. Although often
neglected by leaders, internal communication is essential to ensure sustainable synergies
amongst managers, leaders and employees. It is also a recognition process as it involves all
parties into thinking on a large variety of subject. Finally, developing a strong and widespread
corporate strategy increases efficiency on talent selection, formation and control system.
Indeed, if applied directly to the recruitment strategy, talent will already be in adequation with
the corporate culture of the firm, ensuring a better adherence to its core values and processes.
Moreover, trainings can strengthen this culture hence allowing each collaborator to have a
deeper and broader vision of the firm, its challenges, and forces.

There is therefore a focus to make on knowledge management, and how to ensure this corporate
culture, skills and know-how are properly transmitted amongst teams.

5.3.2 Knowledge management

Elements of context

In the start-up ecosystem, the frequent turnover places companies at risk of losing skills and
adds new urgency to the issue of knowledge transfer between collaborators. The question of
knowledge management, although displayed as a source of concern in managerial rhetoric, is
most of the time not translated into an explicit policy that is likely to favor exchanges between
the generations of employees. The challenge of successful communication is most often
underestimated by those in charge, and is urgently needed when experienced employees, who
have critical organizational skills, are preparing to leave. This situation is all the more
unfortunate because the implementation of knowledge sharing measures has multiple
advantages for both employees and the company.

Indeed, a major property of SMEs is the lack of formalization of processes, relationships and
strategy. The frequent use of intuition reinforces the perception of a lack of resources and the
lack of profit to formalize the procedures. One consequence is the chronic underestimation of
intellectual property issues by SMEs (Reboud, Santi and Mazzarol, 2014). Indeed, besides the
perception of the cost of intellectual property by the leaders, it is shown that the relations of
confidence that they have the feeling to have built with their customers, partly deluded by the
effect of microcosm (Mahé de Boislandelle , 1996), often leads them to overestimate the
reliability of their relationships both with clients and with suppliers with whom they develop
innovations (Kitching and Blackburn, 2003).
This lack of formalization and time for strategic thinking, in addition to a frequent lack of
managerial and strategic training (Gibb, 1997), or formalized risk management mechanisms
also lead to difficulty in identifying, and even more so, managing risks in SMEs.

A new vision of the company, via Knowledge Management, proposes a strategic approach and
a set of concrete actions related to organization, management and information diffusion and
management. This global approach extols knowledge management (Tarondeau, 1998; Prax,
2000). Transversality is essential: matrix organization, transversal projects, multidisciplinary
teams, information systems. It is a question of favoring processes of integration, exchange,
sharing, circulation of information, and knowledge to allow the emergence of new.

Tarondeau (1998, 2000) confirms that strategy should concentrate efforts on the management
of formalized knowledge but also on the dynamics favoring sharing, the pooling of tacit, non-
formalized, individual or categorical knowledge, and thus encouraging organizational learning.
There are three types of knowledge:
- Strategic knowledge: clients, suppliers, concurrent
- Business knowledge: skills and know-how
- Operational knowledge: experience

New information and communication technologies are not foreign to this emerging paradigm
called Knowledge Management. Knowledge Management actually responds to two main
objectives: the conservation and the sharing of knowledge within the organization (Alsène and
al., 2002). However, knowledge management places special emphasis on new technologies of
information and communication as methods and tools for intervention in an organizational
setting (Dieng and al., 2000, Prax, 2000).

The spiral of knowledge

Ikujiro Nonaka, an expert in Knowledge Management, has popularized two categories of

knowledge: tacit and explicit. Tacit knowledge is personal, it gathers innate or acquired skills,
the know-how and the experience of the individual. It is usually difficult to formalize and
communicate. Explicit knowledge can be clearly articulated on a medium and is therefore more
easily transferable (both written and spoken) and shared by a community.

Creation of knowledge is a continuous process between tacit and explicit (Nonaka & Takeuchi,
1995). This theory is expressed through the spiral of knowledge. This model is widely used in
the field of knowledge (Poell, R.F. and van der Krogt, F.J. (2003), McAdam, R. and McCreedy,
S. (1999), Collins, H.M. (2001), Becerra-Fernandez, I. and Sabherwal, R.(2001) etc.).
 Tacit knowledge

Socialization Externalization
Tacit Explicit
knowledge knowledge
Internalization Combination

Explicit knowledge
Fig.1 : The Spiral of Knowledge, Nonaka & Takeuchi, 1995

The four modes of conversion of knowledge act on each other within the spiral, each one has
its importance and allows the other to exist.

1. From tacit to tacit: Socialization

Socialization concerns the interaction between individuals within a group. Learning is done by
observation, imitation and sharing experiences. Socialization is a process of sharing experience:
learning on the job is a practice that basically meets the concept of socialization. The key to
acquiring the tacit knowledge is the experience.

2. From tacit to explicit: Externalization

Externalization refers to the clarification of practices and beliefs. Externalization is a process
of articulation of tacit knowledge in explicit concepts. This process is the quintessence of the
creation of knowledge because tacit knowledge becomes explicit under form of analogy,
concepts, hypotheses or models.

3. From explicit to explicit: Combination

Combination allows the communication of knowledge that is brought together to produce new
knowledge. The combination is a process of systematizing concepts into a system of
knowledge. Individuals exchange and combine knowledge through media such as documents,
meetings, telephone conversations and computerized communication networks.

4. From explicit to tacit: Internalization

Internationalization represents the roots of the explicit knowledge. Internalization is a process
of incorporating explicit knowledge into tacit knowledge. It is closely related to "Learning by
doing".

These four processes represent the conversion of knowledge. Although different, they are
highly inter-dependent and essential in a firm. Socialization goes through interpersonal
interactions, collaborators observing theirs peers and mimicking. In this case, you need to make
sure that everyone is sharing the corporate culture, so that it doesn’t lead to wrong processes
learned.
Externalization is a process of formalization of knowledge. It can be through the construction
of a knowledge base, by writing down know-how, processes, experience so that it can be stored
and accessed by all easily. This process prevents knowledge loss in case of an employee
departure for instance.

Combination corresponds to all explicit exchanges that collaborators share. The mix of
knowledge could induce new discoveries and a better understanding of the global picture.
Eventually, Internalization is the learning-by-doing process: once learned, the knowledge must
be assimilated to be re-used later on.

The spiral of knowledge therefore represents all the types of knowledge sharing and creation in
a company. It is now interesting to get a deeper understanding of the benefits of implementing
a Knowledge Management approach.

Benefits

The benefits of a Knowledge Management approach concern four major aspects:

1. Production Optimization / Increased Productivity

According to Prax (2000), many companies claim to make the most of their production process,
meaning there would be a massive investment needed to increase productivity. However, they
concede that a better use of their internal knowledge would be a considerable source of
productivity. A Knowledge Management approach can avoid reproducing errors already made,
allowing the transfer of experience from one individual to another.

Generally, the experience is acquired as follows: a team performs a task or solves a problem,
gets a positive or negative result, and learns from it for the next time. However, there is no
general truth about how another team would react to the same task, or how another team would
act in a different context. Actors must be encouraged to capitalize on the project so that the
individual facing the same type of task in the future can find all the documentation at their
disposal.

2. Help with decision making

Decision-making process in a company is complex. The individual will rely on a set of
information that will help decision-making. Alternatives and consequences of each of the
decisions taken are not necessarily known, the same cause may produce different effects. The
idea is not to make the right decision but the right path to get there.

Knowledge Management can therefore help decision-making by exchanging multiple sources

of information and points of view, by listening to the customer and anticipating needs.
Moreover, the combination mode from the Spiral of Knowledge could be of use in this case :
team work and so exchanges on point of views and experience is extremely valuable and
increase the chance of success for decision-making.

3. Valorization of the skills of individuals

Within a company, we can distinguish different types of skills held by individuals:
- current vs. unique skills
- skills that are easily acquired vs. those that require years of experience or training
- skills that are rewarding and others less.

The company must have the best possible knowledge of its skills and especially the rare and
valuable. These skills enable the firm to have a better visibility on recruitment, training and
strategic orientations, to put in place a better motivation and recognition policy and to have
easier access to experts. It will not be a question of drawing up a repository or an assessment
grid to combine competence and performance of the company. These two elements, skills and
performance, are complex. The first does not belong to the company but to the individual
himself whom he makes available in exchange for a salary. The second involves a combination
of factors such as motivation, recognition, and salary.

4. Support to innovation
Finally, Knowledge Management promotes innovation. This term is not to be confused with
creativity. A company can be creative without being innovative. Innovation involves the
successful marketing of a new product or service that gives it a strategic advantage. It is born
from the meeting of technical and social progress; one does not go without the other. The
implementation of a Knowledge Management approach creates an environment conducive to
the emergence of new ideas, their capture, validation and transformation into innovation.

A Knowledge Management approach therefore has many benefits: innovation, decision

support, productivity, valuation of staff skills. However, since information and knowledge are
difficult to formalize, this approach is not always an easy one. However, it is essential to
allocate resources on this matter: a good knowledge management strategy could definitely
increase efficiency and productivity in the firm.

This is even truer in the context of hypergrowth: many people join the adventure and need to
be trained to infuse the corporate culture and all the internal knowledge they might need. At a
certain stage of recruitment, a start-up should define a clear knowledge management strategy
to prevent the dilution of its processes, culture, and know-how. Incomers should learn the firm’s
way, and not the contrary.
 5.3.3 Human Resources management

Context

The human resources function in hypergrowth SMEs is often characterized by its lack of
structuration, the weakness of internal Human Resources expertise, and the importance of
informality in the design and deployment of Human Resources management policies. It often
appears to be reduced to its dimension of administrative expertise or compliance with legal
obligations (Mahé de Boislandelle, 1988). The personal characteristics of the leader, his beliefs
and representations, his motivations, his career, his relationships with others, his managerial
philosophy, strongly influence the structuring of Human Resources management policy
(Parlier, 2006).

In SMEs, it is usually the leader who ensures the Human Resources functions (Bolden, 2007).
The leader perceives a need for new resources, decides the opportunity of a hiring, and leads
the recruitment to completion.

Characteristics

Many authors agree on a specificity of tools and practices of Human Resources management in
SMEs (Parlier, 2006, Louart and Vilette, 2010). The highlighted characteristics are :

- Recruitment based on network and cooptation, involving a low diversity of recruitment

channels and often from the competition

- Low investment in continuous formation, often by fear that the collaborators would use
these new skills to find a new job elsewhere

- Salary policies below market standards

- Internal equity of pay not always respected

- Weakness in forecast management of skills and agendas

- Lack of union representation and collective negotiation. It does not inevitably translate
into a degraded social climate, but is sometimes the consequence of direct relations and
proximity between employees and managers (Jaouen and Torres, 2008)

- Importance of affective dimension in work relationships and the symbolic dimension of

the organization, being articulated around the founding myths of the company (the
creation of the organization, the leader, the successes and failures).
The centralization of the Human Resources policy and the difficulty of guaranteeing the internal
equity of certain social decisions due to a lack of structured Human Resources processes may
lead to a high risk of hidden cost drift (notably an increase in absenteeism and turnover). This
arbitrary model is likely to constitute a lasting handicap in the implementation of differentiation
strategies. The deterioration of the social climate may in particular have adverse effects on the
quality of service.

But for SME leaders, grasping the importance of the Human Resources variable in their day-
to-day management and strategy does not seem to be a strong enough motive to devote as much
time, attention and effort as they should. There is a strong gap between their perceptions of
Human Resources as part of their strategic vision and their Human Resources management
practices (Deshpende and Golhar, 1994).

Challenges

The characteristics of SMEs also tend to exacerbate Human Resources issues, especially since
social decisions have a considerable impact at the scale of a small company. This is particularly
true for decisions on mobility, recruitment, reorganization or the consequences of absenteeism
and staff turnover (Bootz, Schenk and Sonntag, 2010). In the specific case of hyper-growth
SMEs, they face four major social tensions:

1. Recruitment difficulties are recurrent due to a reduced attractivity in term of jobs

and a sometimes deficient knowledge in the use of recruitment tools (Paradas,
2010).

2. Employees’ retention can be complex because of a lack of resources and

legitimacy.

3. In general, Defélix and Retour (2003) note that "skills difficulties" are a major
problem for fast-growing SMEs, whether it concerns the acquisition of skills
(recruitment, integration, management of the employer brand ...), their stimulation
and development (training, mobility, implementation of "learning" organizations
...) or even their loyalty (recognition of acquired skills, accountability practices,
organizational culture ...).

4. Hypergrowth SMEs must face the need to quickly change their culture and / or
Human Resources management model during strategic reorientation phases
(Louart and Vilette, 2010). In fact, the arbitrary model of Human Resources
management does not seem compatible with the preservation of a sustained
growth dynamic, requiring a rationalization of at least the main Human Resources
processes and sharing of the Human Resources function with middle management.
Through a study of 70 companies going through hypergrowth, Barringer, Jones and Lewis
(1998) highlighted the key role of Human Resources management in the ability to manage
growth. Indeed, the organizational culture and leader's charisma make it possible to preserve
the coherence of the organization, undermined by growth. Moreover, the introduction of
incentive schemes enables to associate employees with the fruits of growth. Furthermore,
employees' accountability practices and the construction of "learning" organizations are
simultaneously a lever for flexibility and employee loyalty.

For his part, Parlier (2010) suggests that only growing SMEs adopt skills-based management,
making competence a pivotal concept around which the Human Resources management system
is articulated, as well as organizational practices (emphasis on versatility, autonomy, working
in project mode, etc.). Finally, hypergrowth SMEs appear to have a strong organizational
learning capacity through which they influence their routines, initiate strategic bifurcations,
seize opportunities to support growth (Chanut-Guieu and Guieu, 2011).

All these challenges are delicate matters to handle, though surmountable. Attractivity can
countered by offering a great adventure with a positive working atmosphere, and on the
financial side, maybe company shares. Employees retention is handled the same way: if the
recruits fit the corporate culture, values and feel they are part of a greater goal, it is rewarding
enough to retain talents. Moreover, with an appropriate knowledge management strategy, the
issues regarding skills are easily tackled. Finally, with the appropriate corporate culture,
reorientation and changes will be easier to deal with as the whole company will follow.

In conclusion, Human Resources management in SMEs and particularly SMEs in hypergrowth

is complex and full of traps and issues for leaders. However, all of these challenges are
surmountable if identified and handled sufficiently early in the hypergrowth process.

5.4 Conclusion

To conclude on this theoretical chapter, this literature review allowed us to get a deeper
understanding of the concepts of hypergrowth in small firms, but also its impact on leadership
and corporate culture, knowledge management and human resources management. This
analysis highlighted the many issues leaders may face during their hypergrowth phase.

We will now analyze the case of a startup going through hypergrowth called Epsor and compare
its current situation on the matters of leadership and corporate culture, knowledge management
and human resources management to the theoretical frame raised by the academic research
community.
We will formulate three hypothesis based on the literature review:

HP 1 – Internal communication enables the leaders to assess their vision and goals to the team
and strengthen the company’s culture.

HP 2 – Knowledge Management enhances productivity and helps maintaining the skills, know-
how and culture of a firm

HP 3 – A structured Human Resources Management with a formalized recruitment strategy is

a powerful tool helping a startup go through hypergrowth successfully

After a case study of Epsor, the final chapter will discuss the case study in regards of these
hypothesis and verify their validity.
 6. Case study: Epsor
6.1 Methodology

This case study analyses the three factors from the literature review, Leadership & Culture,
Knowledge Management and Human Resources Management, in the specific case of Epsor.
The choice of Epsor is justified by two reasons:
- Epsor is a startup going through an hypergrowth phase. Its manpower has quadrupled
in less than a year and is predicted to continue its growth for at least three years.
- Epsor was not structured and aware of the hypergrowth issues 6 months ago and
implemented a whole strategy to handle each aspect. There is therefore many measures
and process put in place to analyze, and results to observe.

Most of the data has been collected through observation and interviews of the different
stakeholders. Since Epsor is still a startup, there is no additional data available online or in
different medias.

However, Epsor recruited someone dedicated to structure the startup as they feared their
hypergrowth would endanger their business if not properly handled. This thesis is the result of
6 months of observation and interactions with the firm and its collaborators. The analysis of
Epsor’s situation will allow us to validate or not the hypotheses.

6.2 Presentation - Epsor

Epsor is a start-up that dusts off the Employee Savings market in France. It was born from a
simple observation: today, only 20% of SME are equipped in employee savings. Major
companies are better equipped but overall, there is a lack of understanding of the whole
employee saving system. Moreover, savers are not optimizing their savings because of a lack
of financial pedagogy in France.

65%4 of the market is now occupied by three non-agile traditional actors which never
questioned the idea of Employee Savings for SME. With the legal environment being favorable
in France through Loi Pacte which increases the attractiveness of employee savings plans by
making numerous changes to the rules governing profit-sharing and participation, it was the
right moment to come and shake the market.

Epsor’s mission is to democratize the access to Employee Savings and accompany employees
in their saving management by giving pedagogy, support & knowledge. This company is a
100% online platform and its major added value is a robo-advisor that is profiling each
employee who registers in order to suggest an investment profile that fits the needs, objectives,
financial capability of the user.

4
Source : Confidential Report from Association Française de la Gestion financière
The founders started to build the partnerships and the start-up in summer 2017 and launched
the commercialization of the product in July 2018. It is therefore a recent start-up that just
celebrated its one year.

Is Epsor in hypergrowth? As seen earlier, researchers have not reached a consensus on a

definition of hypergrowth. However, Epsor’s manpower was composed of 9 collaborators by
end of 2018 and is now strong of 40 persons at end of October. The number of employees
quadrupled in 9 months and is still going to expand: the objectives are 60 people by January
2020 and more than 100 by mid-2020.

Will the growth of manpower continue through the years? We will see that in the future. For
now, we will consider that Epsor is going through an hypergrowth and critical structuration
phase that we are going to analyze in regards of our 3 factors : leadership, knowledge sharing
& talent acquisition.

6.3 Leadership & corporate culture

A major factor to handle while going through an hypergrowth phase is leadership and culture.
It is necessary to analyze how an hypergrowth company makes sure its corporate culture and
management style sustain through all the new recruitments; and more precisely, how to ensure
the connection between the leaders and employees remains.

6.3.1 Leadership and internal communication

With the arrival of 12 new employees in September, it became more and more difficult for the
founders to maintain a connection with all employees and continue to interact about the job and
more with each of them. Therefore, Epsor set up a few meetings and committee to ensure a
regular interaction with most of the team.

Each Monday at Epsor, a committee named CODIR takes place with all team leaders
representing their division: marketing, sales, customer success, tech, product, and partnerships.
This session is a moment dedicated to sharing what happened last week and the objectives of
this week. This is a meeting where everyone shares thoughts and concerns and think altogether
to resolve the issues they might have.

This committee is essential since it encourages interactions between all divisions even though
they might not usually exchange. It has been the place of many conflict resolutions and is
therefore very useful. However, this committee now takes place during lunch, which means
they eat without the rest of the team. It could create tensions as they separate themselves from
the rest of the collaborators.
In order to prevent a scission, 3 measures were taken. First, Epsor is willing to turn their CODIR
into open CODIR. That means that every week, a few collaborators will be able to join the
committee and assist to the session. It could be to better understand what is going on in the
firm, or to talk about a specific matter ongoing. The idea is to make every collaborator a part
of it, to increase engagement amongst the teams. The worst thing to do in a start-up is to lose
that link with top management because it will alter engagement and collaborators, feeling less
and less involved, will not be as motivated and dedicated as usual.

The second action taken was a weekly newsletter. Epsor’s communication manager is each
week getting the report from the CODIR and is making a summary in order to build her
newsletter. This newsletter also includes a few key figures from Epsor such as the number of
clients or the total amount savings Epsor handles. That way, it allows each collaborator to feel
aware and engaged into Epsor’s objectives and challenges.
Finally, the last measure taken was to institutionalize the Friday team meeting. As opposed to
the Monday CODIR, the Friday team meeting is mandatory for every employee at Epsor. This
is the moment where top-down and down-top information circulate. Sometimes the founders
inform everyone of information such as seminars details, fundraising, new partnership, etc. But
it can also be a moment where an employee shares its ongoing project, a new feature of the
website, a new tool to use, etc. It is a meeting created to ensure exchanges and interactions
between all members of Epsor, regardless of their teams.

Another way to maintain the connection between collaborators and founders was one-to-one
meeting. When Epsor had a smaller team, everyone ate lunch altogether each day. It was a way
to ensure communication but also have everyone know each of his colleagues. With the arrival
of new collaborators, it became impossible to eat altogether, although it was an unformal time
to discuss all types of matters.

Therefore, in order to prevent unspoken, founders organized one-to-one meetings with all
collaborators of Epsor. The whole idea was to book a specific time where each one could
discuss personally with the founders about all types of subjects: about the job, Epsor or more
personal matters. The meeting allowed to identify issues and successes about their own work,
but also for Epsor in general, and enabled collaborators to give their point of view on Epsor’s
objectives, management and functioning.

Eventually, the last vector of internal communication is informal and more relaxed and regroups
all the off-work events that can happen, such as seminars, or regular afterworks. Since the
leaders often come to these unformal moments, it strengthens the relationship between them
and every collaborator and enables more liberated discussions on personal or professional
matters.

All of these types of meetings, committee, or off-site encounters definitely allowed Epsor’s
leaders to spread their vision but also the goals of the team, whilst still listening their employees
to get inputs and views on their management and choices.
 6.3.2 Corporate culture

In order to ensure they have a team that knows and follows their objectives and vision, leaders
need to clearly state them. Epsor’s values were never very clearly stated. An attempt was made,
but Epsor could not settle on a clear set of values. Five of them were considered :
- Ambition: build the best service
- Pedagogy: guide and enlighten
- Innovation: create rather than copy
- Share: give everyone access to this virtuous service
- Exigency: be irreproachable

However, depending on the media (internal presentation, website, etc.) the values indicated
were never the same. This was an issue, because it is essential that the company values are
stated and shared: it defines the brand identity. Moreover, a firm needs its collaborators to share
and adhere to these values. Otherwise, it will be sensed in business: employees are the voice of
Epsor, and should always represent its values in their behavior, work and daily actions. It affects
collaborators general behavior but also the recruitment strategy. If a firm can recruit people
matching its values and ambitions, it will be easier to develop an identity that is adhered to.

Hence, a committee was created with volunteers from Epsor to discuss the values. A consensus
was made that there were too many of them. To be clearer, Epsor needed to focus on two to
three values to develop. The committee agreed on ‘Trust’ & ‘Cohesion’. The result of this
thinking team was shared to all employees during the annual seminar.

Apart from values, it is essential to ensure everyone shares the short & long-term vision but
also the objectives of the company. Epsor chose to share its ambition very regularly, to ensure
everyone was aware of the objectives. The objectives were communicated through an easy form
to remember: very factual, a few key numbers they all needed to achieved. By repeating it
regularly at each team meeting they made it known by all.

But to engage everyone in order to achieve the goal, the data was included into the weekly
newsletter. Therefore, each collaborator could know how far the team was from the objective
on a daily basis. The idea here is to motivate and engage each one of them so they would work
harder to pursue the goal.

Leadership and most importantly how you share the brand identity, vision and goals is essential
in sustaining business through an hypergrowth phase. With fast expansion comes a dilution of
the values, the identity and the spirit of the team, with can influence business. Leaders need to
ensure they infuse the soul of their firm enough for incomers to adhere, and old collaborators
to stay.
 6.4 Knowledge management

Epsor had a major issue to deal with being the transmission of knowledge. At the beginning,
there were only one person per ‘division’ of the company: one graphist, one salesman, one
customer success manager, etc. But the commercial objectives evolved, and so did the size of
teams. They all expanded quickly: Epsor recruited 15 persons over summer 2019 and most of
them arrived in September. The company had to prepare their arrival and think of how
knowledge would be transmitted to new employees: the content of course, but also the form,
and the media.

6.4.1 Onboarding Week

As a first response to the batch of arrivals of September, the first project to implement was an
onboarding week. An onboarding week is the first week of incomers where you get to meet
them and share values, objectives, and knowledge. It is a powerful tool in Human Resources as
it welcomes new employees. It often has a loyalty outcome: if incomers feel welcomed and
taken care of during their first weeks, the chances that they will stay longer with the company
increase.

Apart from this loyalty benefit, it is key to onboard employees on all of the company’s
challenges and help them develop their skills. The case of Epsor is particular because the market
of Employee Savings is a very complex one. There are a lot of legal aspects to know and many
variations and possibilities depending on a list of factors. Employee Savings is a though subject
to master, it takes time to know all the subtleties and laws.

Moreover, since it is a very concentrated market, there are not many people having knowledge
and expertise of this sector. Most of the new recruits do not know about it, or only if they
benefitted from an employee saving program from a previous employer. But most of the time,
they fit Epsor’s acknowledgement: they benefitted from it but did not understand how it
worked.

Hence the onboarding week is a major challenge: the more efficient and complete it is, the
quicker the incomers will be operational in their jobs. Of course, it depends on the functions:
some like Customer Success Manager or Sales will need a deeper understanding of all legal
issues whereas a developer will mostly need to understand what Epsor does to implement it
later on.
At Epsor, the onboarding week look like this:

New entrants are welcomed Monday morning by a first session about Epsor’s history, values
and culture, led by the founders. Epsor wanted its new staff to feel welcomed and important as
individuals, which is why the founders are the first people they see when they arrive. Then, they
have a more operational session where all the tools used internally are presented. It is also a
time to explain Human Resources procedures, such as leaves, expenses reports, lunch cards,
and so on. The objective is that they will know since the beginning how everything works in
order to feel a part of the team from the start.

Each day allows them to focus on one subject :

- Tuesday is employee saving and retirement process and legislations. This session is essential
because Epsor’s market is very complex, and it requires time before becoming expert of this
subject.

- Wednesday is about our product and our partners. This is the first time they will use Epsor’s
platform. All of their reactions and thought on it is fundamental for Product Team because it
replicates the final user behavior when they discover the tool. All of their comments is
thoroughly noted as a useful piece of information for testers. Moreover, it is important for all
staff to know the product they are selling, hence the user’s potential response to it.

- Thursday is about selling Epsor. This session is conducted by the Sales director, who presents
Epsor’s value proposition, and gives everyone in the firm the keys to quickly sell it to anyone.
When newcomers exit this session, they should be able to explain to their relatives what Espor
does, and why they are better than competition.
- Eventually, Friday morning focuses on financial basis. Most of Epsor’s staff did not work in
Finance or Insurance before joining the team, therefore, some of them lack financial education.
This session explains the basis, such as the functioning or investment, funds, etc.

This onboarding week therefore offers new employee the basic knowledge, know-how and
processes put in place at Epsor. This mechanism and fast transmission ensure continuity and
sustainability through Epsor’s culture and knowledge.

6.4.2 Knowledge Base

With Epsor’s hypergrowth phase, new people arrived each week in September and October
2019. It was essential to make sure a knowledge base existed in which every information
regarding the company and how teams work would be mapped. The initial core team of the
company started to break, with the leave of one key member, an expert on employee saving
system. At the beginning, functions and teams are embodied by the core team members. To
prevent knowledge loss, Epsor decided to map everything thoroughly.

There were a few attempts to map Epsor’s processes, each time using a new tool. The first
attempt was a wiki. It is a kind of ‘Wikipedia’ that you can build with your own knowledge and
processes. Unfortunately, the tool was not user friendly and ergonomic at all.

Capture of Epsor’s internal wiki

Since the tool was not intuitive, Epsor did not spend a lot of time filling it. Ultimately, the
resource was partly useful and a majority of information was missing, so no one used the wiki.

The second attempt to map processes at Epsor was to make fact sheets called ‘How To’. It took
the form of a powerpoint in which a few processes were explained, such as : ‘How to ask for a
leave?’ or ‘How to make a request to Graphic design team?’. The point of these How To was
to make an inventory of recurrent processes and how it is supposed to be done. By doing so,
Epsor wished to ensure compliance amongst the staff and limit chaos.
All these How To were stocked in a Drive, and the navigation among them was not obvious.
Hence, a last attempt was recently made to find a new way to map and access each process of
each team easily. The idea of the wiki was a good one : a platform where everything was
accessible by everyone. Yet, the interface made everyone reluctant to use it. A small team at
Epsor searched for a better solution, and they found Notion.

Notion is a "Central Source of Truth" as quoted from their website. It is a central tool where all
knowledge is stocked, a reliable source of information. The idea is to build a data tree where
you can access every single question a collaborator might ask himself.

An overview of Notion :

Capture of the tool Notion

The most significant part of this is to identify, collect and phrase all processes. First, interviews
were conducted with each team of Epsor to identify all types of actions they do in their jobs.
These interviews allowed identifying over 120 processes to map. Next step was to sort out and
rank all process in terms of risk and priority. That ranking enabled to point out the most urgent
processes to handle. Then, the Structuration & Process team had to observe employees while
working. The best way to collect information was to spend time with each of them while doing
a process. Thanks to that, Epsor was then able to write down with a maximum of details all
processes observed.

At the time this professional thesis is written, Epsor has mapped all processes but is still writing
them down. The whole idea of this tool is to make sure there is a reliable source of information
giving truth on Epsor's operations and procedures. By doing so, Epsor helps its whole staff to
work in unison. The business can no longer be altered by turnover or retained knowledge. The
risk of one collaborator leaving without explaining his job is now very unlikely. Information
will sustain, and so does business.
 6.5 Recruitment strategy

While going through an hypergrowth phase, there is obviously a massive increase in staff. Epsor
counted 18 people in May 2019 and doubled in October. How did they manage their recruitment
strategy? There are many aspects to assess: recruitment process but also the global recruitment
strategy.

6.5.1 How to recruit?

Before implementing structure to the Human Resources division, the process was not defined.
Hence, each recruitment was different. During interviews, there were no pre-requisite to ask
the candidate, and most of the team met him/her. The process was somewhat repetitive for the
applicant that repeated himself to all the team leaders of Epsor coming to greet him.

Subsequently, the first subject to address was to establish a clear process. Epsor settled for a
base that is adaptable to every division. At that time, Epsor still did not have a Head of Talent,
dedicated to this subject: therefore, every team leader was concerned and involved in the
process.

First, the team leader calls the candidate to conduct a first interview. This step allows Epsor to
determine the fit with the applicant, if he or she fills in the basic criteria, the delays for their
availability, and their salary expectations. By doing so, the recruiters were eliminating a first
round of candidates that did not meet their needs.

Then, most of the teams continue with a remote challenge. The objective is to test the abilities
of the candidate by giving him or her a challenge to do at home. Depending on the job, it can
be coding, testing, writing a report, or else. All of them have to make sure their challenge would
not take too long, in order not to demotivate candidates at the beginning of the process. If the
challenge is sent back in the delays and concluding, applicants are invited to the next step.

Next step is a first interview in the offices of Epsor. This first interview allows the team leader
to go in-depth with the applicant to measure how he or she would fit the job description. To
make sure they do not miss a thing, a proposal was made with a list of questions they can ask
candidates :
- About the candidate:
• What would your former employer say about you?
• Tell me about one of your failure and what you learnt from it.
• Tell me about your greatest challenge / greatest success.
• Why do you want to join a start-up?
• What do you expect from your manager?
 - About Epsor:
• Why Epsor?
• Can you explain employee saving to a child?
• Why did you apply for this job?
• Where do you see yourself in Epsor?

- About the job :

• What are your former experiences?
• What are the 3 qualities of a [job_title] at Epsor?
• How would you improve existing processes for the job?
• Which metrics would you follow?

After this first interview, the team leader has a first overall idea of the abilities and personality
of the candidate. If they are satisfied, the following stage is a last interview with the founders
of Epsor and sometimes, other team leaders. This meeting enables to settle on whether or not
Epsor should make an offer. If the founders and the future manager appreciate the candidate,
then an offer is made based on the salary grid.

Ever since this process has been defined and put in place, each member of the team gained time
during recruitment: the first two steps are enabling a quick overview of whether or not they
should take the time to meet this applicant.
Apart from being a time saving procedure, all candidates recruited through this method were a
great match for the job and the team in general. Through its hypergrowth phase, it has allowed
Epsor to ensure the candidates recruited fitted perfectly their needs and expectations, hence not
losing time and money in this key process for the firm.
With 15 new collaborators in September/October, the quest for the perfect match can be
extremely time-consuming as Epsor usually met several candidates for one opening job.

6.5.2 Global recruitment strategy

Mass-recruitment vs gold-nugget quest

With mass-recruitment came a few challenges and questions: Should Epsor be as demanding
as for its first employees? Can Epsor still be picky and searching for gold nuggets only? Should
they recruit fast or recruit well? And how to do both at the same time?

First of all, the recruitment process obviously tackled the last question as it ensured compliance
and timesaving through the teams. Some divisions like Sales had no issues recruiting since there
were plenty of candidates applying for the job. Others, like Customer Success and Tech
encountered some challenges.
Tech team encountered an issue with their remote challenge: most candidates seemed extremely
motivated during the phone interview but did not follow-up with the challenge. Over summer,
none of them sent back the remote challenge. At first, Tech team thought it was a motivation
problem, and kept sending the same challenge to applicants, in vain. At some point, they
realized two factors were preventing talent acquisition: the length of the challenge, and the job
market for developers.

Indeed, the challenge they had built took too long to complete, which ultimately discouraged
applicants. Moreover, the actual job market in France for developers was very demanding:
many job offers but not so many candidates. Therefore, they would not spend time on a very
demanding process if a dozen other firms were less demanding.

At this point, Epsor had to define a global strategy: should they be less demanding in order to
get the attention of candidates, or should they consider that the search of a gold nugget takes
time and maintain its procedures? Obviously, they could not remain the same and decided to
diminish the length of the Tech challenge. However, Epsor made very clear that even though
the staff was expanding exponentially, they should not lower their expectations regarding
applicants. It is a risky and time-consuming choice because many candidates were refused by
not fulfilling every item on the list.

Nonetheless, it allowed Epsor to raise a team of individuals that perfectly fitted its spirit, culture
and values. During an hypergrowth phase, it is easy to forget the core values of the firm since
so many new people arrive at the same time. If the company does not pay attention to it, it can
rapidly be dissolved and lost. If that is the case, firms can lose their essence. In order to sustain
its identity, recruitment is a very risky challenge to handle and it requires special care.

In Epsor’s case, its identity is part of its value proposition and a true demarcating factor towards
competition. Epsor is known to be ludic, simple, transparent and trustworthy. This positioning
is key because it is opposed the concurrent that are more traditional actors of employee savings.
If Epsor did not pay attention to this while recruiting and quadrupling its staff, it could definitely
impact business as the interlocutors and actors of this project would not fit its fundamental
objective.

Seniority

Another particular point to define was the expected experience of candidates. So far, Epsor
hired mostly junior recruits. The reason was mostly financial: when you start a company that is
not yet profitable, you need to take extra care of the salaries. With the wage of one senior, you
could potentially pay two junior recruits. This factor obviously impacted recruitment at first but
cannot be sustainable.
Junior profiles are usually are dynamic and engaged in the project, but lack experience. A
company ultimately needs to bring the experience to help them learn and go further. Epsor has
reached this moment a few months ago and started to search for profiles with 5 to 8 years of
experience. It raised an issue they did not anticipate: an ego complex. Some employees were
there from the start. When Epsor started to recruit for senior positions, the hierarchy issue
appeared. A senior collaborator would logically take the lead on the subject, managing juniors.
But when juniors were used to manage everything by themselves and suddenly get “replaced”
by an incomer, it can definitely upset them.

This is what happened for some positions at Epsor. Due to a lack of communication when the
job offers were posted, some employees did not understand why an job offer with their missions
but 5 additional years required were posted. It involved a lot of time defining the roles and
missions of each one in order to make it work with more people in a team, but also from
different backgrounds and experiences.

This seniority step cannot wait for too long, as seniors are definitely needed in the growth of a
company in order to sustain and improve business. Moreover, there is a need for senior, but
also experts on the core business of Epsor, being Employee savings. As there are not many
actors on the market, very few candidates have a previous experience at a competitor. This is a
real issue: the only persons with initial deep knowledge of the subject are the leaders
themselves.

More than recruiting people with experience, Epsor needs to recruit employee saving experts
to perfect its product and anticipate the needs of the market.

6.6 Conclusion

In conclusion, Epsor’s hypergrowth phase generated a few major issues to handle. Epsor had
to define precisely its values and objectives and start working on a communication plan to
ensure every collaborator is aware of them. By doing so, they are sustaining the identity and
soul of Epsor by infusing it directly to old and new employees.

Regarding knowledge sharing, the first departures of employees raised the alarm regarding the
formalization of all processes and knowledge that employees had. A knowledge database
started to be created but is not yet finished as it takes months to identify all processes and
rigorously write them down. This is an essential job to take care of. It should have been done
before the wave of arrivals in September, as it could have been a central base of truth for
incomers learning all about Epsor’s methods and expertise. There is a urgent need to recruit
someone to work on this particular mission before other core collaborators leave with their
knowledge.
Finally, as the recruiting process is now defined, all goes smoothly in this area. However, as
more people join the team, an organigram is often requested by the team since everyone is
willing to know their hierarchy and positioning clearly. There is still structure to bring to the
teams in that sense, to enable collaborators to position themselves. As it is a very young
company (a year of existence), the question of career plans, raises and promotions has not yet
been encountered. A Head of Talents has been recruited and is arriving very soon at Epsor. She
will need to tackle this question urgently as the issues will soon be raised.

Epsor has therefore put many actions to handle its hypergrowth and maintain business through
it all. However it has been a though process which is not yet finished. Even though it is not
directly related to business, these matters should be handled very soon to prevent massive issues
with teams, firm identity, and expertise.

Through this case study we analyzed Epsor in regards of the three problematics we already
explored in the literature review. Next chapter will discuss the hypothesis in the lights of this
case study.
 7. Discussion & Recommendations
7.1 Common observations
7.1.1 Leadership & Culture

The first hypothesis was that internal communication enables the leaders to assess their vision
and goals to the team and strengthen the company’s culture. This was especially demonstrated
in literature with the 6 factors of Michon (1994): Information, Conviviality, Participation,
Federation, Involvement and Identification.

What we have seen at Epsor is very coherent. Indeed, the different types of weekly meeting and
committees enable a smooth flow of Information but also for everyone to Participate, be a player
and raise a matter at any time. These weekly sessions have often been a place of decision
making and conflict resolution, hence increasing productivity by handling the time-consuming
matters quickly. These committees are also a great communication vector of the companies
goals and leaders vision as all the successes are made common : each time a team reaches their
goal, or complete a project enabling the team to come further to the set common goal, it is
celebrated at a weekly meeting.

Furthermore, Conviviality and Federation have been enhanced through communication and the
strengthening of the corporate culture, notably through seminars and unformal encounters. The
regular afterworks, seminars and other events favored interpersonal exchanges and discussions
and had a few particular effects enabling:
- The leaders to spread their vision ;
- The employees to raise concerns or congratulations ;
- All teams to gather by favoring exchanges amongst them.

Moreover, the work on the values was led by a dedicated team of employees. The fact that such
a powerful and important project was led by leaders and collaborators is a great example of
Participation and Involvement. In addition, the values chosen perfectly reflect this sense of
Federation as it is “Collective & Trust”.

Lastly, the onboarding week also participates in the Identification and Involvement factors as
it sensitizes incomers to the firm’s challenges, vocabulary, expertise, and make them
immediately feel part of a whole.

As for our first hypothesis, we can say or case study confirms it : the internal communication
at Epsor through all its forms enabled the leaders to spread their vision and the goals by having
a frequent follow-up on these subjects, but also helped strengthening corporate’s culture and
engaging each collaborator to reach the common goal as quickly as possible.
 7.1.2 Knowledge Management

The second hypothesis was that Knowledge Management enhances productivity and helps
maintaining the skills, know-how and culture of a firm.

The case study enlightens the difficulty for Epsor to handle the subject of Knowledge
Management. The Onboarding week took a few months to set up but is now effectively
transmitting knowledge and corporate culture to new employees at Espor, ensuring a sense of
continuity and sharing. However, the construction of a Knowledge Base took longer than
expected and is not finished yet.

For an hypergrowth startup, we saw that it was essential to structure and formalize the expertise
to ensure the handover to the new workforce incoming. The onboarding definitely allows
Epsor’s teammates to share a common foundation of knowledge, therefore being productive
and effective as quickly as possible.

But we cannot fully assess the usefulness of the Knowledge Management approach at Epsor as
this process is only at its beginnings. The work done on the onboarding week has clearly shown
fully positive results, as all the new incomers who went through this onboarding week and
process applauded it and expressed a feeling of integration, learning and sharing throughout the
process. All of them claimed they had a better understanding of the firm and its expertise and
felt ready to start their own jobs.

However, the structuration and formalization of all know-how, knowledge and processes barely
started at Epsor. This project needs months of implementation, as it requires phases of
observation, mapping, interviews, and redaction. Then, once all the content is written down,
there is a hard work to share it and ensure all collaborators adopt the tool and use it on a frequent
basis. If the firm spends months mapping and structuring its processes but does not update or
share them, it is a complete waste of time, hence, of productivity.

In Epsor’s case, it has been frequently observed that people did twice the same researches,
tasks, etc. The lack of formalization penalizes productivity. There is no need to re-invent the
wheel, just to ensure each one may access all knowledge acquired through the firm’s existence,
avoid reproducing errors already made and allow the transfer of experience between
individuals.

In regard to Nonaka and Takeuchi’s Spiral of Knowledge, it represents the Externalization

phase, or the clarification of practices and beliefs. The other three stages of Socialization
(learning on the job), Combination (communication between pairs) and Internalization
(learning by doing) are commonly spread at Epsor. It is missing Externalization to have a full
Knowledge Management approach and therefore assess if it really enhances productivity and
helps maintaining the skills, know-how and culture of a firm.
We assessed the improvements it brings in terms of productivity, but it also helped in decision-
making (notably during CODIR and weekly meetings) and valorized the skills of individuals.
Even though the formalization of knowledge is not yet finished at Epsor, the process of
interviews of each individual to map their jobs and all the different tasks and knowledge they
own was rewarding for them. It brought attention to their job and valorization as it felt important
enough to assess, analyze and write down for others to know better their job and skills. Epsor
therefore confirmed three of the four Knowledge Management benefits explored in Chapter 5.
The only benefit that was not witnessed at Epsor is the support to innovation.

In regard to the case study and the literature review, we can say that Epsor partially confirms
the hypothesis. What Epsor achieved in terms of Knowledge Management definitely helped the
teams increase their effectiveness and productivity by being operational quickly, but there is a
lot of internal knowledge, know-how, practices or expertise that need to be formalized before
fully confirming the hypothesis.

7.1.3 Human Resources

Finally, our last hypothesis was that a structured Human Resources Management with a
formalized recruitment strategy is a powerful tool helping a startup go through hypergrowth
successfully.

First, we can say Epsor presents most of the characteristics of Human Resources management
in SMEs as specified in Chapter 5 :
- Low diversity in recruitment channels and recruitment based on network and cooptation
and often from the competition

Epsor is definitely recruiting through networking and cooptation, mostly off the leaders’ own
network and uses only two recruitment channels on a frequent basis.

- Low investment in continuous formation

Epsor handled the initial training with the onboarding week but not at all continuous formation.
However, it is a very young startup but the issue will be raised shortly if not cared about.

- Salary policies below market standards

Epsor had salaries below market standards but recently redefined their salary grid, hence
adapting it to the offer and demand. They are now on average in adequacy with the market.

- Weakness in forecast management of skills and agenda

Epsor has done a pretty good job at planning the needs for recruitments and skills so far, with
a variety of job openings and a reflection a few months in advance to prepare future needs in
recruitment.
 - Lack of union representation and collective negotiation
There is not any union representation nor collective negotiation at Epsor, since it has not reach
the legal threshold to put it in place.

- Importance of affective dimension in work relationships

This characteristic is very present at Epsor, as the affective dimension is omnipresent in work
relationships and the symbolic dimension of the organization. Everyone is very attached to the
startup, the product, its history and mostly the people it is composed of. Indeed, the last
interviews in the recruitment process is almost exclusively dedicated to evaluate if the candidate
fits the people, culture and general mood of the startup.

Even though Epsor was pretty representative of these characteristics, they did a great job at
handling them. Their hypergrowth meant a massive increase in workforce. It could not have
been possible without a proper formalization and recruitment strategy.

Indeed, Epsor had trouble recruiting before structuring the human resources pole. It could take
weeks to see a first candidate for a job, as no one really knew their role in the chain of events
leading to a recruitment. The structuration of this process defined precisely the contours of each
one’s tasks and increased the general productivity and treatment of each application. Since the
process has been defined, candidates get a first contact within 2 to 3 days at most and are usually
called during the same week. A smooth recruitment process can now take less than 3 weeks
between application and a job offer if all parties are generally available.

This rapidity brings flexibility and adaptability, therefore a better management of human
resources as it can rapidly adapt to the needs of the teams.

Moreover, the definition of a recruitment strategy and planning helped decision-making by

giving a clear frame with a lot of information: type of jobs, when the job needs to be filled, the
criteria the candidate must fulfill, the skills he or she needs to have, etc.

We can therefore conclude that the third hypothesis is confirmed through Epsor’s case study.
By formalizing Human Resources Management and a clear recruitment strategy, Epsor
managed to hire 12 new employees in September and 5 more in October. This strategy was
implemented at the beginning of summer. In just two months, Epsor managed to get all
stakeholder adopt the new process, use it, and successfully offer a job to 17 new collaborators
that arrived throughout September and October, showing just how successful and useful this
formalization was.
 7.2 Limits of this study

The case study of Epsor almost confirmed all three hypotheses. However, in order to conduct a
more complete analysis, this study should be continued with other startups in hypergrowth in
order to compare different organizations, leaders and internal policies concerning these three
subjects that are Leadership & Culture, Knowledge Management and Human Resources
Management.

Moreover, the data collection could include a more precise framework if further startups are
investigated to clearly measure the benefits of implementing such policies in a startup in
hypergrowth and capture its impact more precisely.

In addition, Epsor is still at an early stage of hypergrowth. This growth will continue for a few
years. As we analyzed Epsor with an increase from 10 to 40 employees, it would be interesting
to observe the future challenge they might face when they go from 50 to 100: will they face the
same issues at a different scale, or will totally new issues blossom?

7.3 Recommendations

Regarding Leadership & Culture, it is key to maintain the link and communication between the
leaders, managers, and employees. At first, management style in startup is often directive, as it
is a small group of individuals working around leaders. With the increase in workforce, a shift
is needed in order to increase retention of talent, make them part of a whole adventure and
improve well-being at work. By listening, paying attention, staying accessible for exchanges,
confrontation and idea sharing, leaders ensure a real communication between teams, hence,
teams that feel included, involved, engaged and therefore more productive.

As the workforce increases, it is more and more difficult for leaders to have interpersonal
relationships with everyone. This is why there is a need for weekly meetings to share
professional information regularly, but also unformal encounters to favor more relaxed and
honest interactions.
Moreover, to ensure the employees fit the firm’s culture, leaders need to ensure the contrary is
also true: employees should contribute to the definition of the corporate culture, values and
goals. Of course, leaders have the final words, but including employees in these reasonings
increases a sense of recognition and involvement. If leaders listen to the person doing the job
in the definition of objectives and goals, they will feel more engaged, and will definitely show
more motivation to reach the goal that helped define.

On the matter of Knowledge Management, it relies on IT tools (corporate portals, collaborative

work tools, Intranet, project management tools, etc.) but not only. It also assumes adherence of
the human resources of the company who possess the knowledge studied.
If transmission remains a weakly anticipated issue that is not always taken into account by
companies, encouraging a dynamic of exchange of knowledge between employees will
definitely facilitate integration and professionalization of young entrants. Although the
expertise of the job and professional environment is partly acquired in the individual
confrontation with the concrete experience of work through trial and error, the speed of
acquisition of new knowledge largely depends on the socialization that takes place by and in
the collective, in direct contact with experienced employees.

This process should not be underestimated and need a constant remodeling and updating by
incorporating the new expertise and challenges of teams on a regular basis. These concern as
much the knowledge of informal rules, networks of power and circulation of information as the
handling of cultural and relational codes.

In terms of recruitment, the next step for Epsor is to structure the arrivals of incomers. These
17 persons arrived each week, being at most three at the same time. For a month and a half,
Epsor welcomed incomers each week. To increase productivity even more, Epsor needs to
gather arrivals, so that onboarding weeks happen once or twice a month at most. By doing so,
they do not over-solicit the trainers who take care of formations, but they would also ensure
that each incomer has his onboarding week the week they arrive, and not 3 weeks after.

Moreover, Epsor really need to prepare for future issues, such as continuous formation, raises,
career plans, and all the continuous Human Resources challenges that a company eventually
faces. Being still young, the issues are still quite not here but if not prepared and anticipated, it
could cause a lot of frustrations amongst the teams, hence consequently diminishing
productivity and motivation, and ultimately altering talent retention, and consequently,
knowledge and skill loss.

This shows more than ever that all hypergrowth startups challenges are linked to one another.
It takes great patience and experience to master all subject well enough not to deliberately
provoke a crisis, but these problematics inevitably needs handling.
 8. Conclusion

In conclusion, this professional thesis explored the pitfalls a startup should avoid to sustain
business while going through an hypergrowth phase, more precisely in terms of Leadership and
Culture, Knowledge Management and Human Resources Management.

Out of the three hypotheses, two were validated by the case study and the third was partially
validated. It therefore established that internal communication enables the leaders to assess their
vision and goals to the team and strengthen the company’s culture and that a structured Human
Resources Management with a formalized recruitment strategy is a powerful tool helping a
startup go through hypergrowth successfully. Moreover, it seems that a Knowledge
Management enhances productivity and helps maintaining the skills, know-how and culture of
a firm. However, in order to have a broader understanding of these subjects, it could be
interesting to extend the study to other startup in hypergrowth.

To conclude, startups should not underestimate the violence of hypergrowth. This process could
either damage the company by diluting the culture and disrupting processes and order
previously in place, or strengthen the relationships and business with collaborators becoming
ambassadors of the startup.

There is a fine line between damage or improvement, mostly relying on the leaders vigilance
and concern. Lastly, a new concept seems to please entrepreneurs and startups : shared experts.
Senior experts in the field of entrepreneurship split their time as consultants between startups
and occupy a top management job, part-time. This concept allows them to have good insights
of the startup, give advices and mostly share their own expertise and experience, therefore
helping startup not to fall into the pitfalls stated earlier. This could be a good concept to explore
hypergrowth in a calm and sustainable way.
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 10. Appendices

Appendix 1 : Nonaka and Takeuchi - Spiral of Knowledge

SECI model of knowledge dimensions [http://en.wikipedia.org/wiki/File:SECI_Model.jpg]