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The Entrepreneur’s Guide to Building a Winning Culture
WHITE PAPER
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Table of Contents
Executive Summary 3
Strategic Overview 4
Employee Culture Critical to Business Success 8
Case Studies: Motivations at Work 10
The Motivational vs. Narcissistic Leader 13
Conclusions 15
References and Suggested Readings 16
Contact for More Information 18
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THE OPPORTUNITY FOR EMERGING COMPANIES IS TO GAIN COMPETITIVE
ADVANTAGE BY APPLYING THE SAME DISRUPTIVE MINDSET TO HIRING AND
EMPLOYEE ENGAGEMENT AS THEY DO TO PRODUCT DEVELOPMENT.
Executive Summary
Founders and investors fret over the best ways to find
and keep the best talent, while mitigating the costs of
a bad hire.
The problem is most emerging companies are pursuing
the wrong path to building and inspiring their teams.
The opportunity for these companies is to gain competitive
advantage by applying the same disruptive mindset to
hiring and employee engagement as they do to product
development.
The new approach is to identify and access employee
motivations as the centerpiece of the company’s talent
sustainability system. Motivations drive individual and
group behavior and decision-making and provide the most
insightful data point for attracting, selecting, developing
and retaining talent.
ATTRACTING AND RETAINING THE RIGHT TALENT IS A MAJOR CHALLENGE FOR ALL ENTREPRENEURS.
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Strategic Overview
The IT industry is rife with turnover. The employee turnover rate among
Fortune 500 companies is greatest
in the IT industry, according to a
recent PayScale study. In 2014, PwC
Saratoga reported that technology
had the third highest voluntary
separation rate across a range of
industries. For all industries, “high
performer” turnover represented
more than two-thirds of those who
left an organization.
IMPLICATION FOR ENTREPRENEURS:
As the largest companies struggle
with turnover, the challenge is
even more pressing among IT and
IT-dependent startups that have
comparatively fewer resources
and bare-bones human resource
infrastructures.
EMERGING COMPANIES STRUGGLE WITH ATTRACTING AND RETAINING THE BEST EMPLOYEES. THESE COMPANIES HAVE
GOOD REASON TO BE CONCERNED ABOUT THEIR TALENT ISSUES:
Not much is being done about high turnover in tech. According to PayScale’s recent
turnover report, the median
employee tenure at Google is just
more than a year, despite the
company consistently ranking as
the “No. 1 company to work for” by
Fortune magazine. Many theorize
that the young, smart Generation Y
and Millennial hires that dominate the
workforce are redefining the concept
of employee loyalty.
The costs associated with “avoidable turnover” and “bad hires” are high. According to Saratoga Institute,
the cost of losing the average
employee is one times annual salary.
For 2012, CareerBuilder reported
that two-thirds of U.S. employers
were affected by bad hires, with
27 percent of employers reporting
that a single bad hire cost more
than $50,000. Other costs include
the impact on employee morale and
company reputation.
IMPLICATION FOR ENTREPRENEURS:
These costs can be particularly
challenging for emerging companies,
where burn rates seem to be rising
while investors are demanding
greater accountability. Sam Altman,
CEO of Y Combinator, recently
observed in Business Insider, “I think
there are more companies burning
$1 million a month than there were
one or two years ago. What is OK is to
spend money on productivity. What is
not OK is to just light money on fire.”
IMPLICATION FOR ENTREPRENEURS:
If you don’t have Google-like profits,
you can’t sustain the reported
Google-like turnover. Simply out of
the need to survive, being innovative
and disruptive extends beyond
product development to management
practices. Startups must identify new
ways to seed greater loyalty among
new generations of employees or at
least put in place systems to mitigate
turnover.
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STARTUPS MUST IDENTIFY NEW WAYS TO SEED GREATER LOYALTY AMONG
NEW GENERATIONS OF EMPLOYEES OR AT LEAST PUT IN PLACE SYSTEMS TO
MITIGATE TURNOVER.
Strategic Overview CONTINUED
The Fallacy of the “UnCulture”The approach for many startups has been to differentiate themselves from the larger companies in their recruitment
messages. The startups describe a kind of “UnCulture” where individual freedoms trump corporate structure. Their
recruitment platform is that talented people don’t have to suffocate in the stultifying air of large companies. They
should work where talent rules.
These ideals are demonstrated in various ways: fun workplaces, flexible work hours (including from home), social
interaction, time off for self-improvement and participation in cause-related activities.
The entrepreneurs are right to offer a fresh approach, but there are two major issues with the tact many have taken:
THE ‘UNCULTURE” DOESN’T WORK.
Many of the incentives being offered undermine the core
tenets of culture building and are detrimental to cultivating
a winning team.
USING THE SAME APPROACH DOESN’T DIFFERENTIATE
YOU FROM OTHER EMERGING COMPANIES.
The emerging companies seem to be copying a “culture
template” made famous by Google and other early
technology winners. If the majority of emerging companies
are using the same template, what is their unique appeal
to current and potential employees? And if the IT industry
turnover statistics are true, why simply replicate a
flawed model?
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Strategic Overview CONTINUED
A Game-Changing OpportunityStartup companies are in a unique position to leverage recent breakthroughs in organizational psychology to build highly-
motivated team cultures that are productive, creative and committed. As new companies, they are not stifled by bureaucracy
or bound by traditional ways. They can seize competitive advantage and outflank competitors who vie with them for talent.
The game-changing opportunity is to adopt a motivational leadership approach. Decades of research shows that human
motivations drive behavior and decision-making. The more you understand about the motivational profile of your employees
and how to create the ideal motivational mix, the greater your chances to build a committed, winning team.
A grounding in positive psychology helps. There are three types of motivations:
INTRINSIC
EXTRINSIC
INTROJECTED
REFLECTIVE OF DEEP, PERSONAL VALUES AND BELIEFS
TANGIBLE REWARDS, SUCH AS PAY, APPROVAL, PUNISHMENT
DOING THINGS I FEEL I “SHOULD” DO
According to a dominant theory of motivation, the more self-determined a person’s behavior, the greater the individual’s
motivation. Satisfying an individual’s deepest intrinsic motivations is the most self-determined — and therefore most
effective — form of motivation. By contrast, extrinsic and introjected motivations are least self-determined, and therefore less
motivating. More so, numerous studies have shown that tangible rewards significantly undermine feelings of autonomy that
are central to self-determination.
By offering their “progressive” package of perks and workplace goodies, many emerging companies aren’t fulfilling their
employees’ intrinsic motivations; they’re simply offering more creative extrinsic motivations. Understanding this, is there
any wonder why turnover in tech is so high?
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EMPLOYEE ENGAGEMENT’ IS BECOMING A FAVORED MANAGEMENT TERM, AS MANY
STUDIES SHOW THAT COMPANIES WITH HIGHLY ENGAGED CULTURES CAN HIRE
MORE EASILY, HAVE HIGHER RETENTION RATES, PROVIDE BETTER CUSTOMER
SERVICE AND DELIVER HIGHER LONG-TERM PROFITABILITY.
Strategic Overview CONTINUED
The Pathway to Motivational Leadership
THE PROCESS FOR BECOMING A MOTIVATIONAL LEADER IS THREE-FOLD:
RECOGNIZE that company culture is critical to business success and not an isolated human resource task.
As a vital management function,
culture can’t be left to “gut feel” or
“guesswork.”
USE BREAKTHROUGH TOOLS to understand and access employee motivations.
The Primal Personality Assessment®
uniquely uncovers the specific
motivations that drive an individual
and group’s behavior and decision-
making; it also identifies the
activities they may find most
fulfilling. It takes the guesswork out
of formulating a winning culture.
UNDERSTAND HOW MOTIVATIONAL
LEADERS INSPIRE others while narcissistic leaders fail to connect.
Leaders who engage others on
a motivational level engender
greater productivity, creativity and
commitment.
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THE EMERGING COMPANIES CAN LEAPFROG PAST THEIR LARGER AND MORE
ESTABLISHED COUNTERPARTS BY IDENTIFYING AND TRACKING THE MOST
INSIGHTFUL DATA POINT—THE MOTIVATIONS THAT DRIVE INDIVIDUAL AND GROUP
BEHAVIOR AND DECISION-MAKING.
Employee Culture is Critical to Business Success
While more leaders are recognizing the importance of
culture, few say they have effectively capitalized on
the opportunity. This opens a competitive window for
entrepreneurs, who can act to create a great culture at
the outset, without the burden of fixing an existing,
inadequate system.
Through its 2015 study of more than 3,000 business
and human resource leaders from 106 countries, Deloitte
identified employee engagement and culture as the
number one issue — ranked as “important” by 87 percent of
respondents and “very important” by 50 percent (double
the previous year). A PwC study showed that 34 percent of
U.S. CEOs are “extremely concerned” about the availability
of key skills.
As a result of this recognition, two-thirds of the HR
respondents to the Deloitte study said they are updating
their engagement and retention strategies to include, “how
we lead, how we manage, how we develop and how we
inspire people.”
PwC reports increasing pressure on HR executives to
provide evidence-based approaches to developing and
retaining talent — including having the “right talent mix”
to achieve the company’s objectives.
The HR executives are facing a major challenge, in part
because employee culture is no longer just an internal issue.
Social media and employment sites such as Glassdoor make
a company’s culture public fodder — and it is a growing
influence. LinkedIn’s Talent Trends 2014 study of 18,000
employees across 26 countries found that 56 percent of
respondents identified a company’s “reputation as a great
place to work” as the most important reputational factor in
considering a new job.
“Employee engagement” is becoming a favored
management term, as many studies show that companies
with highly engaged cultures can hire more easily, have
higher retention rates, provide better customer service and
deliver higher long-term profitability.
Corporate leaders across the globe recognize these
potential strategic benefits, but are slow to seize them —
opening a real competitive opportunity for the more
nimble emerging companies.
RECENT GLOBAL STUDIES BY MAJOR CONSULTING FIRMS DEMONSTRATE HOW IMPORTANT CULTURE IS BECOMING TO CORPORATE
LEADERS. THERE IS GROWING RECOGNITION THAT A STRONG CULTURE CAN BE A COMPETITIVE ADVANTAGE, WHILE THE REPUTATION
FOR HAVING A BAD CULTURE CAN BE AN IMPEDIMENT TO ATTRACTING AND RETAINING THE BEST TALENT.
87%
% of business executives who believe employee engagement is important. (Deloitte)
13%
% of global workforce that is highly engaged. (Gallup)
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Employee Culture is Critical to Business Success CONTINUED
For most companies, employee engagement remains an elusive goal:
Moreover, the HR executives responsible for the engagement programs acknowledge their companies are not yet up to the task:
Emerging Companies Can Leapfrog CompetitorsThe competitive opportunity now open to emerging
companies won’t last forever. In a recent study, PwC
Saratoga found that 86 percent of respondents identified
improving people analytics as “a strategic priority for the
next one-to-three years” and nearly half already have a
dedicated analytics function.
The question is — what analytics will they be tracking?
The emerging companies can leapfrog past their larger and
more established counterparts by identifying and tracking
the most insightful data point — the motivations that drive
individual and group behavior and decision-making.
13%A recent Gallup poll showed
that only 13 percent of the
global workforce is “highly
engaged.”
A 2014 Deloitte/Glassdoor
study showed that “upwards
of half the workforce
would not recommend their
employer to peers.”
9%
Deloitte’s 2015 Human Capital Trends
reported that only seven percent of its
study respondents rate themselves as
“excellent” in “measuring, driving, and
improving engagement and retention.”
Nearly two-thirds of the HR leaders
surveyed believe their HR solutions
“are barely adequate or falling behind.”
The same study reported that fewer
than nine percent of respondents
believe their organizations have a
strong analytics team in place — a key
infrastructure need for benchmarking
and improving employee engagement.
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Case Studies: Motivations at Work
According to self-determination theory, the more self-determined the behavior, the greater the individual’s motivation.
Satisfying identified and intrinsic motivations (i.e., deep, personal values and beliefs) is the most self-determined — and
therefore most effective — form of motivation. By contrast, external motivations (e.g., tangible rewards such as pay,
approval, punishment) and introjected rewards (e.g., things I feel I “should” do) are least self-determined, and therefore
less motivating. In fact, numerous studies have shown that tangible rewards significantly undermine feelings of
autonomy that are central to intrinsic motivations.
THERE ARE VARIOUS PSYCHOLOGICAL THEORIES RELATED TO MOTIVATIONS AND THE PATHWAYS TO MAXIMIZING HUMAN POTENTIAL.
THESE INCLUDE SELF-DETERMINATION THEORY, SELF-CONGRUENCE THEORY AND SOCIAL-COGNITIVE THEORY.
The Primal Personality Assessment® identifies the intrinsic motivations that drive individual and group behavior and decision-
making — and the activities and interests that are most fulfilling. Its value in employee engagement is two-fold:
CREATING THE “WINNING TEAM FORMULA” for recruiting and
composing teams of people with the right complement of motivations
in order to optimize performance and commitment.
IDENTIFYING INDIVIDUAL MOTIVATIONS to provide a roadmap for
satisfying each employee’s intrinsic motivational needs so they are
more productive, creative and committed.
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IN EACH CASE, THE PRIMAL PERSONALITY ASSESSMENT® IDENTIFIED
THE MOTIVATIONAL ELEMENTS THAT MADE THE ORGANIZATION UNIQUE
AND SUCCESSFUL.
Case Studies: Motivations at Work CONTINUED
The Winning Formula: Not About “Gut Feel” or “Fixing People”We have seen in various motivational studies where a
leader, consciously or unconsciously, screens for people
just like them (or people they just like) in making hiring
decisions. But they would become more effective leaders
if they developed their organizations using the same
disruptive mindset they apply to product development.
Large companies use traditional methods in their
recruitment and development of employees. According to
a recent Deloitte study, nearly two-thirds of HR leaders
surveyed believe their HR solutions are “barely adequate or
falling behind.” The current methods aren’t as effective as
they need to be.
Many of the traditional methods are based on identifying
employee characteristics and traits — including individual
strengths and weaknesses. The work is to help employees
change and improve by leveraging their strengths and
addressing their weaknesses — and thereby enhance the
team culture.
How effective is this approach to improving cultures by
getting people to change? It’s been widely reported
that 70 percent of change management programs fail.
“Fixing people” alone doesn’t work.
Another approach is to put people in a position to
excel by aligning their intrinsic motivations with their
job responsibilities:
• Motivations provide a deeper level of understanding compared to identifying characteristics and traits. Motivations are at the core
of human behavior and decision-making. Characteristics
and traits can be seen as expressions of deeper
motivations. The Primal Personality Assessment®
facilitates alignment between peoples’ roles at work and
satisfaction of their intrinsic motivations.
• For leaders, it simplifies the employee recruitment and team selection process by offering a choice
from among a group of qualified candidates whose
motivational profile fits a specific need and would help
propel the company to a new level of success.
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Case Studies: Motivations at Work CONTINUED
Case StudiesFollowing are examples of how Leadership Counseling Services, LLC has used the Primal Personality Assessment® to
establish motivational leadership practices that help companies achieve greater levels of productivity and commitment:
CASE SUMMARY #1: The Primal Personality
Assessment® was used to study the motivational
profile of an emerging technology company. The
findings demonstrated that the CEO had excelled
at creating an outstanding culture of people
dedicated to customer service — the company’s
main selling proposition. However, growth was
stagnant. We discovered this was due in part to the
team’s motivational mix.
Growth companies are fueled in part by a
combination of creativity, strategic planning and
task-orientation — motivations completely missing
from that company’s employee motivational
profile. The CEO’s new priority became to screen
for complementary but additive motivational types
in the company’s recruitment in order to fill this
critical void.
CASE SUMMARY #2: The Primal Personality
Assessment® was used to study the motivational
profile of the leadership team of a professional
service company. The company had recently been
acquired and management was being tasked to
meet the growth expectations of its new owners.
The findings showed that company leaders were
not fully united and were being hampered by a
significant motivational conflict. Further, there
were issues with the diversity and strength of the
motivational mix, particularly for lacking leaders
with the creative and strategic motivations
necessary to galvanize the team and drive growth.
Insights from the assessment led to the formula
for adjusting the team’s motivational mix in a way
that would preserve what made the organization
“special,” while adding new, but complementary
motivations that would help address the
motivational conflict and align leadership with the
new owners.
In each case, the Primal Personality Assessment® identified the motivational elements that made the
organization unique and successful. Recommendations were designed to enhance those aspects of the
company, while adding others to help it reach a new level of success.
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TO BE SUCCESSFUL, A COMPANY’S VISION AND MISSION MUST REFLECT THE
MOTIVATIONAL DESIRES OF THE TEAM CHARGED WITH MAKING IT HAPPEN.
OTHERWISE, PEOPLE ARE JUST SHOWING UP FOR WORK.
The Motivational vs. Narcissistic Leader
The problem is many entrepreneurial leaders lose sight of
the fact that people aren’t buying into the entrepreneur’s
passion or vision. Instead, they are consciously or
unconsciously evaluating whether participating in making
that vision a reality meets their intrinsic motivational needs.
To address this, many entrepreneurs simply hire like-minded
people. In the rush of getting a company started, this may
seem like a rational choice. First, it’s easier to communicate
and find acceptance for the leader’s vision and mission.
Second, the company founder doesn’t have to stretch as
a leader and manage a range of personalities with a more
complex set of needs and expectations.
This is where many entrepreneurs make their first misstep—
and it can be the deciding factor in a company’s survival.
Hiring people just like you (or people you just like) may
provide psychological comfort to the leader, but it creates a
culture of “sameness” that lacks the motivational diversity
necessary for a winning team.
The opportunity is to become a better leader. The
impetus is the founder’s longevity as leader and the
company’s survival.
Leaders who focus on explaining their vision in ways
others find compelling and aligned with personal values will
engender greater productivity, creativity and commitment
than those who try to gain support and participation by
offering extrinsic rewards.
To be successful, a company’s vision and mission must
reflect the motivational desires of the team charged
with making it happen. Otherwise, people are just
showing up for work.
THERE IS A NARCISSISTIC TRAP ASSOCIATED WITH BEING AN ENTREPRENEUR — AND IT COMES FROM BEING IN THE CONSTANT
POSITION OF HAVING TO SELL “YOUR VISION” AND “YOUR COMPANY.” INVESTORS AND OTHER IMPORTANT STAKEHOLDERS
ENCOURAGE IT BY EQUATING AN ENTREPRENEUR’S SINGLE-MINDED, OBSESSIVE PURSUIT OF A BUSINESS IDEA AS “PASSION.”
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The Motivational vs. Narcissistic Leader CONTINUED
Communications that MotivateLeadership communications are critical to achieving
motivational buy-in. Studies have shown that
communications are far more powerful and persuasive
when the messages are framed in terms that fulfill a
target group’s intrinsic motivations versus extrinsic goals.
That means identifying, recognizing and speaking to the
different core motivations represented by the group.
Research shows that framing messages to appeal to
intrinsic motivations leads to deeper engagement,
more in-depth processing of information and more
prolonged engagement.
Motivational leaders create communications platforms
that engage employees. As described by Warner Burke
of Columbia University in Organizational Change and
Practice (2011):
The leader has a sense of what followers need and want; it is simply that these desires are not in the conscious awareness. It is about beliefs and values that people hold but do not necessarily discuss. They are implicit and tacit. Gardner’s examples (1995) of this type are Ronald Reagan when he was president of the United States and Margaret Thatcher when she was prime minister of the United Kingdom. They both, Gardner has argued, tapped into latent beliefs and desires of their respective constituents, beliefs and desires that support a free-market system, that oppose socialism and prefer capitalism, and that provide people with a feeling of freedom and choice. In the corporate world, innovative leaders might surface a strong desire on the part of employees to be more collaborative as opposed to competing with others in the organization, and to be more involved and engaged in the business, or to be a participant in changing the organization
Insight from the Primal Personality Assessment® is used
as the basis for leadership communications platforms that
resonate because they appeal to the intrinsic motivations
of employees and other important stakeholders.
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COMPARED TO LARGE, MATURE CORPORATIONS STIFLED BY BUREAUCRACY AND
TRADITIONS, STARTUP COMPANIES ARE UNIQUELY POSITIONED TO LEVERAGE
RECENT BREAKTHROUGHS IN ORGANIZATIONAL PSYCHOLOGY TO CREATE AND
SUSTAIN HIGHLY-MOTIVATED TEAM CULTURES THAT SPAWN PRODUCTIVITY,
CREATIVITY AND LOYALTY.
Conclusions
• INSPIRING TALENT AND TEAMS: Most startup and
emerging companies are pursuing the wrong path to
building and inspiring their talent and teams; they are
missing the opportunity to gain critical competitive
advantage by applying the same disruptive mindset to
hiring and employee engagement as they do to product
development.
• STARTUP COMPANIES ARE UNIQUELY POSITIONED:
Compared to large, mature corporations stifled by
bureaucracy and traditions, startup companies are
uniquely positioned to leverage recent breakthroughs
in organizational psychology to create and sustain
highly-motivated team cultures that spawn productivity,
creativity and loyalty.
• THE GAME-CHANGING OPPORTUNITY is to leapfrog
past competitors by identifying and tracking the
most insightful data points — the precise motivations
that actually drive individual and group behavior and
decision-making. Adopt a motivational leadership
approach based on understanding the motivational
profile of employees and creating an ideal employee
motivational mix to build and retain a committed,
winning team.
• THE PROCESS FOR BECOMING A MOTIVATIONAL
LEADER: 1) Recognize that company culture is critical
to business success; 2) Understand how motivational
leaders inspire others and why narcissistic leaders fail
to connect and engage; and 3) Use breakthrough tools
(i.e., the Primal Personality Assessment®) to understand
and access employee motivations.
• SATISFYING INTRINSIC MOTIVATIONS (i.e., deep,
personal values and beliefs) is most effective. By
contrast, external motivations (e.g., tangible rewards
such as pay, approval, punishment) are least motivating.
• THE VALUE OF USING THE PRIMAL PERSONALITY
ASSESSMENT®: It generates an insightful roadmap
for satisfying each employee’s intrinsic motivational
needs so they can be more productive, creative and
committed. It also enables company leaders to create
and replicate a “winning team formula” by recruiting and
composing teams of people with the right complement
of motivations in order to optimize performance and
loyalty.
• SUCCESS MEANS BEING IN SYNC: To be successful,
a company’s vision and mission must reflect the
motivational desires of the team charged with making it
happen. Otherwise, people are just showing up for work.
• LEADERSHIP COMMUNICATIONS ARE CRITICAL TO
ACHIEVING MOTIVATIONAL BUY-IN. Studies have
shown that communications are far more powerful
and persuasive when messages are framed in terms
that fulfill a target group’s intrinsic motivations versus
extrinsic goals.
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Colvin, G. (2015). How to build the perfect workplace.
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THE INFORMATION HEREIN CONSTITUTES PROPRIETARY PROPERTY OF LEADERSHIP COUNSELING SERVICES, LLC. ANY DISCLOSURE, TRANSMISSION, REPRODUCTION OR COPYING OF ANY OF THIS INFORMATION WITHOUT WRITTEN PERMISSION OF LEADERSHIP COUNSELING SERVICES, LLC. IS EXPRESSLY PROHIBITED.
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References and Suggested Readings CONTINUED
Shontell, A. (2015). Startups are blowing $1 million
a month and it’s getting ‘frightening,’ warns Silicon
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and persistence: The synergistic effects of intrinsic goal
contents and autonomy-supportive contexts. Journal of Personality and Social Psychology, 87, 246-260.
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Contact for More Information
To learn more about the Primal Personality Assessment,® contact:Sean K. Murphy
Managing Partner
Leadership Counseling Services, LLC
18
Leadership Counseling Services, LLCPrimal Personality Assessment®
©Leadership Counseling Services, LLC. All Rights Reserved.
THE INFORMATION HEREIN CONSTITUTES PROPRIETARY PROPERTY OF LEADERSHIP COUNSELING SERVICES, LLC. ANY DISCLOSURE, TRANSMISSION, REPRODUCTION OR COPYING OF ANY OF THIS INFORMATION WITHOUT WRITTEN PERMISSION OF LEADERSHIP COUNSELING SERVICES, LLC. IS EXPRESSLY PROHIBITED.