“For a startup, growing too quickly can produce just as spectacular a failure as growing too slowly,” observed New York Times technology writer Farhad Manjoo.
Growing pains are inevitable for any company that’s scaling fast. You’re going to make some mistakes along the way – and that’s just fine. The key is how quickly you can learn from those mistakes and correct course.
Here are some talent management strategies that fast-growing companies can implement before their growth spirals out of control.
As companies scale, it’s common for them to lower the bar while hiring, says Chris Platts, founder and CEO of TalentRocket, a software that tries to align job seekers and employers based on culture fit.
“When a company starts out, the founder is personally involved in every hiring decision,” says Platts. “This is fine as they only want to hire the best. After a while, this becomes unmanageable so managers take responsibility for hiring.
“Often, because managers are looking out for themselves as much as they are the company, they tend to compromise on talent. Managers naturally want to hire smart people but often not people who are smarter than themselves. Over time people hire people who are typically just a little less smart than themselves and this, when amplified, creates a dilution of talent.”
To combat this, he encourages companies to take a page out of Mark Zuckerberg’s hiring playbook: “Only hire someone if you can see yourself one day working for them,” Platts advises.
Most employees aren’t content to spend their careers in a dead-end job – and if they are, well, do you really want them on your team? The path to climbing the corporate ladder isn’t always obvious at a fast-growing company. New departments and new positions are bound to emerge.
It’s essential, however, to put structures in place to allow for employees’ growth, says Kathy Powell, brand manager at TIE National, a technology infrastructure provider.
“I’ve seen businesses tell their staff that they are looking to hire from within for a position, but all along they really intended to hire externally,” she says. “This backfires on morale. If employees are given a chance to interview but no one from within is ever promoted, not only will the negativity fester and spread like a virus, but the new employee is now set up for failure with a resentful team.
“Instead, encourage employees to take the initiative. The more employees grow and learn within the organization, the more invested their interests in the success of the business become. By giving the staff a voice on process improvements, and allowing them a chance to strive for a higher position, you’ll reduce training time, increase morale and maintain company loyalty through a rough growth spurt.”
Middle management gets a bad rap, and not for nothing: Managers are subordinate to and lack the power of executives. But they still have ensure that their own subordinates are working to carry out policies and objectives – policies and objectives the subordinates may object to and that the managers didn’t develop themselves. It’s little wonder 18 percent of managers report symptoms of depression, compared to only 11 percent of executives. All the more reason to take care of your managers.
“As many businesses grow, they don’t put enough resources into training middle managers,” says Marc Prosser, co-founder of product reviews website Fit Small Business. “This can fall into the background because it’s seen as overhead – a day spent training a manager is a day both of you aren’t directly engaged in directly growing the business. Developing skilled managers has a huge long-term payoff but not much of a short-term payoff, which is why it sometimes falls by the wayside.”
By giving management the support they need from the get-go, you’ll mitigate the possibility of a disconnect between top-level vision and ground-level execution, says Prosser. “It’s managers’ job to bridge that gap and make sure everything happens as intended.”
When business is growing faster than you can handle, it’s tempting to go on a hiring spree. With hiring that’s reactionary as opposed to strategic, you risk swapping one problem for another. Ultimately, the second problem poses more of a threat to business, according to Daniel Eke, founder of Factor Funding Company, a small business lender.
“Many business owners will hire more workers than they need, and when growth stalls they are left with too many employees,” says Eke. “Businesses that look forward and have income projections for two or three years out are able to avoid this pitfall and keep their staff to the right amount.”
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Unless you’ve got hundreds of millions in funding à la Zenefits, most startups try to keep costs to a bare minimum. There’s a difference between saving smart and cutting corners, though.
The decision to go without a dedicated recruiter is the type of cost-saving measure that hurts companies in the long run, according to Jill Witty, VP of operations at recruiting software Entelo.
“Recruiting is viewed as a cost center, an area to keep as lean as possible for as long as possible,” says Witty, whose employer has tripled in size each of the past two years and now employs 75 people. “However, if nobody owns recruiting, then the process gets neglected. Every department head is busy with other things: R&D is working on building a great product; Sales on selling, the CEO on fundraising.
“Nobody will view recruiting for what it is: the area that will make or break your business. Once you put a dedicated recruiter in place, that person can be 100 percent focused on sourcing and hiring great people, and only then will you be able to build a great company.”
Most companies probably don’t aspire to a rowdy, party-hard culture – but without proper oversight, that’s exactly what it can devolve into. Just because someone has the ability to fulfill a position’s responsibilities doesn’t mean they’re the right person for the job.
Witty says that in the rush to grow headcount, companies often prioritize candidates’ relevant skills and experience at the expense of making sure the candidates’ values align with those of the organization.
“All it takes is one bad hire to change company culture for the worse,” she says. “There is the concept of ‘technical debt’ – when programmers write code hastily that gets the job done today, but that will cause problems down the road. There is a ‘people debt’ that gets incurred when a company makes bad hires because they are hiring too quickly. It is far worse to hire the wrong person in order to hit hiring quotas, than to take too long to hire the right person.”
Screening for cultural fit is only the first step. Once you’ve hired a team of employees who are attuned with corporate culture, fostering and maintaining that culture takes effort.
Dmitry Ozik, co-founder of HighYa, a consumer reviews website, knows about this first-hand. He says that last year, as business was growing rapidly, he and his fellow co-founder devoted most of their attention to features and quality at the expense of building relationships with their team members, all of whom work remotely.
“As a result, they felt left out, and their passion for the work and quality of their work declined.”
After identifying the problem, they set out to make repairs by getting on weekly or biweekly calls with each team member.
“We transparently share everything that’s going on with the company (good and bad), provide feedback and direction, cast vision and discuss culture,” Ozik says. “This commitment is reflected in their top-notch work. Team members understand where we are going, what’s required of them, and how their work is making a difference.”
For founders, their business is their baby. They literally conceived it, and have devoted countless hours to growing and nurturing it. So it can be hard to delegate. But if the business is successful enough, there will come a time when there are too many tasks for the founder to take on themselves. And if you continue to try to do everything, you run the risk of alienation your team.
When Kalen Iselt, owner and COO of car-buying website MobilKamu, started his company with his co-founder, the two of them took care of every aspect of the business. After they grew larger, got funding and began to hire people, he found that it was hard to let go of control.
“Delegating tasks was always very difficult for me, as I wanted to personally make sure everything got done,” he says. “As a result I ended up undermining my staff, questioning their judgment and ultimately driving away several talented, highly intelligent, driven employees.”
It’s crucial for companies to put policies in place to ensure that individuals and/or departments can’t gain too much power and undermine the best interests of the company as a whole.
By paying his sales team a healthy salary and offering them commissions on top of that, Iselt believed he was earning the same earning the same loyalty and trust that he bestowed on them. His trust, it turns out, was misplaced.
“We instilled too much trust and not enough safeguards to protect our revenue, and as a result we had our best performing sales member run away with a large amount of our revenue,” he says. “After this we also lost several other sales consultants before we could stabilize the team again.”
And unethical intent isn’t always behind bad decisions. As Leo Welder was growing ChooseWhat.com, a website that provides resources for startups, some valued team members made mistakes that ended up seriously hurting the company.
“I trusted high-performing individuals to handle the core business functions, but even great performers can make mistakes – sometimes critical ones,” he says. “These mistakes can be avoided by making sure that even your best employees are being challenged by other people that are not only smart, but experienced in that area. Mission-critical functions in my business need to be lead by strategies that are designed by great people AND are frequently challenged to ensure continued success.”
If your company is in the enviable position of scaling fast, congratulations – you’re already breathing rare air, as 90 percent of startups fail. To ensure continued success, it’s essential to develop and execute sound talent management strategies. After all, your team is the lifeblood of your organization. If you set them up to thrive and produce, business will follow.