There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things.Niccolo Maciavelli, The Prince (1532)
Monday, 27 October 2014
Billy's Thirty-Third Law Transition Four: From Familial to Structural
The fourth transition is often the most difficult…and for a variety of reasons. When a business grows it transitions through a number of sizes…from the one person ‘solopreneur’, to a 100+ large organization. Each of these sizes changes the company’s nature and culture. Revenue growth inevitably results in increases in staff sizes and employment structures. Managing this change is a daunting task for the most experienced managers, never mind the entrepreneur whose expertise is in his or her chosen field, and not in managing people and organizations.
Many people love for working at a ‘micro’ firm. Everybody knows each other, eats lunch together and, importantly, it is easy to keep track of what everybody else is doing. This ensures accountability as there is really, ‘no place to hide’. There is less specialization, except in professional services, as everybody does a little bit of everything. This situation requires the least amount of structure and the least amount of management. Recruiting is more ‘fit’ based than qualification bases. This generates a great deal of ‘sameness’ amongst the employees.
Something happens to a firm at as low as six or seven employees. Communications begin to breakdown as people don’t necessarily know where everybody is. A new receptionist may not ‘know’ that the boss is always at a breakfast meeting the third Tuesday of every month simply because nobody told her.
As a company grows through the next stage, communications must become more formal. This includes who manages and assigns tasks. When a company is small, people are assigned tasks from a number of different people. As the company grows, you become formal to prevent everybody from getting in each other’s way. The result is a change in culture…a change that is not necessarily welcome by everybody.
Company growth often results in more complex tasks and processes. Jobs outgrow the incumbent candidate. A bookkeeper, adequate for a micro business, may not have the accounting skills required for a larger firm. Tasks are often specialized as the company grows, leaving some employees left out. Addressing this can cause strain on the organization, especially with long time employees who are used to a more familial style.
As your business continues growing, the working environment changes dramatically. This is the point at which the organization becomes hierarchical. Suppose you have a small chain of stores. With one store, you have a store manager. With five stores may require five store managers and an area manager. At twenty-five stores, you may have twenty-five store managers, five area managers and a regional manager.
The specialization continues, as does the knowledge level of those holding positions. In the micro enterprise, a bookkeeper has sufficient knowledge to keep the company running financially. In the medium sized firm, a financial administrator is required. In a larger firm, a CPA may be required. As an enterprise grows, it becomes far more complex requiring more sophisticated management structures.
Before your firm grows, run through the following checklist and then plan for the changes:
· Develop a Human Resources forecast and a recruiting plan to ensure you have the number of people you need when you need them.
· Develop formal job descriptions for the employees in the firm. Along with the job descriptions, develop measurable goals for each employee in each role.
· Develop formal management structures. People need to know to whom they are reporting. Develop and implement a formal review process based on the goals people must achieve.
· Develop a formal compensation scheme. This must include regularly scheduled wage reviews that relate to job performance.
This sounds so 'big business' doesn't it. You can achieve these goals without a company becoming overly bureaucratic or impersonal. Think of these measures as measures of fairness...fair to the employee...to the company...and fair to the customers they serve. If this is your guiding light while developing your Human Resources strategies, you will never go wrong even as your company grows.