I recently started a series that documents the journey a small employer takes from hiring their first employee to their 60th. I'm focusing on four stages of company size and the organizational structures, CEO priorities, staffing challenges, and key regulations that happen at each stage. Today's article focuses on Phase 3: 20 to 34 employees.
Phase 3: 20 - 34 Employees
At this phase the primary business challenge is still managing cash flow, but now we add delegation. In fact, in this phase the CEO delegates or risks burnout and losing key employees.
During this stage the organization transitions from being almost totally CEO centric to being more Enterprise centric. The organization is just too large for one person to let alone manage, much less manage while also being a day-to-day performer. For this reason, we see more CEO burnouts in this phase as many just refuse to let go.
While the CEO started delegating in the last phase, by this point they have delegated most, if not all, day-to-day tasks. People are pushing back now, demanding to have more responsibility. CEO's that won't let go not only risk their own burnout, they also risk losing good employees who want more responsibilities.
By this phase we've hired several experienced managers, and the CEO spends a good part of their time managing the managers. As we now have departments, team building begins to become more of an issue to make sure we're still rowing in the same direction. At the start employees were all on the same team and they got their direction from an inspiring CEO. Now we have people working in departments who have little to no customer interaction. It's easy to have silo thinking.
More than ever before, the CEO now understands the importance of regular and effective communication. Employees are now many times only hearing things from a Manager instead of directly from the CEO so it's critical that messages cascade down in an efficient and accurate manner.
Another new important new role for the CEO is as the protector of the vision of his or her company. A small company can't handle a manager or key employee that isn't in sync with the CEO's vision. We must hire people that fit that vision and terminate those that don't fit it quickly (in a respectful manner, but quickly). The failure to do either is a major reason companies get stuck in this stage and in fact move backwards.
During this stage many CEO's come to a point where they realize they don't enjoy what their job has become. Early on they were in the middle of the action, fighting the fires, winning the battles, closing the deals, designing the next big thing. Now they are managing, and delegating, and communicating, and trusting, and building processes, etc... At the same time, the CEO may in fact enjoy and be the best sales person, or architect, or engineer. And at the same time they despise and are lousy at this new CEO role. Some CEO's overcome this problem by hiring someone else to run the business operations, freeing up their time to be the Chief Sales Person, for example. There is nothing wrong with this approach, and in fact many times it is required to move the company forward or even stop it from moving backward. There is nothing worse for a growing company than to lose it's best sales person (the CEO) and gain it's worse administrator (the CEO). Both roles are critical, and normally require two different people once you're in phase III, and definitely if you're in the next phase.
During this phase we also add two more regulations.
To sum this phase up...delegate or die.
Tune in next week when we examine the last phase of getting to sixty employees. If you need assistance with overcoming people and management challenges presented with growth call Rick Washburn or Tom Sheehan on our Advice and Resolution team.
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