The Journey from Zero to Sixty Employees: Phase IV

Document created by 1002028 on Sep 16, 2015Last modified by 1002028 on Sep 20, 2015
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speedometer.jpgdoug for news.jpgI 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 4: 35 to 60 employees.

 

 

 

 

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Phase 4: 35 - 60 Employees

At this phase the primary business challenge is still managing cash flow, but now we add building internal processes.

 

The entire complexity of this little company has grown by now to heights the owner never dreamed.  It’s no longer good enough for processes to be only in people’s heads, or shoved into individual file cabinets.  You now clearly see the need to build out many internal processes.

 

The CEO is teetering on shifting the major control of his or her company over to experienced managers. Another reason why we must focus on key processes and key systems that will provide the foundational building blocks to manage that shift.

 

The company is growing up. The biggest question the CEO has to ask themselves is 'are you'?

 

In fact, the CEO is now spending 70% of his or her time managing.  Remember in Phase 1 the CEO spend 90% of his or her time "doing."  As was mentioned in the last phase, many CEO’s grow to dislike their new job.  Many preferred, and were frankly better at, doing.  That’s fine, by this phase you will definitely need someone else to run the day-to-day operations.  The CEO may choose to go back to doing.  However, by the end of this last phase this “doing” comes with a price.  Someone needs to be looking ahead into the future to find the next “river of cash.”  Failure to look ahead, regularly, is a primary reason companies get stuck in this phase. 

 

On the management front, this isn't the time to think about saving money by hiring inexperienced managers.  The company is in need of managers who 'have been there, done that'.  These experienced managers will manage the work and the people -  employees feel less frustrated, work fewer hours, are way more productive and receive solid input on their performance on a regular basis.  Otherwise good employees will leave.

 

During this phase we also add two more regulations:

  • Family Medical Leave Act (50)
  • The Affordable Care Act (50)

 

Let’s review some key themes a company faces as they grow to 60 employees. 

 

  • As you grow it becomes less about the CEO and more about the people.  People create more complexity than any other system in business.
  • Bad hires are devastating for small companies:
    • The effects of poor performance felt throughout the company.
    • Bad hires are more likely to sue / file claims.
    • You'll spend 80% of your time dealing with or trying to fix these bad apples.
    • Bad hires who remain eventually contribute heavily to low morale / high turnover which drains efficiency & profitability.
  • Losing key employees affects many aspects of the firm.
  • The success of the company is directly related to the CEO’s ability to let go and trust experienced managers to run the day-to-day.

 

For a review of how to find and keep the right people, or 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.  You may also visit our Engaging Talent series on our new Learn and GO platform.

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