By Markey Read
Each company’s origin story is unique, but what they all have in common is the opportunity to create a company culture. Like the culture in a petri dish, each company’s environment supports certain types of life forms better than others. Additionally, as the company evolves through the natural stages of development, the culture changes; and like that petri dish, some life forms adapt, some thrive, and some wither.
The natural cycle of starting and growing a company can take an owner by surprise. When starting a company, consider these natural stages when hiring and developing employees. The basic stages of growth include:
- The Launch (generating the inspiration and vision in order to initiate the concept)
- The Muck in the Middle (developing and adapting the operations, products and services through the twists and turns of a new venture)
- Staying the Course (stabilizing operations and strategizing for growth with a reliable team)
Each of these stages require different skills, personality styles, and energy levels. As a company grows, it must hire a different kind of employee, in the latter stages than in the first. This does not mean that loyal long-term employees need to be replaced periodically, but it does mean they need to evolve with the needs of the company or choose to join a different company. It is rare that the first 20 employees are the best people to successfully take the company to the mature level of development, unless they are able to evolve and contribute in key areas.
Before launching a new venture, an entrepreneur gets inspired with a concept. This inspiration can come from adapting current professional skills that directly compete with similar businesses, noticing a product or service gap in the market and introducing this concept to serve a local or regional population, or true innovation that transforms an industry sector or creates a new one.
In this stage, the environment is very entrepreneurial, highly energized, and requires everyone to wear many hats. Hiring people who are flexible and who are willing to make mistakes, learn, and adapt quickly will move the company through this phase with success and relative humor.
While some level of technical skills are required for any industry, seek people who share the enthusiasm and vision that launched the business. This initial team needs to collaborate closely, share information quickly, and bounce off each other’s ideas and energy. This stage typically lasts for the first three to five years, depending on what kind of products and services are offered.
The Muck in Middle
At this stage, a company is typically in the midst of reconciling what products and services customers are actually buying with the original vision or inspiration that launched the business. This is a time to adjust the message, align products and services, and introduce a few specialists who can bring some depth of skill and knowledge required to provide quality products and services to current customers. Some areas of specialization include: customer service, sales, marketing, finance, operations/administration, and technicians.
In the meantime, the company leadership needs to keep focused on the big picture. Depending on how committed the founder is to the original vision; there may be some focus on educating the public about the vision to gather enough interest. If the founder is willing to adapt the original vision; leadership will need to get ahead of the stampede and build a roadmap for how to guide the new vision of the company into the future.
The natural need for more specialization changes the culture from a free-flowing intimate team into a slightly more structured and larger organization. This phase demands more management processes and formal procedures. Some of the original team who were superheroes in the time of “wearing many hats” may find it difficult to function in this changed environment. Some will say the owner has “sold out” and leave; others will gracefully adapt into new roles; and a few will likely be promoted into management/supervisor roles for which they are poorly suited.
The mistake here is to search for people who are both specialist and generalist. It is a rare individual who can do both, and it is even more rare to find someone who does both well. Hire specialists where they are needed and let them specialize; develop some members of the current pool of generalists into managers who can supervise and potentially join the leadership team; and allow others to choose specialization or graceful departure.
The primary reason people leave or get inappropriately promoted in this stage is due to poor management by the owner or leadership team. Management in this stage requires being transparent, admitting ignorance, apologizing for mistakes, allowing people to vent their frustrations, and being honest about how each person fits into the new culture or not.
Hire people who enhance the operations and skills already present, welcome some structure, and are still able to adapt to the coming adjustments. Beware of hiring people who want to replicate too many systems or structures from previous employers. Success in one environment does not always translate to success in a new one. If the systems and structures were used at a similar stage of development, they can be useful but be careful about blindly applying them.
It is critical at this point to start establishing a strong leadership or executive team. If a company does not establish a leadership team, it tends to muck around a lot under the leadership of an owner/operator who has not realized his or her limitations. Many companies obtain profitability at this level and can sustain operations for decades, but they suffer from high turnover and dysfunctional departmental management.
Staying the Course
At this stage, the company has a grasp on who its’ customers are, what it’s selling, and is actively initiating new ventures. It is critical at this point to have a strong leadership or executive team in place. If a company has not established this level of structure, it is not possible to stay the course. This stage brings with it higher levels of responsibility and accountability, more specialization, and more structure; without a strong leadership team accountability is difficult to sustain.
By this time, those who were promoted to their highest levels of incompetency have departed, some external professionals have joined the management ranks, and the company has a firm understanding of its mission/vision, strategy, and implementation plan.
Strong communications, personal/professional responsibility and accountability are crucial at this point. The culture will have overt structures and, at least, some light hierarchy so that employees are clear about their roles, who their resource people are, and how they can professionally progress within the organization. If no formal human resources manager or department has been created yet, this would be an important addition at this juncture.
The people who will support this next level seek formal planning and systems. They expect a more traditional structure with specialized jobs, clear expectations, and tangible rewards. People joining at this stage are usually implementers. They are the people who will take the ball and run hard with it, while relying on the strength of the team. They enjoy the diversity of a team and reliability of an established organization.
Whether the company focuses on promoting from within or hiring expertise from outside, hire people with enthusiasm for the company’s products and services, provide them with appropriate professional development and training, and give them the opportunity to develop personally and professionally.
Riding the Ebb & Flow
All companies have a natural ebb and flow of employees and some will revisit the “Muck in the Middle” several times as new divisions are added or businesses are acquired/merged. Naming each phase is useful because it allows leadership to identify potential trouble spots and address the real issues.
Structuring Your Business Growth Strategy
When hiring new people or promoting from within, talk about these stages and the inherent challenges and opportunities. Be clear with current and potential employees about the expectations of the current and future stages of growth. Hire people who match your level of development. Along the way, long-term employees will complain about how the company has changed. Provide them with the coaching and support to clearly choose if this company remains right for them as it develops into the next stage.
Although all of this takes time, resources, and forethought, the results are worth it. In the long run, it’s a lot cheaper than the alternative.
Markey Read, Chief Consultant of Career Networks can assist you in identifying key areas to address in this process. Additionally, she supports organizations in developing a leadership team that enables companies to shift from managing tasks and addressing personnel to leveraging their strengths. She teaches a Career Development Workshop at UVM.
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