There comes a time in every small- to medium-sized business when leaders start asking, “how do we scale our team”? While for startups this involves making first hires beyond the core owner / operational team, for established businesses this usually means navigating adding management and executive leadership.
The general trajectory for businesses is three basic steps:
- They hire the entry-level and technical personnel.
- They hire those who manage and organize people and workflow.
- They hire an executive team to oversee forwarding the vision and direction of the company.
Three types of organizations approach their scaling challenge three different ways. Please note that these are categories, and intended as descriptions, rather than prescriptions.
Title First: Many startups with an eye toward funding give their founders executive titles – even though they themselves typically end up doing everything from entry-level work to executive work, all mixed together, in the beginning. As they grow, they either end up shedding the lower-level work, or getting stuck at one or more of those stages. This often breaks the startup when that happens.
Solo Executive: Other organizations eschew a team-based executive model, and operate with a single executive. These companies find their upper size limits based in the capacity of that one executive to maintain the big picture and manage areas where that executive has lesser skill or expertise. No one is an expert at everything, of course.
Operator: A third class of organizations operates in a manager-owner model, where the executive functions of planning, visioning, and building big-picture value is very limited. This usually means the business started with an owner-technician, such as a skilled tradesperson, a consultant, engineer, or researcher. This leader stays in the business, spending most of their time actually doing the work itself. They hire help to do some of their tasks, but their main work is still getting day-to-day projects done.
Each of these models has distinct challenges as they scale. Nevertheless, they all have this in common: they have to grow the company’s leadership capacity to scale, adapt, and remain sustainable.
In the Title First or Startup Executive model, the organization faces dual challenges: growing the leadership capacity of the founders, and those leaders shifting the balance of their priorities nimbly as the situation warrants it. This requires what we call “bounded fluidity” – the ability to flow as needed, but within constructive boundaries. Otherwise, fluidity loses its energy as it goes from stream to puddle. These executives often need coaches, mentors, advisors, and guides to help them manage the changes from idea to pre-revenue business to scaled business.
In the Solo Executive model, the executive faces having to do a little bit of executive everything. The self-aware solo executive knows that they don’t have skills in everything, and need support in the areas they are weak. Nevertheless, their organization, while it may provide them with managers (some of whom, confusingly, may hold the titles of executives), does not actually have people who can operate in that capacity. These executives may already have coaches, and may not be able to afford another full-time, skill-balanced jack-of-all-trades associate executive to help lead the organization. However, they often could afford a fractional CXO, allowing the company to have some executive capacity while not incurring the costs of a full-time employee at an executive pay scale. A consultant can often fill this fractional executive role until (and unless) the role grows to a full-time position.
In the Operator, or owner-manager model, the challenges are a bit different. Many small- to medium-sized businesses run well like this for years. However, the lifestyle of the business can be burdensome – having to build every other aspect of life around the business’ needs. And if the owner wants or needs time off, they are often so intertwined with day-to-day operations that things grind to a halt or start breaking if the owner is away for any significant length of time. Moreover, the resale value of the firm suffers because the owner is a major piece of the firm’s revenue.
Owners in this kind of structure do well to hire to build a management and technical team at the same time – so they have the freedom to step away. This typically requires test-hiring or test-building positions that don’t exist yet. Position Design leaders can help here. A Position Design leader is typically a consultant hired to create the position from scratch and serve in it until the wrinkles are ironed out. Then they pass the role on to someone else who is suited for a long-term position.
So Now What?
Scaling a team is more than just setting up a job description and hiring process – although it is that. It’s determining where a company is in its lifecycle, and what kind of leadership structure it resembles.
We’re happy to help with organizations going through any of these transitions or that have these needs. Let us know how we can help you scale your team!