Hey, Founders…
Having lots of discussions with tech and software company founders these days. When you’re reaching new levels of success for your company, it can be exhilarating and daunting at the same time. If you are looking for some helpful context and ideas on how to lead the next stage of change at your company, this letter is for you!
Dear Founder,
Congratulations on the remarkable growth of your software company! It's truly an exciting journey to witness the transformation from a handful of employees to a thriving organization.
Many founders note that there are specific turning points where they become aware that they are turning a corner of growth where their organization’s design, roles and systems that are familiar (and worked well so far) won’t continue to do so for long.
This creates a natural tension for founders. How do we navigate these changes while keeping what we love about our company? How do we add numbers and expand structure without becoming out of touch? How do we delegate without losing control of what matters? How do we develop and keep our emerging leaders without expanding to an unwieldy number of managers? How do we build policies without becoming rule-bound and stuffy?
There are common milestones where founders realize their organizational structures and practices need to adapt to sustain growth effectively. While the exact thresholds vary depending on the industry, company culture, market conditions, and technology advancements, here are some points and corresponding employee counts commonly associated with organizational shifts:
Startup to Small Business: This transition typically occurs when a company grows from a small team (around 5-10 employees) to a more structured organization (around 20 employees). Founders often start feeling the need for more defined roles, processes, and systems to manage the increasing workload and complexity.
Small Business to Mid-Sized Company: As a company grows from around 20 employees to 70-100 employees, it often encounters challenges related to communication, coordination, and decision-making. Hierarchies and reporting structures become more formalized, and there is an increased focus on departmentalization and specialization.
Mid-Sized Company to Large Enterprise: When a company reaches around 300 employees, it typically faces significant organizational complexity. This stage often requires a shift towards more formalized structures, such as divisions or business units, to manage different product lines or geographical regions. There is a greater need for scalable processes, performance management systems, and cross-functional collaboration.
As you navigate this rapid expansion in your specific context, it's helpful to be aware of the common challenges that arise and explore strategies to address them. Let's delve into some of these issues while acknowledging the personal impact they may have on you.
1. Designing career development options: Witnessing the emergence of future leaders is a fulfilling experience, but it can also be a challenge to identify and develop them amidst rapid growth. Implementing a leadership development program can help you spot high-potential employees early on and provide them with mentorship, training, and growth opportunities. Nurturing talent within your organization ensures a smooth transition as the company continues to expand.
As your team grows, retaining talented individuals becomes increasingly important. It's natural to feel a sense of pride and attachment to your employees and losing them can be tough. To address this, offer competitive compensation packages, provide avenues for growth and advancement, and create a positive work culture where employees feel valued and motivated.
2. Finding the right pace for you: The pace of organizational design and development should be driven by your company's unique needs and growth trajectory. It's essential to be adaptable and willing to make changes when necessary while considering the impact on your team and their ability to adapt to new structures. It's essential to strike a balance between maintaining agility and adapting to the changing needs of your expanding team. And if your employees rate your culture highly, that is a huge advantage while managing change!
Here are some considerations to help you navigate this process:
Assess your current state: Take a step back and evaluate your existing organizational structure. Identify any pain points or areas where the structure may be inhibiting growth or causing inefficiencies. Consider factors such as communication bottlenecks, decision-making processes, and alignment with your business goals. Tools such as a SWOT analysis can be helpful in this assessment.
Plan for the future: As you envision the future of your company, consider the scale and scope of growth you anticipate. Will you be expanding into new markets, changing your product or service focus, or adding specialized teams? Understanding your long-term goals will help you determine the level of organizational design and development required. Apply agile principles to your organizational design process. Break down changes into smaller, manageable iterations or sprints. Regularly assess and adapt your structure based on feedback, learning, and evolving needs. This iterative approach allows for flexibility and continuous improvement.
Involve your team: Your employees are a valuable source of insights and feedback. Engage them in discussions about the current structure, potential challenges, and opportunities for improvement. Encourage open dialogue and create a culture where everyone feels comfortable sharing their perspectives. Regularly collect feedback from your team to gauge their experiences and identify pain points. Employee surveys, one-on-one meetings, and performance metrics can provide valuable insights into areas where structural changes are needed. Prioritize changes that will have a significant positive impact on employee satisfaction, productivity, and engagement.
3. How to update your organizational design: As your company expands, the need for clear roles and responsibilities does too. The growth phase can be overwhelming, and ensuring everyone understands their roles can help alleviate some of the pressure. Getting a functional inventory done is crucial to update your understanding of the functions that need to be completed day to day, especially operational and financial functions. While you may have just taken care of these yourself up to now, some pieces of work, important though they are, may no longer be the best use of a founder’s time. Consider automating manual tasks, investing in scalable technologies, and ensuring your virtual workspace supports the evolving needs of your expanding team. By implementing comprehensive job descriptions and creating an organizational chart, you can delegate effectively and provide your team with the clarity they need to excel.
4. Communication issues: Rapid growth often strains communication channels, leading to misalignment and delays. Breakdowns in communication can be disheartening when you've built a close-knit team. To counter this, reconsider the various kinds of meetings that will support communication in your growing organization. Scheduling regular all-hands meetings and using virtual meeting tools such as breakouts and chats can help foster open dialogue and keep everyone involved. Establish clear communication channels using tools like project management software, and encourage collaboration across departments.
5. HR and recruitment issues: Recruitment challenges can be daunting, particularly when you're scaling the workforce rapidly. It's essential to streamline your recruitment process to attract top talent efficiently. Consider leveraging applicant tracking systems, collaborating with recruiting agencies, and implementing employee referral programs to widen your talent pool and simplify the hiring process. But when you reach a key growth point, HR teams need to provide more than just the mechanics of posting, interviewing and onboarding. As you grow and need to compete for skilled talent, you’ll need to provide and communicate attractive advantages of working at your company such as coaching, mentoring, leadership development or certifications as a way of attracting and retaining talented people in your company.
6. How to develop organizational culture: As your company expands, preserving the unique culture you've cultivated can become more challenging. You've put your heart and soul into building a close-knit team, and it's natural to worry about maintaining that spirit. Regularly reinforce your core values and culture through consistent communication, engaging in team-building activities, and recognizing employees' contributions. In a virtual setting, the challenges of creating a productive and connected remote work environment are real. Embrace the flexibility that a virtual setup provides while fostering a sense of belonging and collaboration through virtual meetings, team-building activities, and utilizing online collaboration tools. By prioritizing culture, you create an environment where everyone can thrive, even as new faces join the team.
7. How to prioritize all the changes: Scaling a virtual company presents its own set of challenges. It's important to regularly assess and upgrade your systems, processes, and infrastructure to accommodate growth smoothly. Frameworks such as Kotter's 8-Step Change Model can help your team organize the process of deciding on potential changes. While primarily focuses on managing the overall change process, it can also help guide the decision-making process for determining potential changes within the organization. By involving your team, leveraging frameworks, and monitoring feedback and metrics, you can prioritize changes effectively and ensure a smooth transition to the next phase of growth.
Remember, as a founder your journey is intertwined with the growth of your company. It's natural to feel a mix of emotions as you witness your vision materialize. Acknowledge the challenges you face, celebrate your achievements, and seek support from mentors and fellow entrepreneurs who have experienced similar growth trajectories.
Embrace this incredible phase of your company's growth with confidence, adaptability, and a commitment to nurturing your team. By addressing organizational design, talent development, succession planning, and structural issues with intention and care, you'll build a resilient and thriving organization that reflects your vision.
If you’d appreciate having a thought partner as you consider how best to navigate this next phase of your company’s growth, reach out to GrowthPoints Strategies for a complimentary consultation. Email kate@growthpoints.ca to set up a virtual coffee and chat.
Best of luck as you navigate this exciting journey of organizational design and development!
Warm regards,
Kate