This is part two of a four part series of posts that summarize an article that first appeared in the March 1982 Small Business Report. Â I believe this publication is not being published anymore, but if you should know of this magazine and either its online or actual contact information, please let me know so I can give proper attribution.Â
The first post in this series focused on financial pitfalls and excessive optimisim as two of the causes for small business failure. In this post we will talk about inability to change and rapid growth.
INABILITY TO CHANGE – The changes that come with growth are not only unavoidable but often unwelcome. It’s best to recognize and accept that change will occur and prepare yourself to deal with change as best you can.
For your company to grow, it must become more structured, which, unfortunately, means it will become more impersonal as well. Regular reporting becomes necessary as a means of ensuring proper control, and communication becomes more formal, with emails and memos replacing informal and impromptu meetings.
Recognize that as your company grows and becomes more structured, it will also become more complex. With complexity comes the need for specialization. More and more, you will need to hire specialists to do specific tasks rather than rely on generalists to handle multiple tasks. This means that if managers who started with the company cannot adapt to the new organizational structure, they will have to be replaced.
It is management’s responsibility to plan for changing roles as the company grows. Today’s doers must become tomorrow’s planners; they must find someone to handle the day-to-day operations in the specialized areas of marketing, sales, finance and operations.
To determine if your managers are keeping pace with company growth ask them these five questions monthly:
- Which functions take up the most time?
- Is the time spent on a task justified by the benefits/results?
- Can the work be delegated?
- How much time is being spent on areas of expertise?
- How much time is being spent on critical risk-taking activities?
If you want to know if you are spending the right amount of time on managing instead of doing, use this rule of thumb:Â you should spend at least half of your time on decision-making matters, while administrative tasks should require less than 20 percent of your working day.
RAPID GROWTH – If you are increasing your workforce by 20% or more every year, then you are likely to experience major problems directly related to uncontrolled growth.
Rapid growth consumes financial resources and places a great strain on both management and employees. Decision making is increased, decisions must be made more quickly, and job responsibilities expand, usually beyond employee capability.
Employees cannot be develped from within as quickly as needed, so many positions must be filled from outside. Typically, rapid growth companies have to hire five to ten times as many employees as slow growth companies. However, if you are selective in your hiring process, you can avoid many problems. Take the time to be sure the person you hire has both the specialized expertise you require as well as the personality to work within your corporate culture. If you do not, you will find that you will be spending more time and expense than you should on personnel matters.
Pay special attention when you hire people for management positions. You cannot afford to hire an executive who does not have the necessary experience; a management position is not the place to get on-the-job training. When you hire a manager, you need to define, in writing:
- The priorities of tasks and results for which the manager will be responsible.
- The amounts and types of expenditures the manager can spend without approval.
- The manager’s resonsibilities for and to others. Who can the manager hire, fire, promote or give a raise to?
Next Post:Â Improper Organizational Structure, Failure to Delegate, and Lack of Succession Planning.
