Stop the Break: Scaling Your Business Beyond 150 Employees
Hitting the 150-employee mark can feel like your business is about to break. Don't wait for chaos! In this crucial follow-up to our previous episode, Andrea Fredrickson and Michelle Hill provide actionable strategies to proactively navigate the growing pains of scaling your company beyond the 100-200 employee range.
Discover how intentionally codifying your company culture, redesigning your organizational structure and processes, and clearly defining roles and responsibilities can prevent things from falling through the cracks. Learn why empowering your leaders and building their capacity is essential for sustainable growth.
This episode offers a roadmap to move from reactive firefighting to a smoother, more controlled expansion, ensuring your business thrives instead of breaks.
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Navigating Organizational Structure When Scaling a Business
The journey of a growing business is often marked by exhilarating milestones, but this exciting journey can encounter significant challenges as the organization scales. A critical juncture often emerges around the 150-employee mark, a point where the informal structures and processes that once sufficed can start to buckle under the weight of increased complexity. To navigate this phase successfully, a proactive and strategic approach to organizational structure becomes essential for sustained and effective scaling.
At Revela, we recognize the critical importance of addressing organizational evolution for businesses experiencing rapid company growth. A recent episode of The Leadership Hustle podcast provided valuable insights into navigating this critical transition. The conversation focused on the pivotal 150 employee mark and practical advice on how to proactively address the organizational shifts necessary for continued company growth.
Codifying Your Company Culture for Growth
In the beginning stages of a company's evolution, its company culture typically emerges organically, shaped by the shared experiences, values, and interpersonal dynamics of a tightly knit, intimate team. While this initial culture might be strong and deeply felt by your first employees, it won't automatically spread throughout a larger, more diverse team.
As your team grows, that automatic understanding and shared history among everyone starts to fade. This makes it really important to clearly explain and formalize the kind of culture you want. Instead of hoping new hires will just 'get' how things are done, you need to actively define and reinforce the behaviors that will guide your company's goals.
Andrea Fredrickson pointed out, "Most companies and I'm going to even say consultants think you need a mission statement, you need values. And that's going to put all of that in place.” While mission statements and core values serve as an essential philosophical compass, providing guidance on the company's purpose and guiding principles, they’re often insufficient for day-to-day interactions and operational conduct.
The real power in building a company culture that can grow with your business comes from turning those big ideas into specific actions people can see and do. For example, 'accountability' isn't just a word; it becomes real through behaviors like getting things done as Michelle Hill clearly put it.
Similarly, 'teamwork' truly comes alive when everyone has each other’s backs. Hill explained this means actively helping colleagues and giving honest feedback in a way that builds trust, not fear.
Leaders play a crucial role here by constantly showing these behaviors themselves and making sure they're deeply woven into how everyone works. This active effort to build a strong culture is key to keeping everyone together and driving company growth.
Redesigning Organizational Structure and Processes
The simple, flat organizational structure that worked so well for communication and decisions when your company was small will likely start causing problems as your team grows. Trying to manage an ever-increasing number of direct reports simply isn't sustainable. As a result, communication routes become confusing and ineffective, and the entire decision-making process grinds to a halt. This directly undermines the agility you need for scaling a business.
It’s crucial to proactively anticipate future operational demands and strategically redesign your organizational structure. This forward-thinking approach may necessitate the creation of new departments or specialized teams with clearly defined functions and responsibilities.
For example, as Hill pointed out, a single person handling both sales and marketing works well at first. But as the company grows, these tasks become more complex and need their own specialized teams. In the same way, a larger company might need dedicated leaders for areas like IT or HR, as Fredrickson wisely suggested, to provide expert guidance and strategy.
As teams expand, maintaining manageable spans of control for managers becomes a critical factor in ensuring effective leadership and team performance. Overseeing an excessive number of employees can dilute a manager's capacity to provide adequate guidance, personalized coaching, and meaningful support, ultimately impacting team productivity and morale.
Beyond just changing your structure, you'll also need to start focusing on improving organizational communication, giving feedback, and holding regular company activities. In a smaller company, quick, informal chats might work. But as you grow, these won't be enough to make sure everyone gets important information.
Instead, improving organizational communication through regular town hall meetings, team meetings with clear results, and consistent one-on-one chats, as Hill wisely suggested, creates reliable and open ways to share information and get feedback. This helps everyone stay on the same page and understand each other, which is crucial for continued company growth.
Defining Roles, Responsibilities, and Decision-Making Authority
As your organization undertakes the critical task of scaling a business, clarifying roles and responsibilities becomes an indispensable element in mitigating confusion, eliminating redundant efforts, and preventing critical tasks from falling through the cracks. Each role within the evolving organizational structure should possess a well-articulated purpose, comprehensively outlining the specific responsibilities, expected deliverables, and key performance indicators associated with that position.
It's also crucial to clearly mark out who has the power to make decisions. Fredrickson wisely pointed out a big problem that slows down operations and company growth happens when "...managers don't delegate decision-making authority or decision-making rights. And so then everything gets bottlenecked up." Empowering individuals at the appropriate levels with the autonomy to make decisions relevant to their specific roles makes your operations more flexible, helps tasks get completed faster, and generally improves efficiency.
While some individuals or teams might initially perceive the formalization of roles, responsibilities, and decision-making authority as an unwelcome step towards "becoming too corporate," it is essential to reframe this perspective. Clearly defined structures and explicitly assigned authority, when implemented effectively, actually cultivate greater freedom and enhance efficiency by:
Reducing ambiguity
Minimizing unnecessary approvals
Empowering individuals to act decisively and with confidence
Hill pointed out that this process also necessitates a clear understanding of what individuals should transition away from as their roles evolve and who will assume ownership of those previous tasks. This ensures a seamless redistribution of responsibilities. It's also crucial to have a clear plan for training new and existing employees.
This deliberate process helps them gain the skills and knowledge needed to take on more responsibilities and make bigger decisions as the company grows. This gradual and supportive approach builds individual competence and confidence and contributes to a more empowered, efficient, and ultimately, more scalable workforce.
Building Leadership Capacity for Scale
Successfully scaling a business isn’t solely dependent on an increase in headcount or the mere appointment of more managers. It relies on the strategic development of leadership capacity at all levels within the organization.
True leadership transcends simply managing tasks and directing workflows. It encompasses the ability to inspire, guide, mentor, and effectively develop teams to collectively achieve the overarching strategic objectives of the organization. This necessitates a conscious, proactive, and sustained effort to identify, cultivate, and empower individuals with leadership potential throughout the company's ranks.
Establishing clearly defined organizational levels and transparent career progression pathways provides a crucial framework for fostering leadership capacity. Even if you don't immediately fill every leadership position in your planned organizational structure, clearly outlining what those future roles look like gives employees a clear roadmap. They'll understand where they can grow in the company and what skills they'll need to get there.
Cultivating essential leadership skills is paramount in equipping individuals with the competencies and confidence necessary to excel in leadership roles. You can do this by providing:
Targeted training programs
Mentorship opportunities
Developmental experiences
If you don't invest in developing your people, you might end up promoting individuals based on how long they've been there or how well they perform individually. You may do this even if they lack the leadership skills needed for the role.
As Hill cautioned, when this happens, people might have a leadership title but still spend most of their time doing the work of an individual contributor. This often overloads middle managers and ultimately slows their teams' development.
These overwhelmed middle managers, as Fredrickson described, frequently struggle to balance the demands from senior leaders with the vital need to coach and support the people they manage. This directly hurts an organization's overall ability to scale a business smoothly and grow in a lasting way. Investing in leadership capacity is a direct investment in future company growth.
The Importance of Proactive Steps for Sustainable Scaling
Navigating the complexities of organizational growth, particularly around the pivotal 150-employee mark, demands a proactive, strategic, and consistently applied approach to your organizational structure. You can build a resilient foundation for sustained success and impactful company growth by taking deliberate action. This means clearly defining your company culture, redesigning your organizational structures, working on clarifying roles and responsibilities, and developing leadership capacity throughout your team.
At Revela, we believe that building a solid organizational structure is the ultimate investment in your company's future. If you’re looking to learn more about improving your organization, be sure to reach out to us and listen to the rest of The Leadership Hustle podcast!
About the Hosts
Andrea Fredrickson
Andrea Fredrickson is a thought leader and consultant at Revela, an organization based in Omaha, Nebraska specializing in the development of leaders, culture alignment, and business strategy for private and family businesses of all sizes. Revela is one of the region's most experienced thought challengers, helping individuals and companies find their greatness. Andrea has built an amazing team by believing that fundamentally people want to be successful and become better versions of themselves.
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Andrea has degrees in education, management, and business. She is the author of Insight Unseen; How to lead with 20/20 business vision. She helps people see things differently, self-reflect, and never stop looking for ways to improve themselves on a personal and professional level. Andrea has spent more than 30 years researching and developing methods to help people communicate and lead more effectively.
When Andrea isn’t working with clients, you’ll find her spending time with her family & friends and making memories by exploring new cities.
Michelle Hill
Michelle Hill is a master facilitator and coach at Revela, an organization specializing in the development of leaders and aligning the culture of privately held and family businesses of all sizes. Revela is one of the region's most experienced thought challengers, helping individuals and companies find their greatness.
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An ambitious leader, Michelle has the natural ability to create forward momentum to build teams and get results. She inspires others to look within themselves and to challenge the status quo. She helps create high-performing environments. Michelle brings a diverse background: operations, employee development, and sales in the steel, hospitality, and consulting industries.
Outside of work, you will see her competitive side engaged in her daughter’s sports and ISU athletics. She loves life, her four-legged companions, and captures all the moments through her camera’s lens.
TRANSCRIPT
Andrea Fredrickson: Companies break at 150 employees. Wouldn't you like to know how to prevent your company from breaking? Tune in to this episode of The Leadership Hustle and we'll give you the answers. Hello and welcome to the Leadership Hustle for executives whose companies are growing fast and need leaders who are ready. Welcome to this episode of The Leadership Hustle. I'm Andrea Frederickson.
Michelle Hill: And I am Michelle Hill.
Andrea Fredrickson: And this episode, we are going to be doing the second part of a two part series. Series where last time our series started with the discussion about when things start getting more difficult, things get weird. As we talk about where they do, they just start getting harder with the size of the organization. And so we have recognized that when companies get to 150 employees, it's really much more difficult than it needs to be.