As a company grows one of the most challenging questions leaders need to grapple with is whether or not the people who helped take your company to where it is today are the right people to take it to the next level.
Sadly, in many growth companies, the answer is very commonly no.
The original team – the individuals who put their blood, sweat, tears and passion into making the company a success in the beginning – often cannot make the personal leap forward required to grow in parallel with the company.
What’s even more unfortunate is that CEOs often don’t (or don’t want to) recognize this reality; that those loyal individuals who supported the company in the earlier days simply can’t continue to support it into the future.
In other words, upgrading the team is most often the right decision for the company, but the CEO, for any number of reasons, chooses to hold onto current team members.
A very common example is the CEO who holds onto the original Controller far too long. Why does this happen? The controller might be a relative or friend, or perhaps they now know too much about the CEO’s personal finances. Clearly, making the decision to terminate the controller would be uncomfortable for the CEO in either of these scenarios.
But regardless of the reason the CEO finds it difficult to let go of the controller, she needs to realize that the outcome of non-action will be more than uncomfortable.
It could be tragic for the company.
In fact, non-action related to making sure a company has the right people in the right seats to achieve the next level, can cripple your company’s growth.
That’s a serious price to pay for neglecting to:
- Envision the team your company needs for the future.
- Examine your current team’s competencies.
- Take action on your findings.
A controller may be perfectly competent in the start-up phase because they are working within their wheelhouse, but moving into the growth phase and beyond, the skill set the company requires changes dramatically. To continue our example:
In the finance function, the CEO needs a team with competency in all areas of the company’s financials and a financial leader who has the vision to take the company forward – someone who can help the CEO make the right decisions for growth.
Here are just a few of the symptoms you’ll notice if the wrong people are running your company’s finances:
- Financials are late.
- Accounts don’t reconcile.
- There are many surprises (and not good ones!).
- Historical financials are ancient history (i.e. no one has access to past information).
- Future-looking information is completely lacking (e.g. you don’t have cast projections for the next 120 days).
- There’s clarity around key metrics such as gross profit margin, liquidity, etc.
- Frequent errors.
The good news is that if you pay attention to these symptoms, you can make the changes you need to make to early enough to ensure continued profitable, sustainable growth.
Keeping your eyes to open for these signs is part of your own growth as a CEO too – specifically, learning when it’s time to think differently about your financial support or any business function, as well as your company overall.
It simply can’t over stressed how important it is to realize that every stage of a company’s lifecycle requires different:
- Types of leadership and people management
- Skill sets and competencies (within every department)
- Systems and processes
Quite often even a different type of culture.
For example, the culture that supported innovation in the start-up stage but never developed concrete systems for continued innovation, may find itself being eaten up by an industry disruptor at some point. But only because the company didn’t put the processes in place that larger companies need to ensure continual scanning of the environment and methods for collecting, cultivating, critiquing and executing ideas.
As the CEO of a growth company, or any company attempting to achieve the next level, it’s essential to make time for regular re-evaluation – even if that means uncomfortable steps need to be taken.
The very good news is that everyone wants to excel at their job and letting go of an employee who the company has outgrown does not only create opportunity for the company, it also creates new opportunities for the employee to find the next position that’s right for them.