We've faced a lot of challenges," says Dennis Sisco, vice-president of operations for Data Switch Corp. (#25) of Norwalk, Conn. His understatement might well serve as a summary of the experiences of many of the INC. 100 companies that have often found fast growth to be a mixed blessing.
Chief executive officers, vice-presidents for administration, personnel directors, and others who have borne the responsibility for finding and hiring the people to keep pace with such growth know that it is a formidable undertaking. Internal changes that ordinarily might take a decade or more must be engineered overnight; ordinary problems proliferate, and new ones arise.
"Recruit, interview, hire, train. Recruit, interview, hire, train -- say that fast 600 times, and you'll have some idea what life is like," says the human relations director at one company whose work force seems likely to double each year. A fast and frantic pace is routine for many of the INC. 100 companies, some of which have seen their payroll rosters swell more than 3,000% since 1978.
Complicating the scenario further is the fact that many of the affected companies are young and naive in terms of personnel. Fortunately, there are a few advantages -- the enthusiasm and high visibility that go with being a winner, among them -- that may ease the transition and make the uncertainty more palatable.
"The one thing that's definite when you begin adding people so quickly is that your entire company is going to change," observes Sisco.
Data Switch, a manufacturer of computer switching and control systems, was only four years old in 1981 when its sales took off, tripling virtually overnight. At the time, it had an informal and decentralized hiring procedure -- recruiting, interviewing, and selection were handled by department heads. It had no personnel department. Its initial response to the unexpected boom was to continue doing what it had done before. "We just kept hiring more people to meet the demand," says Sisco.
As money became available, salespeople were added; as more orders were generated, the line force was increased; and finally, almost as an afterthought, the company began to build an infrastructure to manage the growth. It wasn't until April 1982, when the demand for new employees became critical (the number of employees would go from 139 to 250 in the next eight months), that a personnel manager was hired.
Finding enough of the right people proved the least of the manager's problems. "When a company is growing as explosively as we are, it gets out," says personnel manager David Goldstein. "It's a great recruiting source." Of the new hires as of January 31, I was an officer, 13 were allotted to administration (a 35% increase), 45 to sales and support (+150%), 21 to engineering (+95%), and 28 to production (+62%). Personnel costs shot up significantly, from $902 per person in 1981 to $3,182 in 1983, but they were nearly offset by a corresponding increase in sales (personnel costs totaled 1.7% of sales in '81, 2.1% in '83). The largest increases were earmarked for relocation, recruiting, employee training, and personnel administration.
Data Switch found it particularly difficult to accommodate the incredible influx of new faces within the company. "I think we've coinbatted it with new orientation and communication programs," says Goldstein. "Good communication is really a key -- it provides a common bond during an explosive growth period; it's something you can't lose sight of."
Sisco notes that Data Switch has committed what had been "word of mouth" policies to paper and is now about to publish its first employees' handbook. It has also formalized its hiring procedure. Managers now relay their needs to the personnel department, which then does the preliminary work with candidates. The final selection is made by each manager. "The present challenge," says Sisco, "is hiring for our future."
"We're confident enough about our ability to continue to grow the company that we've made a conscious decision to bring in executives who, if anything, are ahead of where we are," Sisco explains. "That involves a trade-off between what I can pay now versus what I need tomorrow. But if I'm going to grow, I've got to find a way to afford these people." Thus far, the goal has proved attainable. Data Switch has recently acquired top-notch directors for manufacturing, material operations, and quality assurance. "It's already paying off," says Sisco, beaming.
Another INC. 100 company, Micom Systems Inc. (#15), a data communications equipment maker based in Chatsworth, Calif., discovered that it was difficult to attract and keep good people, given the ongoing high-tech explosion. It decided to outbid the competition by offering bonuses in addition to competitive salaries. Among the lures: a bonus program that begins on the first day of work, a no-waiting-period health insurance program with dental and vision care, a Christmas party featuring $100-to-$400 presents, an in-house recreation association, and classes in aerobics, guitar, and English as a second language for Spanish and Vietnamese workers. In addition, certain executives get a moving allowance, housing reimbursement, and lots of life insurance.
The company has also gone out of its way to establish excellent lines of communications: Inter-level meetings are held frequently, and two employee publications help bind the work force.
"It's had a significant impact on the problem of holding on to employees," says Robert Weaver, vice-president for finance and administration at the company, whose work force mushroomed from 40 to 775 employees in the years from 1978 to 1982.
Texas Energies Inc. (#34), an oil and gas exploration and production company, faced a similar problem. The company went public in 1980 to take advantage of rising oil and gas prices, at a time when it had only six employees. "We were oil and gas people, not personnel people," says executive vice-president Gordon Stull. As a result, the company, headquartered in Pratt, Kans., sometimes hired the wrong person or failed to explain the job adequately. "As a young company, you have a tendency to perceive a need for someone but have a very difficult time developing a job description, defining that person's duties and responsibilities, and fitting that person into your own organization. . . . We were weak initially."
Texas Energies created a wholly owned subsidiary, Wheatstate Oil Field Services Inc. -- which now employs 95 of Texas Energies' 130 workers -- to operate three drilling rigs and other equipment. But Texas Energies found that boom times were bad times for hiring: Heavy demand made skilled workers scarce and skittish. "To be real honest, there were times when we had a different crew every day," Stull recalls with annoyance. "They'd work one day then quit and go on to a different rig." The company countered with higher wages and better benefits programs, "but it didn't turn around until the downturn in the oil business." Now, notes president and chief operating officer Lloyd Geoffroy Jr., his work force is stable, more experienced, and being paid less.
Intergraph Corp. (#77), of Huntsville, Ala., identified a problem of many of its fast-growth colleagues: how to upgrade management as the ranks of those managed multiplied. "We've had people come in and say, 'I want out of management. I just can't handle so many people,' " explains human resources director Dianne Maples. The company, a CAD/CAM systems manufacturer, has responded with a beefed-up training program.
Shopsmith Inc. (#58), a tool-manufacturing company in Vandalia, Ohio, which began booming about six years ago, made the mistake of hiring lavishly to keep up with sales, which were doubling every year, and to handle the extra paperwork generated by a switch from a distributor network to direct selling. "You weren't as picky about the kind of people you brought on," admits president John Folkerth. "We often attacked problems with numbers rather than skill." The fact that Shopsmith had no personnel department at the time served to make matters worse. "I was in the throes of trying to establish a department and support all of the other departments when I arrived in 1978," grumbles personnel director Tom Grillo.
The company had no trouble attracting people -- it was a viable employer in a depressed area -- but it frequently hired the wrong ones or too many. For a while, the annual turnover averaged 20%. "You've got an accounting problem, you add six more clerks, and they get it done," explains Folkerth. "But you wind up with six, plus the six you started out with, and, if everything was running smoothly, you could probably do that job with four people. When you're adding as many as 300 employees a year [Shopsmith's rosters shot from 211 to 1,280 in the years from 1978 to 1982], it may take two years to recognize the error."
The best thing that happened at Shopsmith, as far as hiring was concerned, was the recession. It made a large number of skilled employees available, and because sales growth slowed, it provided a breather during which the company could take stock of what it had done. It continued to hire to keep critical positions filled, but it also laid off 400 people. The net effect was to reduce its work force by 330 employees. "There's no question about it," says Grillo. "We're very lean now, and we're operating much more efficiently."
"If you're not careful," adds Folkerth, "you sow the seeds of your destruction when you grow at that rapid a pace."