In the early days of your business, the small teams, flexible mindset and work environment can make it easy to manage your employees. Unfortunately, I've seen many small to medium sized businesses start hiring new employees as they scale, only to find that they no longer have the adequate leadership resources in place to keep everything running smoothly.
When this happens, things start going in the wrong direction. Your team becomes less efficient than it was in the past, and culture starts to take a turn for a worse.
Thankfully, while these setbacks are all too common, they are also preventable. Here are a few things I've learned from my own experiences in running a business:
What causes leadership to stumble as businesses scale?
Unsurprisingly, one of the biggest issues facing leaders of a growing company is that with more employees, you can no longer manage everyone yourself. While you may have had no trouble managing a team of five, a team of 20 is an entirely different matter.
This requires that you begin delegating leadership responsibilities -- because if you don't, things can quickly get out of hand. A lack of one-on-one time with your employees could cause conflicts to boil over before you even become aware of them. Employees may feel like they no longer have a clear direction or that you don't care about their needs.
When this happens, performance starts to decline. Miscommunications become more likely, and it becomes harder to create your desired company culture. Employee turnover increases, which industry analyst Josh Bersin estimates can cost up to twice the value of each individual's annual salary.
While advancing others within your organization to leadership positions can help relieve your burden, I've seen far too many companies struggle because they fail to do this effectively.
Companies that don't have a learning and development department or program in place will often rapidly promote individuals into leadership positions without formal training. They are essentially assuming (and hoping) that these employees will be just as good at leading as they were in their former role.
Without a way to prepare them for these new responsibilities, these hopes are rarely realized -- which is why my work as a global management consultant focuses on helping turn professionals (especially women) into effective leaders.
All too often, people are thrust into leadership roles without any idea of how to manage a team. The result is ineffective leadership that harms company culture and potentially creates further problems among your team.
Ensuring that leadership continues to deliver results.
Going from the flexible style of an entrepreneurial culture to a more rigid leadership culture can be like going from a pirate ship to joining the Navy Seals. If you want to be successful, you need to evaluate potential leaders based on emotional intelligence, coaching skills and their investment in your company. Then you need to train them so they have the resources necessary to do the job.
Investing in a leadership training program is essential to ensure that new managers understand and are prepared for their responsibilities. You should also be careful not to overwhelm them with too large of a team -- The Wharton School at the University of Pennsylvania notes that optimal team size typically ranges between five and 12.
Prioritizing meaningful communication with all employees is one of the most important things you can do when training new leadership. Both with my own team leaders and clients, I've found that -- as your organization grows -- your lower-level management becomes increasingly vital for ensuring that each member of your organization feels valued.
This makes investing in quality leadership training an absolute must. As Gallup has reported, praise and recognition in the workplace are consistently associated with improved productivity and engagement at work, as well as reduced employee turnover and better customer satisfaction.
You may no longer have time to meet with each member of your organization in a one-on-one setting, but you must ensure that they continue to enjoy regular interaction with leadership. This will ensure that concerns are addressed in a timely matter and that no employee slips through the cracks.
Scaling your business presents exciting new opportunities for your startup. But it also comes with its fair share of leadership challenges. By understanding the potential pitfalls facing your company and taking proactive measures to prepare your leadership team, you can ensure that everyone continues to produce great results.