Stage 30 to 49 employees: The People Crunch
Research shows that there are 6 stages along the evolution from 0 to 100+ employees, each with unique characteristics and milestones. Here is a description of Stage 0 to 9 employees. This is a section in the article in Cool Companies magazine 2007 Vol.2 Issue 2: What are your company’s next growth stage?
Content by Donald Rumball, Chair of Cool Companies magazine’s Editorial Board, and past Business Editor of The Financial Post. Interview by Claudia Sammer, Founder and Editor of Cool Companies magazine
Top challenges identified by CEOs in Stage 30 to 49 employees
1. Hiring and retaining good employees.
2. Technology and its integration.
3. Operations
Operational focus: To maximize production efficiencies, CEOs begin to operationalize their business; they set up systems that avoid having to reinvent the wheel.
Marketing and products: Something unusual happens to a company with 20 to 29 employees. The CEO gets close to their customers again, and many adopt an extreme customer-centred focus. Taking their lead from existing customers, they concentrate everything they do on serving their existing customers. As customers request additional products, they expand the number of product lines and tailor their products to fit their customers’ needs. Financially, this might not be the best choice for the company. New product development slows. They continue to add product lines, though at a slower pace. The result is that their customer base starts to shrink because they are not trying to find new customers for the products they offer. This is the first time many of companies take the plunge into exports. Most of them start with the U.S.. Using up-to-date technology is very important in reaching efficiencies and there is a big technology project.
HR: These CEOs are more realistic than they were in last stage about what their employees can do for them. They continue to delegate more responsibility as they grow. Two-thirds of them have a formalized management structure with 2 layers of managers, and 3 managers reporting directly to the CEO. Most CEOs have regular review meetings with employees rather than setting goals or meeting when milestones are reached. They shift toward bonuses as a means of motivating employees and manager. CEOs start to appreciate management talent.
Financing, ownership and shareholders: The portion of CEO with 100% ownership of their companies stays constant at 56%. In companies where the CEO does not own 100% of shares, there is a significant slow down in giving shares to employees as incentive because CEOs realize that with greater sales, the company starts to look more attractive to outside investors. Private investors become shareholders in 50% of the companies.
Planning: CEOs with a written business plan continues to climb. 47% of companies have then now, compared to 38% in the first two stages. Only 19% of CEOs have long-term strategic plans. Manager participation and frequency of business plan review increases. Since CEOs take their advice mostly from customers, there is little need for strategic thinking.
Core competencies: As in the previous stage, CEOs believe the unique skills of their employees and flexibility to deliver highly customized service are their top competitive advantages; however, in this stage their order is reversed.
The Entrepreneur QuoteJared Sayers, Founder and President, Red Flame Hot Tap Services Ltd. manages maintenance and performs modifications to pressurized piping systems around the world, 130% growth in past 3 years, 37 employees, founded in 1996, self-funded, 2002 BDC Young Entrepreneur of the Year, one of Alberta’s fastest growing companies in 2003, www.redflame.ca Red Deer, AB.
Jared Sayers, Founder and President, manages maintenance and performs modifications to pressurized piping systems around the world, 130% growth in past 3 years, 37 employees, founded in 1996, self-funded, 2002 BDC Young Entrepreneur of the Year, one of Alberta’s fastest growing companies in 2003, Red Deer, AB.
- Winning the people crunch with values
It’s hard to attract and retain employees. If you have a good reputation I think that that helps a lot.…From the beginning we have always been very values driven – this is who we are and this is how we are going to conduct business in this matter. You have to be able back it up with a track record. Once you build that track record, it gives you that reputation, then you build on it.Honesty, respect and trust are very important to us. You have to have honest relationships with your clients and they have to understand how you are doing business. Honesty builds trust. Everything we do, we do with unyielding integrity, even if it means a decrease in profits; we are going to do it because it’s the right thing to do.
You can’t be all things to all people. There are some companies that don’t want it done right; they just want it for the cheapest price. If that goes against what your values are, then there’s probably not a match there. We’re willing to lose work if a client just doesn’t match our values.
Not all your conversations with clients are going to be positive, but as long as you are having those communications, it’s a lot better than not having them. (Not having them leaves) a huge opportunity for misjudgment and misunderstanding. But if you are in conversation with them at least you know where you stand.
For more descriptions on the stages of growth in a company’s evolution from 0 to 100+ employees, return to this article in Cool Companies magazine 2007 Vol. 2 Issue 2, What are your company’s next growth stage?
