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What Growth Stage is your company in?

30 TO 49 EMPLOYEES: THE PEOPLE CRUNCH

Excerpt from Cool Companies www.coolcompanies.ca
Content by Don Rumball. Interviews by Claudia Sammer.

Read PDF version that appeared in the Cool Companies industry guide [PDF] This version contains graphics and pictures.

TOP CHALLENGES IDENTIFIED BY CEOS
1. Hiring and retaining good employees
2. Operations
3. Technology

Operational focus
CEOs complete the process of formalizing and operationalizing their companies to achieve a new economy of scale.

Marketing and products
As CEOs enter this stage, most CEOs reduce their reliance on customers for strategic guidance. They have realized that this strategy is hindering their growth. They focus again on adding new clients and entering new markets. Companies optimize their product lines, dropping ones which are not in their own best interests, even if they used to make their customers happy. There is a return to new product development. 50%are exporting and 20% export outside North America.

HR
Hiring and retaining good employees is the highest concern in this stage. 80% of companies have a formalized organizational structure with 3 layers of management and an average of 4 managers reporting to the CEO. CEOs distance themselves from the close involvement of the last 2 stages and the distance helps them look more critically at the capacity of their senior managers to grow with the requirements of their job. The CEOs don’t manage their senior managers as closely as before. The proportion of CEOs who review progress of their senior managers through regular meetings drops to 67% in this stage from 83% in the last stage. There is a corresponding increase in the proportion who return to the system of setting goals with their managers and requiring reports at pre-arranged milestones.

Financing, ownership and shareholders
CEOs with 100% ownership stays constant at 56%. In companies without CEOs having 100% ownership, there is an increase in corporate parents owning shares. This shareholder group more than doubles their presence to 28.5% of the firms.

Planning
CEOs place greater emphasis on the planning process. More than 50% of CEOs have written business plans. They review them regularly, using them as a management tool to monitor performance and set goals. More CEOs have written long term strategic plans. In this stage they rely much less on customers. Some look to consultants for advice. CEOs start to keep some of their strategic thoughts to themselves as they learn that they need to distance themselves from the company for clarity of vision.

Core competencies
There is no change in thinking about the company’s competitive advantages from the previous stage. It continues to be flexibility to deliver customized service and the unique skills of their employees.

Company Profiles: Red Flame Hot Tap Services

Jared Sayers, Founder and President, Red Flame Hot Tap Services Ltd., manages maintenance and performs modifications for 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, redflame.ca, Red Deer, AB.

WINNING THE PEOPLE CRUNCH WITH VALUE

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.

We started with hot tapping and then that led to welding, engineering, manufacturing and then non-destructive testing. It’s all been from customer requests. I think we are really good at listening and responding to our clients. You know, a lot of people {other companies} talk about being customer driven, but then they just say, “This is what we offer. Take it or leave it.” We never said that. We said, “What do you want and we’ll build it.”