Building a Fast-Growth Management Team
The biggest distinguishing factor between success and failure is almost always the senior management team. A high-performing team, with broadly differing viewpoints and perspectives, determines how far a business goes – more than the idea, more than the timing, and even more than the resources of the company.
As a business scales, it simply won’t have the expertise needed in every area. The CEO must build a management team of functional experts. Without a good management team, you will not be able to build a good business.
But most CEOs completely underestimate the time and effort required to build a top team. Bringing management talent into a growth company is difficult. Often, existing managers lack the experience and skills to scale the company. Big company mangers frequently fail to adjust to an entrepreneurial growth company environment. Growth often requires hiring several key mangers in a short period of time. Many times, there’s a mix of veterans and newcomers that requires skillful management to ensure that everyone gets along. People are the biggest variable in a growing company.
A top management team is a reflection of a CEO’s style, values, and aspirations. You can’t overestimate its importance, particularly when you’re growing fast. Rapid growth tends to highlight the weaknesses of any team. When you go from being a $5 million company to a $20 million company, in just a few years, you’d better have people with $50 million worth of capability in them.
The reality is that it’s difficult for most growth company CEOs to build a senior management team. These are some of the biggest challenges:
Upgrading the Management Team
The need to continually upgrade the management team is not often considered or planned for by most CEOs. When businesses are growing rapidly, they are a different business at the end of the year than they were at the beginning. The CEO needs to stay on top of this evolution. In many cases, the team that can manage a smaller business is not the best team to manage a growing bigger business.
As your business grows, the people that work at $5 million probably won’t work at $20 million. If they work at $20 million they probably won’t work at $60 million. As your company grows, you must continually evaluate and strengthen the management team and be prepared to make the tough decisions that one or more members of the top team are not suited for scaling the business. People either have to grow quickly or new people have to be hired. The process of building a team never stops.
Evaluating Technical Competencies
CEOs may have difficulty evaluating expertise outside their functional domains. CEOs have a hard time evaluating technical competencies where they don’t have any experience. Hiring mistakes are particularly common for key positions in finance, human resources, sales, and technology. This is costly and inefficient. If you’re hiring for a position outside of your comfort zone, find outsiders that can help you effectively evaluate technical competencies.
Bad Hiring Practices
It’s critically important to conduct rigorous multiple interviews, in different situations, with several interviewers. Why? You want to avoid any kind of hiring bias. There’s a natural tendency to hire people who are like us. When building a team, you want to hire people that have different skills and strengths than you. That’s why you want multiple viewpoints in the hiring process. Because you will miss a lot of good people and you don’t want everybody the same. Build the team with people who are different than you and possess skills you don’t, but whose styles are complementary.
Hiring Too Quickly
The tendency in a growing company is to hire quickly because of urgent demands for more expertise. CEOs make way too many mistakes by feeling pressured to hire quickly, and therefore they do it poorly. Being slow to let people go, that aren’t a good fit, compounds this error. I’ve never had a CEO say to me, “I fired so-and-so too quickly.” Hire slow and fire when it’s obvious someone is not working out.
Failing to Hire for Cultural Fit
A big problem is hiring people that just don’t fit the culture. A lot of time and effort must be spent on team dynamics. A cohesive team does not just happen. You must make a concerted effort to hire people that are going to play nice and work together. (This doesn’t mean you don’t want diversity of opinions). But you simply can’t hire based on credentials. Sometimes the people with the best experience are the biggest jerks. Don’t think that doesn’t matter. It’s really that important.
Misjudging the Difficulty Big Company Managers Have in Moving to an Entrepreneurial Environment
Many experienced managers from big companies cannot adapt to the entrepreneurial environment of a smaller, private company. You’re taking a risk if the first entrepreneurial venture a large company person tries to work in is yours. Can a large company person adapt and excel in a chaotic, fast paced, resource restrained entrepreneurial environment? It’s hard. Try to find managers with experience in rapidly growing companies.