How Scale Changes a Manager's Responsibilities and the Pitfalls to Avoid

How Scale Changes a Manager's Responsibilities and the Pitfalls to Avoid

As a company grows and approaches 100 employees, there are significant changes in a manager's responsibilities. Founding leaders must confront the reality that they can no longer be plugged into every aspect of the business. It becomes crucial for them to empower their leaders to take charge and lead effectively. If they fail to do so, it can lead to a loss of confidence from investors and board members, potentially resulting in a replacement of the founding CEO.

One area where CEOs and founders often struggle as their companies grow is in hiring and people management. In the early stages, it is advisable for the CEO to stay closely involved in the hiring process. This includes reviewing resumes with inexperienced managers and establishing selection guidelines for candidate interviews. As the company reaches 50 to 100 employees, the CEO's role shifts to guiding and mentoring the team during candidate reviews for key hires. It is essential to empower the team through the decision-making process.

However, once the company exceeds 100 employees, it is time for the CEO to let go and trust their team to make the right hiring decisions. Clear guidelines need to be in place to ensure a healthy company culture and avoid high attrition rates. If necessary, the CEO should rework the hiring process to address any issues.

Managing people is another significant challenge that CEOs and founders face as their companies grow. In the early stages, they may be managing people for the first time and it is crucial to seek help and resources to navigate this new territory. Reading books and listening to podcasts on people management can provide valuable insights and guidance.

As the team expands to 20-30 employees, it is advisable to bring in experienced managers who know how to effectively manage a team. Promoting from within may not always be the best solution. When managers start working for the CEO, it is essential to establish clear people-management guidelines. Many companies make the mistake of waiting too long to hire human resources managers and experienced recruiters. Investing in these roles early on can save time and money in the long run.

CEOs and founders must understand the power they wield, even if they consider themselves to be "one of the people." Every action and word from the CEO has a significant impact on the company. It is crucial to articulate the company's True North and product guardrails early on and evangelize them until they become ingrained in the company's DNA. This helps establish a high-level product roadmap that extends no more than 12-18 months. Trusting the team to follow this roadmap becomes essential as the company scales beyond 100 employees.

Shifting attention from "how" to "what" is crucial as the company grows. CEOs and founders need to let go and empower their leaders to make decisions on how to execute tasks. The CEO's role is to make the desired outcomes clear and provide guidance when needed. Micromanaging or backseat driving will hinder the team's progress and erode trust.

Another factor to consider as the company grows is the DNA of early hires. Not everyone may have the qualities necessary to thrive as the company scales. CEOs and founders must pay attention to signs of trouble and evaluate whether an employee should remain in a different capacity or if it is time to part ways. It is essential to ensure that the right people are in the right roles to support the company's growth.

Cross-team dynamics can also create tension as the company expands. New teams form, and new managers lead, which can lead to conflicts between teams. It is crucial for team leaders to prioritize collaboration and partnership with their peers as much as they focus on their own team's performance. Addressing inter-team issues promptly and avoiding fiefdoms is vital for a healthy and productive work environment.

Compensation and incentives play a significant role in motivating employees. CEOs and founders need to be thoughtful about salary structures and avoid haphazardly compensating new hires or giving undue raises to retain employees. This can lead to the need for recalibration in the future, causing dissatisfaction among the workforce. Fair compensation, along with meaningful work and a supportive team, are the three major motivators for employees.

Lastly, CEOs and founders must be aware of the human impact of hypergrowth. Scaling at an accelerated pace can lead to burnout and poor performance among employees. It is crucial to prioritize employee well-being and provide support in managing the rapid growth. Regular check-ins, opportunities for growth and development, and a focus on work-life balance can help mitigate the negative effects of hypergrowth.

In conclusion, as a company scales, CEOs and founders must adapt their management style and empower their leaders to take charge. They need to stay involved in the hiring process initially but gradually let go and trust their team to make the right decisions. Establishing clear people-management guidelines and hiring experts early on can contribute to a healthy company culture. Articulating the company's vision and product roadmap early on helps guide the team and allows the CEO to shift their focus from "how" to "what." Paying attention to early hires, addressing cross-team dynamics, and providing fair compensation and incentives are essential for sustained growth. Being mindful of the human impact of hypergrowth and prioritizing employee well-being contributes to a productive and thriving company.