How Scale Changes a Manager's Responsibilities: People, Product, and Priorities

How Scale Changes a Manager's Responsibilities: People, Product, and Priorities

As a company grows and reaches the 100-employee mark, the responsibilities of the founding leaders undergo a significant transformation. At this stage, it becomes essential for the CEO/founder to let go and empower their managers to take charge. Failure to do so can lead to a loss of confidence from investors and board members, potentially jeopardizing the CEO's position. Two areas where CEOs often stumble as their companies expand are hiring and people management.

In the early stages of a company (zero-20 employees), it is crucial for the CEO/founder to stay closely involved in the hiring process. By reviewing candidate resumes together with inexperienced managers, selection guidelines can be established to ensure that only qualified candidates proceed to the interview stage. This hands-on approach helps set the foundation for building a strong team.

As the company grows to 50-100 employees, the CEO's role transitions to guiding and mentoring the team through the candidate review process for key hires. While the final decision may not rest with the CEO, their input and guidance are invaluable in making informed choices. This stage is a critical juncture where the CEO must strike a balance between staying involved and empowering their team to make decisions.

Once the company surpasses 100 employees, it is time for the CEO to fully let go and trust their team to make the right hiring decisions. Clear hiring guidelines and a strong company culture are essential at this point to ensure a smooth transition and avoid high attrition rates. If necessary, the CEO should consider reworking the hiring process with the hiring team to address any issues.

Managing people is another area where CEOs often struggle as their companies grow. In the early stages (zero-20 employees), CEOs may find themselves learning how to manage people for the first time. Seeking guidance and learning from experienced managers through resources like books and podcasts can be immensely helpful during this phase.

As the team expands to 20-30 employees, it is recommended to bring in managers who have prior experience in managing teams rather than solely promoting from within. The "two-pizza team rule," popularized by Jeff Bezos, suggests that the optimal team size is around eight people. This practice allows for effective management and fosters a collaborative environment.

When managers start working for the CEO, it is crucial to establish clear people-management guidelines. Many companies make the mistake of waiting too long to hire human resources managers and experienced recruiters, resulting in wasted time and resources. Investing in these roles early on can significantly streamline the scaling process.

One important aspect that CEOs must realize is the power they hold in shaping the company culture and direction. Everything they say and do has a far-reaching impact. It is essential for CEOs to articulate the company's "True North" and product guardrails early on and consistently evangelize them until they become ingrained in the company's DNA. This ensures that the team knows the overall direction and can make decisions aligned with it.

As the company grows beyond 100 employees, the CEO's role shifts from attending routine product meetings to trusting their team to follow the high-level product roadmap. Great product leaders and designers become invaluable assets as the company scales, allowing the CEO to shift their attention from "how" to "what." Clearly communicating desired outcomes and empowering the product team to make decisions fosters trust and enables the company to move forward.

While scaling a company, attention must also be given to the people who make up the organization. Not everyone may possess the "big-company DNA" required to thrive in a rapidly growing environment. CEOs should closely observe early hires and assess whether they are still a good fit as the company expands. If necessary, consider reassigning roles or parting ways to ensure the company continues to thrive.

As teams form and managers lead, cross-team dynamics can create tension within the organization. It is crucial for team leaders to prioritize effective collaboration and partnership with their peers. Fiefdoms and rifts between teams should be addressed promptly to maintain a healthy and cohesive work environment.

Finally, CEOs need to be thoughtful about compensation structures and incentives. Haphazardly compensating new hires or making sudden adjustments to retain employees can create the need for recalibration in the future. Employees are motivated by the work they do, the people they work with, and fair compensation. CEOs should consider Maslow's Hierarchy of Needs when designing compensation packages to ensure they align with employees' motivations.

In conclusion, as a company scales, the CEO's responsibilities shift from micro-management to empowering their team to make decisions. Hiring and people management become crucial areas of focus, and early investment in HR and recruiting roles can save time and resources in the long run. Articulating the company's values and product direction early on helps align the team and foster trust. Attention should also be given to the people within the organization, ensuring that they possess the necessary skills and thrive in the growing environment. By prioritizing effective cross-team dynamics and thoughtful compensation structures, CEOs can create a strong foundation for scaling success.

Actionable advice:

1. Stay involved in the hiring process in the early stages and establish clear selection guidelines.
2. Invest in HR and recruiting roles early on to streamline the scaling process.
3. Prioritize effective cross-team collaboration and promptly address any issues that arise.

Remember, scaling a company requires a shift in mindset and delegation of responsibilities. By empowering your team and creating a supportive environment, you can successfully navigate the challenges of scaling and lead your company to new heights.