In our work with business owners and leadership teams, we often see firms that ‘get stuck’ at a certain size and can’t seem to break through. We refer to the threshold they hit as the ceiling of complexity and it limits a firm’s ability to grow past a certain size.
To illustrate how complexity can grow in an organization, imagine a 2 employee company. In this situation there is only 1 one-to-one relationship in the firm. Add one more employee, and now there are 3 one-to-one relationships. With 4 there are 6, with 5 there are 10. With just a 10 person firm, there are 45 unique one-to-one relationships.
And employee count is not the only factor that drives up complexity exponentially. As companies grow they also tend to add more clients and more products and services. This adds more deliveries, more invoices, more quality checks, more sales calls, more potential complaints, etc. So it’s no surprise that complexity can become overwhelming a short way up the growth curve.
I’ll just do it myself.
Pair the exponential growth of complexity in firms as they grow with a characteristic we see in many entrepreneurs and business owners, particularly those who are founders. This characteristic is one of ownership of the activities within the company – wanting to own or be involved in all aspects of the business. Being the person to sign every cheque, review every invoice, manage every client relationship, check every product on the way out the door, and so on. Not only is this a path to stress and an unmanageable workload, it also puts a stranglehold on the company’s ability to grow.
The obvious solution to this problem is to hire more people, then delegate and get other people involved in doing the work and managing the relationships and complexity. In fact, a statement we often make with business leaders is “You can’t grow your company, only your people can”.
But simply hiring more employees is not the whole picture. Leaders need several other tactics and tools to align and engage employees, make them productive, and ultimately break through the complexity ceiling to the next phase of growth.
Grow through others.
There are numerous tactics to managing people as a company grows. These include clear organization structure, best-practice processes, and good recruiting and performance management systems. But even with these in place, we often see a lack of a good delegation process at the day-to-day level.
Good delegation is both a process and a culture. In my last article I wrote about building a culture of accountability within a firm by making performance visible (key performance metrics and dashboards), well-written role scorecards for every role, and single point accountability on all tasks and actions. This is a great start, but it can be taken further.
Consider these principles when delegating work within your firm:
- Tolerance for “Not quite perfect” – There is a temptation for us to throw up our hands and exclaim, “Oh never mind, I’ll just do it myself”. This response occurs when we think it will take longer or not be done as well as if we just did the task ourselves. That logic may hold for one-time activities, but will severely limit the skill growth of our teammates and the capacity of our organization if we hold to this myopic attitude. Sure it will take longer to explain or teach, but this is an investment and over time our employees will grow in skill, capability and output.
- Delegation Process – using a sound process like this every time will improve delegation results:
- Plan your delegation by considering who the best person to undertake the task is. Consider capability, capacity and growth opportunity (and not just who sits near you in the office). Also clearly plan what you want the outputs to look like, what deadlines or other constraints exist, and any other guidelines for how the work will be done.
- Communicate verbally and then confirm in writing restating what was discussed and what is expected. Communicate the purpose of the work, how the deliverables be used and those deliverables contribute to the overall goals and strategies of the firm.
- Provide support in the form of resources or progress “check-ins”. Agree the check-ins up front and the level of authority the delegate has to make decisions on their own.
- Evaluate, recognize and reward the work that has been done. Remember that a sincere “thank you”, especially publically in front of peers, is a significant form of recognition.
- Guiding principles and direction – delegation works best when every employee has clarity of the company values (guidelines for behavior), vision and strategies. With this context, employees can make more independent yet consistent decisions versus simply following the delegation to the letter.
- Action Rosters – maintain action rosters for every meeting, team or function. These are as simple as What-Who-When tables that define what action will be taken, who is accountable, and when will the work will be complete. I also like to add a status column so team members can report on progress or identify roadblocks. This makes it unmistakably visible who is accountable for what.
- Delegate to technology – it seems like every time we turn around technology is providing new opportunities to do work more efficiently. For example, many firms now use electronic invoicing and funds transfer to eliminate the work of printing, stuffing and mailing physical invoices. Business leaders need to always be on the lookout for opportunities to automate and make things more efficient.
The bottom line.
The growth journey any company takes is by no means smooth. It is bumpy and it’s typical to see spurts of growth followed by plateaus where firms seem to get stuck and stagnate.
For leaders, these plateaus are indicators that it is time to retool the organization, look for places where (and with whom) there are bottlenecks, and push through to the next level. This includes looking in the mirror and honestly answering the question, “Am I the bottleneck?”.