A growing company needs more expertise than even the most skilled founder can provide. Most entrepreneurs start to grow their business with people they already know, so while there may be a shared history and a deep trust, there is often a critical skill set missing on the team. This skills gap should be filled with the longer term strategy in mind.
Who to Hire? It might be an operations role; it might be someone who is 20 years further into the sector and has connections and experience you can draw from; it might be someone like a CFO, or IT Director whose technical expertise will add value; it might be a really great admin person who relieves you of all the day to day work and frees you up to work on the business, rather than in the business. It all depends on the company’s current leadership mix, history, strategy and place in the market. A CFO may be required if your company is growing at a rapid rate requiring outside financing or careful cash management, when your company requires a formal audit or when you are contemplating a complex financial transaction (ex: acquisition, merger, or public offering of stock). So how do you go about finding a seasoned CFO?
Many companies work at first with a part-time financial executive, an interim manager, whom they later recruit to join the management team on a permanent basis. Traditional HR can often be outsourced. Many smaller companies manage their HR by employing a good interim HR Manager or part-time consultant to assist with initial set up and understanding of legislation, process and procedures. Recruitment can also be outsourced again to a good consultant or by hiring in a part-time recruiter who knows your longer term business strategy and company culture. Hiring a seasoned HR Director on an interim basis for a defined period of time will ensure you implement best practice policy and procedures whilst keeping your costs down.
What is the biggest challenge that young companies will face in 2010? Some young companies may be facing issues with their lenders or investors, and they may be having a hard time making promises around company stability. If you’re trying to hire experienced, strong candidates, you have to be able to show that your company is stable, has growth opportunities and has the resources required for the candidate to be successful. But honesty is still the best policy. It is best to avoid sugar-coating challenges (if someone feels they have been misled down the track this will only result in bad feeling all around).
If you’re hiring less experienced staff, it’s more critical than ever that you hire for flexibility and their ability to think on their feet. Within a smaller business environment, these skills and attitudes are essential as the days of organisational charts with clearly defined job descriptions and career paths are out dated. They have been replaced with a flat structure that has people prepared to carry out diverse, flexible roles. They are under-pinned by a culture that embraces autonomy, flexibility, a clearly defined purpose, vision, and a set of organisational values that everyone is guided by and allows for good management decision making by everyone.
What’s the biggest opportunity? Of course, companies have an opportunity to pick up talented people who have been made redundant in the last year or two. More importantly, they have a great opportunity to realign their company culture.
Retain Your Loyal People If you’re trying to retain staff, the future value proposition needs to be clear, honest and, if not exciting, certainly brighter than it may have been painted in 2009. Current staff need to hear some sincere gratitude for the sacrifices, hard work and flexibility they have already shown and, most likely, will have to continue to show in 2010. According to a recent report in Forbes, a daily thank you proves a powerful employee motivator. Verbal praise from a manager can be as effective as a cash award in motivating employees, yet, a survey shows 75% to 80% of workers say they get little recognition from bosses. Restaurant chain Hard Rock Cafe reports worker turnover was reduced 3% when managers gave verbal recognition to workers for a minute a day.
What’s the most important step a small, fast-growing company can take to build its leadership pipeline? Recruiting top managers is not always easy. Persuading talented leaders to join a start-up is not as hard as it once was, but it still involves having a good eye for talent and the ability to sell an idea and its potential upside to a savvy operator who might well have other options. Moreover, making the wrong hire at the highest levels of an organization can have serious consequences. The severance costs of terminating a top manager can be high; they can be higher still when you factor in any turnover in a key department that precedes or accompanies the departure of a bad hire.
For all of these difficulties, however, entrepreneurs who have built strong management teams enjoy obvious rewards. They can rely on the skills of others to compensate for their weaknesses. They can focus on strategic issues while confidently delegating day-to-day tasks, such as managing people. And they can use their management team to secure outside funding and establish creditability with potential customers.
