Scaling Your Leadership Team

I get asked by my clients all the time as they grow: is it time for me to hire ahead of HR? Do I need a COO? Is it time for me as CEO to give up the reigns of also heading up sales, and should I hire a VP of sales? Those are all great questions because your company will never scale faster than your leadership team scales. What happens is, as you grow, your business gets more complex. That complexity slows growth, and that's a tough cycle.

The only way to keep that growth going and do it in a healthy, profitable way is to scale your leadership team. If you don't, what starts to happen is things fall through the cracks as the business gets more complex. It impacts client retention, it impacts employee retention, it impacts your profitability, and it impacts your sanity.

Now, the problem with that question, "Is it time for me to hire X?" is that there's no magic formula. There's no formula that says when you hit 50 people, you need a head of HR. When you have 100 customers, you now need a COO. There's no magic formula. It's different for every business. So I want to share with you a process that I use with my clients, that I really want to recommend you use, to make sure that you are proactively planning for the scalability of your leadership team:

Step 1: Create your functional org chart. A functional org chart helps you understand your current organization. Who is truly accountable for each function? Who is the head of the company? Who's accountable for sales? Who's accountable for marketing? Who's accountable for research and development, finance, IT, et cetera? A functional org chart is not the typical org chart. If you have someone called VP of Administration, that doesn't help you understand what functions they're really accountable for. So create a functional org chart to understand who truly is accountable for each function. You may have people's names multiple times on that functional org chart, especially as a smaller company, because typically people are accountable for more than one function.

Step 2: Create a 12 quarter plan. A 12 quarter plan is with your future vision in mind, quarter by quarter, what are the numbers that are going to get you there? Financial numbers like revenue, margin, net profit, and cash flow. But just as importantly, sometimes more importantly, are those non-financial numbers - how many products do you need to have at that point? How many clients will you have? How many new clients do you need to be adding? The non-financial numbers are very important in understanding what your leadership team needs to look like and when you may need a new VP of sales, when you may need a COO, understanding as part of those numbers, how many people will you need to have in the organization in total at that point? That may drive a question like, "When do we need a head of human resources?"

Step 3: Create a 12 quarter leadership team plan. Based on those numbers each quarter projecting out, how does your leadership need to change? At what point will you need a head of sales? At what point will you need a head of operations or a head of service? Looking at it through the lens of the numbers allows you to make that decision and project that decision early on. So instead of saying, "Oh, my God, things are falling through the cracks, I need to hire a VP of sales now," you know 2, 3, 4 quarters ahead of time when you'll have a need. So you could start grooming somebody internally for that position, you can start developing the leadership team you have to make sure that they can handle it, you could start searching on the outside for that external help you might need. But again, you know that many quarters before, so you don't have to rush to hire.

What are you doing to ensure your leadership team is a driver of growth, instead of a barrier?