- August 8, 2018
- Posted by: admin
Tina Garg founder and CEO of a digital services company points out a well-known fact as to why Start-ups in their initial stages focus on generating revenue and gradually grow their team. Having a HR person or department at this stage is premature as CEOs wear many hats right from making the business to succeed to recruit the right talent and most importantly running a tight ship, cutting costs, wherever they can. But when Start-ups grow, the problems crop up, which can be likened to the transition of loss of innocence of adolescence to a confident adulthood in individuals. There is always a huge gap between the aspirations of a CEO and his team and what they really do on the ground. Tina points out in her article (link below) that when a Start-up grows beyond 50 members, they need to become strategic – borrow ideas and methodologies that have worked elsewhere. It also means more importantly, having business driven HR policies and practices and a management team who can translate the founder’s vision and clone themselves as founders in key critical functions.
In our blog too, we carried an article “Value of pep talk for Start-ups and small businesses,” which pointed out frequent pep talks can replace HR person or the department when start-ups have a small team in 7th December 2016. But once they grow and go beyond the Start-up stage they reach an inflection point – a point where people and business strategic decisions which worked earlier may not work now. In our HR consulting work we found why small and medium companies don’t grow, although they have potential to become well-established companies. What stunts their growth? We found that the founders and their team have misplaced notions in running and building their organizations. Here are some:
- A manufacturer of construction of finishing materials of different sizes didn’t feel the need to calculate the optimal production capacity for production and manpower planning, just because one production in-charge who is a close associate of the founder doesn’t feel the need for it. If his rich experience was made explicit in terms of processes, the company would have benefited immensely.
- A MD of a logistics company with 30 years of history looks at the profitability of business, departments and individuals month by month and quarter by quarter, because of which professional can’t stay beyond 1 at best 2 years. Talented professionals require 2-3 years to put the right systems and processes before they deliver results. As MD scrutinized the professionals’ performance right from day one and every month and quarter, they had no time settle in. When an organization succeeds as a start-up with a few people initially, it needs systems and processes to develop the people and for the organization to grow.
- A series of programs were done for supervisors about 2 years back for an export oriented unit running in 3 shifts. During the program, we came to know that the supervisors didn’t have clear work expectations, how to break them down for their workers and more importantly how the job needs to be done, before the supervisors can train their workers. We suggested a training program for supervisors’ managers to set right these things, management saw reason in this but then felt it is waste of time and money. After 2 years, the company again called us for another series of program for supervisors and workers. Before starting the program for supervisors, we met the managers to understand how to make the program effective and relevant to the company. The managers had lot of complaints, such as, the supervisors noting take responsibility, not getting involved in the work; the complaints went on and on. On probing the reason for these complaints, we realized there were no shift handover process between managers to supervisors; supervisors to workers; and workers to workers. There were checklists without pictorial depiction for workers and English was an alien language for many. More surprises were there! Many quality groups within departments were using 7 QC tools just as tools without making managers, supervisors and workers realize to solve the vast majority of quality-related issues and wastages within and across departments. We are now helping the company to frame handover processes and work checklists to improve the operational efficiency.
- Another construction consulting company has almost 16 trades or services including outside vendors and subcontractors in designing industrial and commercial buildings. Knowledge driven and each client requirement is different which can be compared to job production as opposed to batch. The company is well respected in the market and the top management and the Heads of other departments are always well entrenched in meeting day-to-day clients’ requirement, like fire-fighting and sometimes people running like headless chickens. The CEO didn’t devote sufficient time to discuss with one another about each client requirements for coordination between people and departments. More importantly what needs to done in the event of complexities and change in requirements, which were common, so that everyone concerned are in the same page. There were processes and checklists but little thought on how they should seamlessly bring in synergies between people and departments and outside vendors and experts. Besides there many design parameters that can be used for a particular type of work. If an engineer used one design parameter, his manager asked why he didn’t use the other. If he used the other, next time, the next question was why he didn’t use the former. When engineers went for site visits to see whether the execution of drawing is accurate, often found some improvements, but didn’t know have the heart and courage to give the feedback, if the design was made by a senior manager. While designing a construction drawing there are a lot sequential dependencies going back and forth within and across departments and vendors, and if there any slippages or mistakes of any department or person, it had the domino effect. Some efficiency was brought by drawing an organization chart by organizing departments within 3 geographical locations and moving people around. When the above issues were brought to the notice to the top management to build the performance culture by way of processes and checklists, the CEO almost said that he knew what needs to be done and indirectly told us, “Do what I tell you to do and besides what do you know about construction design?” One my friend puts this nicely, “The bottlenecks for improvements whether it is in operations, processes or the people’s culture, they are always at the top.” He is so right! One key factor is the top management and the other is, small companies don’t have HR managers. And if they have, most of them are hatchet men of the management doing the transactional work like recruitment, firing and promotions, statutory compliance and not giving a thought on transformation work, which contributes to their success and the company’s.
When an organization wants to scale up after its initial success as a Start-up, it becomes apparent that founders’ and his team need to translate their insights and wisdom into processes and use them as a tool to develop people and to attract the right talent. Failing to do so, you will find managers in companies as in the above 3 examples, micro managing and running like a headless chicken. This clearly shows that founders and CEOs of some small and medium companies need to see the big picture first and start building their organization as we bring up our children when the employees’ strength goes beyond 100s. Big picture is about business and departmental processes to guide managers and employees to prioritize their work and time as to what is important to the organization, its customers and to the vision of the founder. Processes are about building efficiency and cutting slack, for example: whether the tasks are being completed on time with 100% accuracy; or financial gains; or through cost savings; or customer acquisition; or satisfaction; and even relooking at the existing processes themselves with the help of digitization. To further leverage applying Pareto’s 80 20 rule works wonders, if a company decides which:
- 20% of employees produce 80% of a company’s results.
- 20% of a given employee’s time yields 80% of their output.
- 20% of software bugs cause 80% of the software’s failures.
- 20% of a department’s/company’s investments and people produce 80% of its investment profits
The processes are dynamic and not static and help an organization to evolve Key Performance Indicators (KPIs) for the company and its different departments and from which flow Key Responsibility Areas (KRAs) as well as Job Descriptions for employees at various levels.