The mid-market transition: If you want to make something significantly better, make it into a “thing”
How do we get important things done in growth companies? Take the examples of Sales and Operations which are at the core of most businesses. For starters, we create dedicated functions and populate them with people who have relevant skills and manage them through senior managers with relevant experience. We give those functions budgets, build or buy systems to support their processes, and create KPIs to measure their workflows and results. In management meetings we talk about sales and operational topics and how the wider organisation can facilitate their activities. In board meetings we extrapolate from today’s situation, dream up improvements and agonise about trade-offs. If they aren’t generating the desired results then resource may be added, systems upgraded, managers changed, KPIs evolved and attention focused until matters are back on track.
My point is that Sales and Operations are not just business functions: they are (healthy) obsessions which manifest in many ways and consume serious management team attention. For want of a better phrase, let’s call that multi-dimensional focus a “thing”.
This is not just labelling for labelling sake: the concept is helpful especially when we look at team and organisational issues, because I’d argue that for most growth companies those are not a “thing” in the same way as Sales and Operations, for several reasons:
HR is the function which has most to do with people-related issues. However, in practice, HR people in a 50 – 300 person business tend to be relatively junior and are rarely part of the inner circle. Even in larger organisations, the ability of HR to influence what happens to people at salary levels above their own can be limited. Instead, HR people are often expected to oversee administrative processes and react well to situations which arise, rather than proactively build better teams and organisations.
Even where there are strong HR managers or directors in place, their ability to deliver results is usually highly dependent on active collaboration from line managers and active sponsorship from executives. In companies with a healthy culture, the bandwidth available to provide that input can nonetheless be severely constrained, meaning that line managers tend to dabble in people-related activities leaving HR without sufficient back-up to pursue bigger issues.
Years ago, in my doctoral research on the recruitment of managers by large companies, it became clear that even if the deployment of specific methods was more or less effective in principle, in reality the main determinant of good outcomes depended on what I came to think of as ‘factor X’, meaning how seriously the company took the whole “thing” of talent acquisition. That meant that relatively unsophisticated businesses who really cared would outperform those with apparently superior mechanisms but low energy.
Over time, senior leaders tend to pick up bits of knowledge about team and organisation issues, especially if they have had good role models to emulate and seen ‘what good looks like’ in effective organisations. But the majority of growth companies have been built by leaders who are managing the largest business they have ever worked in and usually derive from a sales, operations, technical or financial background. By contrast, CEOs with an HR background are rare: in the 1960s and 1970s Shell used to rotate high-fliers through HR to broaden them for general management; more recently Mary Barra (CEO of General Motors since 2014) was previously VP of HR; Nigel Travis, formerly CEO of Dunkin’ Brands started his career in HR in the UK. But these remain exceptions.
The result of a lack of direct experience, and scarce time, means that team and organisational issues are often handled as a ‘side of desk’ activity, frequently informed by incomplete or faddy tools and frameworks (e.g. Patrick Lencioni to cover team issues; MBTI to handle team styles) or approached in a lopsided way (e.g. weekly staff surveys, 20 staff committees, big social budgets – all things we have seen on Catalysis projects).
To get better results in the team and organisational domain, therefore, requires making that a “thing”, i.e. creating an approach which gives those issues regular and proactive management attention, asking questions about what would generate meaningful impact, tracking progress, ensuring that there is a concerned voice to make the case at board level when priorities are being debated. A lot can be achieved, with limited budget, with the investment of focused thinking.
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