The mid-market transition: Executive roles, activity portfolios and ‘role peeling’
Growth company boards spend lots of time thinking about how to get the best performance from existing executives and which new roles may be needed to cope with expansion. Bandwidth and skill constraints are weighed up against budgets, and the trade-offs between those factors are debated. But what principles can guide those debates to find a workable solution, and how can the multiple judgement calls be made in practice?
How roles evolve
If we took a time lapse sequence of an organisation chart developing from inception to maturity, it would look like cells dividing and re-dividing, or a plant adding tendrils and leaves. Perhaps it would start with a couple of people, one focused more on interacting with clients and the other on delivery. Over time that first role would split into marketing, business development, internal sales, account management, customer service etc. Depending on the nature of the product or service, the second role could break out into operations, engineering, quality control, as well as back office functions.
What drives those changes are two main factors:
the need for greater specialisation of function in the interests of dedicated expertise and greater efficiency
the need to integrate the various functional activities for the sake of coherence.
We can think of (1) as vertical deepening of the organisation’s domain capabilities. For example, a software business may hire specialised developers as it grows. A B2B service business may hire senior salespeople to focus on specific end markets.
Meanwhile, (2) requires roles that allow better horizontal coordination within and between functions, e.g. a higher-powered CTO who can ensure alignment across all technical areas and act as an interface with other senior managers; a CCO who works to join up marketing, sales and customer success.
Progression in (1) tends to generate a need for more of (2). We often see a period of expansion in headcount in functional areas followed by a sense that ‘we are working in siloes’ which leads to the creation of new horizontal roles or mechanisms to strengthen communication and coordination.
Role boundaries can be elastic
This on-going ‘tug of war’ between greater specialisation and coordination can be seen in role boundaries for individuals. Consider the case of a Head of Finance in a business without a full-time FD. They are likely handling a generalist finance role but after an FD is appointed may be asked to focus more specifically on, say, FP&A. By contrast, a successful head of sales may be asked to broaden their role by taking on responsibility for account management or marketing to create a more aligned GTM approach.
Those are illustrations of the fact that the same job titles can hide great variations in role portfolios. So, while there are usually similarities in the core of activities across all FDs (financial reporting and cashflow management) and all sales directors (inbound and outbound sales activity), one FD may be strictly financial in their focus while another may look after legal, IT, HR and other activities. Likewise, one sales director may be strongly focused on hunting new business while another mostly supports incoming clients with pre-sales and on-boarding.
Activities like product management, account management, quality control, back-office administration and others could be overseen by various executives in practice. Those variations may be based on strong organisational logic – or due only to personal preference, historical accident, or capacity constraints.
Certain role titles seem especially elastic. Depending on the organisation, ‘Commercial director’ can mean everything from CCO (sales, marketing, customer success) to someone who handles more internal aspects of making margin (pricing, procurement, contract management). Similarly, a COO can range from someone who is effectively in charge of running the overall business day-to-day (like a deputy CEO) to an operations director with extra elements, to essentially the head of back office (overseeing all the support functions). CEOs can have widely varying ways of dividing up their time and focus.
This elasticity of role definition provides a good argument for careful specification of new roles: different people may imagine quite different role portfolios when discussing the same title.
How to evolve top team roles with intentionality
When a top team appears to be creaking for lack of bandwidth and/or capability in certain areas, we advise as follows:
Ask each executive to list out all their reporting lines, accountabilities and other activities – whether fully ‘owned’ by them or shared. We have seen lists of 20 – 30 items in some cases, but 10 – 15 is more usual.
Then ask the executives to annotate each of those items with their view of whether those should grow, stay constant, shrink or disappear within their role portfolio over the next 12 months. For a team which is heavily loaded, the number of items overall would ideally decrease for each individual as responsibilities deepen. We think of that tendency as ‘role peeling’ where more marginal responsibilities peel off into new roles, migrate towards subordinates or are outsourced.
Following that ‘homework’, talking everything through in a facilitated workshop can then sort through everyone’s perceptions and build a image of where activities can be better organised. Inevitably, there will be trade-offs: budgetary constraints or difficulties hiring may mean that certain roles cannot be peeled off for a while. The inability to back fill certain second tier roles may mean that the transfer of certain reporting lines is delayed. But, overall, we should see not only tidying up of activities which were misplaced but also more significant shifts in certain roles.
As described earlier, those shifts may make individual roles more specialised/vertical or wider/horizontal. For example, a head of sales in a care homes group was delighted to drop her BD role with local authorities and focus instead on the client on-boarding aspect of their role. The co-founder CEO of a manufacturing business was relieved to become head of R&D when a full-time CEO was brought in. Another CEO of a software business migrated into a chief of staff role to provide a coordination function across a larger group after his business was acquired. Another CEO in a medical equipment company migrated into an ‘ambassador’ and strategic projects role after struggling at coordinating the management team day-to-day.
Where roles are widened, there may be a need for development activities in various forms to support the stretch involved as well as backfilling to reduce the levels of tactical problem solving.
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