The biggest challenge facing executives while scaling their startup into growth companies is managing their talent pool while suffering growth pains.
If you hope to remain ahead of the fast-growth curve, and tranquilize as much of the associated pain (and prevent the HR nightmare of a blow up or total meltdown) then here are my thoughts on the matter: completely re-engineer HR processes and systems.
It is crucial to making a smooth transition.
Chaotic Change — Problem at a Glance
You’ll have to abandon a lot of practices that worked for your initial startup stages, and replace them with new ones. Given that all the human capital practices and process have to play catch up with growth, you will be required to stabilize your workforce to one where you have more dedicated and “intra-preneurial” talent, ones who could be more creative and dedicated to the company goals. This should point to the need for changing the overall culture of the company and make growth intrinsic not only to the company but also of its talent pool (through personal development and career growth and opportunities).
I’m sure of one thing: It will be chaotic. Then again I’ve seen that during rapid growth, executives are more than willing to respond to changes, adapt to different challenges, and find opportunities that can move the company to a more sustained phase of growth.
The three crucial areas that I believe need consideration include your retention, reward, and compensation practices. Let’s start with the first round of primary growth oriented changes that have to be re-engineered in the HR department.
I’ll start changing your HR filtration system: its existing retention, hiring, and firing processes.
TALENT RETENTION STRATEGIES
Be selective. Identify and retain people who are essential to your business’s strategic goals and business model.
Many leaders would have already realized that the startup strategy of relying on career gamblers, transient, and free agents is no longer effective. It worked during the startup phase because the recruitment strategy was (and it normally is) of getting people into the empty seats and getting the engine chugging productivity. Growth phase demands selective empowerment and elimination from the current talent pool, while recruiting talent for core competencies.
Retain dedicated high performers closest to the organization’s core competencies. The retention focus of the HR should be on talent that directly affects core competencies and core business processes. This can be followed by marketing and other technology based jobs. Your goal should be to prevent talent drain to other larger companies.
Talent will always be magnetized by the best deals in the industry, and unless you offer them something that adds value to their work, they will get pulled to the ones that offer them or at least give them the perception of offering those incentives.
I believe two fundamental leadership actions for developing a robust retention strategy include:
Leadership Action #1
Understand the fragile balance between the talent that stays or leaves in terms of total rewards, i.e. the total deal that your company is offering them, including the company culture, the work environment and people, leadership, the terms of pay, career growth and development opportunities, and of course how interesting and creative the work is. (I’ll address relevant strategy in the next section)
Leadership Action #2
Appreciate key talent. Make your employees feel valued for the value they bring to the company, their contribution, dedication, and hard work. Reiterate the processes that show them that they count and are included in the company’s future. (I’ll address retention strategies and total compensation as another model for growth oriented retention strategy in the second section)
Total Rewards — Growth Oriented HR Road Map
Leaders in the surveyed companies provided their approaches to the elements of an integrated total rewards strategy.
Six core elements to forming a robust retention strategy include:
- Employee Engagement
- Company Culture
- Improving Manager’s Role
- Training and Development
- Career Opportunities
Increasing Employee Engagement
A targeted study sponsored by Achievers (Harvard Business School Review, 2013) shows that employee engagement as crucial factor in achieving overall organizational success. Incidentally, efficient productivity was rated on par with employee engagement whereas the ability to innovate ranked lower than either. The most impactful factors driving employee engagement includes:
- Clear job descriptions
- How employee’s work contributes to the overall strategy of the business
- Recognition given to high performers
- Continuous and effective communication from the senior leadership
- Efficient and fair performance reviews
- Pay and appraisals directly linked to corporate goals
- Development and training programs linked with personal growth as well as linked to the corporate goals of the company, among others.
According to the 8th iteration of the Gallup Poll, increased employee engagement has direct bearing on the important growth KPIs, growth sustainability, and integrity of the business model. From the poll, the following eight factors experience significant improvement due to increased employee engagement:
- Turnover (for high-turnover and low-turnover organizations)
- Shrinkage (theft)
- Safety incidents
- Quality (defects)
- Customer ratings
Renewing Values, Creating a Growth Oriented Culture
Finding a common ground definition of organizational culture for growth oriented companies is fabulous. You won’t find single culture or definition that has worked for all organizations. Some common cultural models include:
- Performance culture — that values high performers, contributors, and achievers
- Success-oriented culture — that links business goals and success of the business with the reward system, rewarding core competencies and top-performing talents
- Enabling culture — that relies on empowering people, growing their capacities, and encouraging new job roles
- Focused culture — that keeps re-inventing its core competencies and business processes only,
- Others — a whole post, for another time.
I believe that a growth oriented culture is an environment in where your team members can become owners of the business process i.e. they don’t have to wait for the CEO to be in the room to make a decision. I believe strong growth oriented cultures empower employees and makes them dedicated to the team in a different fashion. And for me, the two values that should be intrinsic to the growth culture as the startup is scaled include agility and mobility.
- Agility — the commitment to rapidly respond to change in market and company’s objectives, and hence, to always remain ready for stepping outside of their comfort zones
- Mobility — a commitment to company’ strategic goals, to remain un-rooted to a single job description, and have the flexibility to be deployed in various departments and teams according company needs.
I believe a culture based on agility and mobility will always value continuous empowerment of its talent pool, risk changes to job descriptions, realize their abilities, capacities, and passion, and empower them to take new roles in the organization.
Investing and risking time and effort in your organization’s culture is important, primarily because it has powerful momentum, one that overcome the shortcomings of your strategy, and beat better and more competitive strategies in the market — Every. Single. Time.
Improving Your Managers’ Role
“Employees leave managers, not companies”. I think we’ve heard it too often for a single lifetime. To give credit to it, I must say that it has had its impact, but still the fact of the matter is your manager still needs improvement. It involves improvement in leadership role and setting an example as a role model, training and coaching, and in their ability to direction for your business, engaging team members, and aligning their abilities with business objectives and strategic goals.
You have to make them accountable for talent retention, development, and motivation. And the only way you can do that is to reduce barriers to decision making by delegating greater administrative authority.
[Continued in Part 2]