How can HR help a rapidly growing company?

First of all, thankyou so much for all the lovely comments, feedback and messages of support in my new role. It really does mean a lot to me.

This week we will cover how HR can add value to a company moving from being a small SME to a medium sized one.

In my new role I have researched this a great deal to try and ensure I can be as effective as possible.  However, I’d like to stress that in this article I am not describing my role at CHEC and the issues and scenarios explained are in no way a reflection of HR at my new employer.

You may be familiar with Boston Consulting Group’s model of the four stages of an organisation’s journey from initial rapid growth, through mature markets and then markets in decline. I often adapt their model to explain the HR implications of companies in the various stages of their growth and the market they are in at the time. In this article I’ll use BCG’s original classifications of ‘Wildcat, Star, Cash cow and Dog’.

The model is more a business and markets theory than a specific HR theory so please forgive me for sometimes straying from their model but I will concentrate on the HR implications for an organisation moving through the stages in the rest of this article.

Wildcat

The first stage, ‘Wildcat’, generally relates to young companies with great prospects. Growth is rapid in a new, often growing, market and the small company is nimble and entrepreneurial, able to react quickly to take advantage of opportunities. They take staff on as needed, in an almost ad hoc manner depending on what issues crop up e.g. from a small number of generalists doing everything, the organisation starts needing specialist roles such as finance, sales, marketing, purchasing etc. This leads to better focus, structure and organisation and the growth escalates further. Although these new roles add some structure, building that structure is generally not a robustly planned activity and recruitment of specialists is often more knee jerk reaction to circumstances than planned Organisation Design. For more information on Organisation Design please see my article https://186hr.co.uk/should-you-start-business-planning-now-to-prosper-when-lockdown-ends/

Star

The company then enters the ‘Star’ phase where both the company’s market share and often the market itself continues to grow quickly. This is an exciting, high octane growth phase for the company where it takes advantage of the rising market and increases turnover and market share rapidly, often in innovative ways.

But it is at this stage where HR risks are often at their greatest. The organisation needs to assess and evolve its structure and processes to maintain competitive advantage. Failure to do so can lead to collapse of the company as service suffers and customers move to competitors.  Think Tesla a couple of years ago when they couldn’t physically build the number of cars they had forecast to the market due to a lack of infrastructure.

In this phase the previous ‘spider web’ type organisation structure, where the founder or a small number of senior staff control everything personally, becomes stretched and the company needs to decide what new structure best suits the organisation both now and to ensure it thrives in the future. Often the company will decide on a departmental structure and combine existing specialists with externally recruited experienced heads of department e.g. in Finance, IT, Purchasing, Marketing, Sales, Logistics etc. to form a competent structure below the CEO that can deliver their part of the strategy in an efficient and focused manner.

For more information on the various types of structure that may best suit the organisation whether that is departmental, product based, geographical or customer centric see the ‘Structure’ section of the above blog article or contact us to discuss it further.

It is at this stage that companies also often decide that they need a specialist HR function to steady the ship regarding people issues and also put together the infrastructure that will support future growth. Whereas previously, personnel type actions such as recruitment, contracts, disciplinaries, arranging training courses etc were probably handled by committed and reliable administrators, an experienced HR consultant is generally needed to assess the HR needs, bring in robust employment contracts, processes, employee handbooks, and other best practice. At this stage HR in the company is likely to be a mess and not fit for purpose.

This article focuses on HR support when moving into the Star phase and I will come back to that shortly, but to complete the Boston Consulting Group explanation, after a period in the Star phase that can last a few years or even decades, the model explains how markets start to mature and move away from high growth to being relatively settled and established.

Cash cow

Unless the organisation has some competitive advantage allowing it to continue to take market share from competitors, it is likely to move in to the ‘Cash Cow’ phase, where the focus shifts from growing market share to keeping what they have but doing it as efficiently as possible. Sales are maintained rather than rising rapidly so the focus turns to reducing costs and improving margins. This is often when the company is at its most profitable and can be quite a settled period for the organisation as it is likely to have built scale and loyalty from customers, leading to barriers to entry for any upstarts who wish to spoil the party. Telecoms providers such as Vodafone fit into this category, although they are constantly looking for new areas in which to be Stars again e.g. the move into broadband and TV.

Dog

The final stage is ‘Dog’, where the market is declining and even if it can maintain market share the organisation needs to change strategy or it will slowly die. An example of this is high street based retailers who have not developed a strong online presence. But all is not lost, Next is an excellent example of a company that could have languished in this state but has adapted and evolved impressively over the years.

Moving back to how HR can support organisations move from Wildcat to Star and thrive, as stated above HR is likely to be a bit of a mess at this stage and need structure.

(Blatant and unashamed advertising alert). This is where the organisation needs experienced HR support. At 186hr we are highly experienced at helping organisations through this phase and to develop HR to be first and foremost fit for purpose and then a crucial cog in the machine, supporting the organisation to thrive as it grows.

Once engaged to help the organisation bring in the required structures, policies and HR best practices to help and support the organisation to grow, the first task of the HR consultant is to understand the organisation, take stock of the current situation, and agree with the senior team what good looks like. This must be bespoke to the organisation and not lifted from the shelf as a ‘one size fits all’ approach that some of the larger HR providers used to offer.  

This gap analysis between ‘where we want to be’ and ‘where we are now’ will clearly form the basis of the initial plan, also taking into account any risks the organisation is exposed to, and other company priorities.

It is not unusual for the HR department to be very unpopular at this point with a feeling that they have let the side down. However, generally the reason things have gone awry is not because the HR people are rubbish, it is because they do not have the expertise to handle the needs of the business now it has grown to be a medium sized organisation, or the experience to change it.

In a lot of ways this is unfair on the individuals in the existing HR team as they are not equipped to deal with the requirements of the company at this stage in its journey and, of course, any mistakes or poor processes lead to issues that are high profile such as bad recruitment or new starters leaving due to not having a decent induction process. Also errors made may be personal and important to individuals e.g. errors with pay.

I often use a football analogy to explain this state of affairs, where HR is the goalkeeper in the team. All players in the team make mistakes due to the fast growth and rapidly increasing demands of that growth, but team mates in midfield can rescue a stray pass, and the striker is soon forgiven for missing a sitter when they score the next opportunity and, as Gary Lineker often tells us, at least they were in the right position to get the opportunity!

However that is not the case for the goalkeeper. The goalkeeper makes a mistake and the opposition score a goal. The ’keeper may have had a brilliant game otherwise, getting their angles right to close down any danger, playing out from the back etc but that will largely go unnoticed and they will be remembered for the error.

So – poor HR. Blamed and reviled. Should we feel sorry for them? No, not a bit of it! Being in HR is a privilege, it is a great job. It is interesting, motivating and can make a real difference to an organisation if done well. If there are issues then we just need to suck them up and get on with it. Advising on ‘Organisation Design’ to help with issues like this is our job, as is bringing in processes, policies and best practice actions that will support the organisation to get where it wants to be. 

Any HR practitioner who whinges about their role should get a grip. In my experience there are huge numbers of people who would love to get into the profession. Anybody can have a bad day but if the job is not what the HR person wants it to be they are uniquely placed to change it. So get on with it!

Rant over. Getting back to the HR actions when an organisation has moved from Wildcat to Star, following the above gap analysis clearly the actions will take some time to sort out so it is important to prioritise and agree a plan based on business need. Top priorities invariably include, recruitment, high staff turnover, organisation structures, change management and ensuring employment contracts, HR policies and processes are fit for purpose.  We’ll explore some of these in a little more detail.

Recruitment including Induction

When an organisation moves into Star territory it is likely to need to dramatically increase both the volume of recruitment and also the difficulty as it will be necessary to recruit specialists, which can be tricky. It also needs to ensure that these new starters receive a good induction into the company that satisfies both supporting the individual to be competent in their role as quickly as possible and also to ensure they understand and fit into the unique culture of the organisation.

The recruitment process can often fall over at this stage if specialist HR support is not brought in, resulting in roles taking too long to fill, good prospects getting fed up and accepting roles elsewhere, and a poor onboarding experience leading to talented new recruits leaving.

The recruitment process should be mapped out. When process mapping, we find that the old ways are often the best, and that asking the employees who do the role, along with a HR professional to guide them, to write down every action that is needed to recruit an employee on post it notes and then spend some time arranging the large number of post it notes in order as to how the process needs to work works well. Simple but effective!

That structure is then fleshed out into a Standard Operating Procedure so everyone in HR is clear what is required. Management can then agree goals and service standards with the team and manage them accordingly.

A spreadsheet or recruitment board summary should then be constantly updated, ideally with a Red, Amber, Green system for each critical point in the process. This summary should be visible to management and the directors so they know where the organisation is up to with each vacancy and new starter.

In our experience, even though the process of getting to this stage may have been uncomfortable, individuals soon buy in to the new process and the structure they have helped build. This then leads to them enjoying their jobs more, performing better, and taking pride in the results, which improve significantly.

Moving from the administration to the actual recruitment, as a small company it may have been fine to use an agency for all vacancies previously but when volume recruitment is required there needs to be a combination of approaches for both cost and efficiency reasons and it may be necessary to employ a specialist recruiter who can ensure all role profiles describe the role and person specification accurately, and recommend the best way to recruit e.g. through CV libraries, LinkedIn, Job boards, general or specialist recruitment agencies, or adverts. Then manage the process professionally and efficiently.

With regards to the selection process clearly there are various techniques that can be employed such as structured interview, psychometrics, exercises, assessment centres, psychological profiles etc and the recruitment specialist should advise on which is best for each individual vacancy.

We find that untrained managers are generally pretty awful at interviewing and so, at least in the initial stages until it can be shown that managers are competent, a HR professional should be involved in deciding on the interview questions and then coaching managers on the process, giving feedback after joint interviews.

Once the interviews are complete there is often a big sigh of relief that the right candidate has been found, but this is a critical period and no time to relax. It is not unusual for good candidates to be talking to several organisations and deciding between them so the organisation needs to move quickly and decisively with a professional offer letter and good communication i.e. give them a reason to choose the organisation and want to join it as opposed to the competition.

Once the individual has joined we move to the next critical area, induction. We have all experienced situations where the onboarding of new employees is not up to standard, leading to high levels of exits in the first 3-6 months. This in turn holds the company back due to gaps, important tasks not being done, wasted effort, high recruitment costs and losing potentially good employees of the future. Remember it is often the good ones that can easily get a job elsewhere that leave, and the duffers who hang on to their jobs like a limpet.

Change Management

Change management comes in many guises and, as we all know, employees are wary of change and find it uncomfortable. In last week’s blog, we discussed the change curve, and how individuals need to be at the ‘acceptance’ phase of the curve before they will embrace a new role, structure or ways of working.

For further details see https://186hr.co.uk/why-you-should-include-organisation-development-in-your-2021-business-planning-process/

As you will be aware there are myriad ways of managing change in an organisation and when I have worked for large companies we’ve used some of the latest techniques. However, this normally involves using expensive specialist change consultants and we have found that SMEs often shy away from what they view as overly complicated plans and also the high costs involved.

Therefore, with SMEs, and especially those moving into Star status we normally employ tried and tested techniques that still work very well. The key is invariably good, clear communication and explaining the ‘why’ not just the ‘what’ and ‘how’. If employees understand the reasoning behind the change they tend to accept it quicker.

When training and coaching managers on how to lead their team through change I often start by asking them to read the short story ‘Who Moved My Cheese’, a booklet by Kenneth Blanchard Ph.D. 

Blanchard tells the story of a group of mice with a ready supply of cheese where one day the cheese supply is moved. He then explains the mice’s different reactions to the cheese disappearing, from the ones who just want things to go back to the way they were so stay in the same place waiting for the cheese to magically reappear which, of course it doesn’t. There are also those mice who realise the cheese has gone for good and set off in search of new cheese, plus various other approaches where mice try and replace their cheese. It’s a brilliant way of explaining the human reaction to change, how we cope with it and the various different approaches we follow when faced with change. 

The booklet takes under 2 hours to read and costs around £4. I’d highly recommend you read it if you haven’t already done so. It brings a simplicity to what we think is a complicated subject and helps managers to understand what their team are feeling about the changes and how they are likely to react to them. We can then decide how best to support them to accept the change as quickly as possible and then thrive in the new normal.

Clearly an organisation moving into Star will undergo rapid and often fundamental change of roles and organisation structures as the needs of the business evolve. Unfortunately this often leads to redundancies being necessary. Click here for our free guide to the 8 Stages of Redundancy.

Employment Contracts, HR Policies and Processes

When checking whether employment contracts, HR policies and processes are fit for purpose most HR consultants, us included, will have a HR audit document where we check that the basics are in place for processes such as recruitment, disciplinary, grievance and also contracts or Statement of Main Terms of Employment are fit for purpose, along with making sure other risks such as employer liability insurance cover is sufficient for the numbers now employed and pension arrangements, life insurance policies, Private Medical Insurance etc. are up to date.

We find that contract wording at SMEs is normally very poor, and often employees either don’t have a contract or the contract on file is out of date or missing key clauses. 186hr can provide up to date employment contracts that will be adapted to the individual company, usually for the cost of one day of consultancy. Contact us for further details.

Often, we find that contracts have been ‘lifted’ from larger organisations that may have been heavily unionised and whereas the contracts may have been appropriate for that environment they can hamstring the smaller company by imposing unnecessary restrictions that have been negotiated by an aggressive union.

The same is often true regarding policies. Again, often they have been lifted from large organisations where directors or senior managers were previously employed and do not suit the needs of a nimble, smaller company e.g. the disciplinary procedure can insist on significantly more than 48 hours notice of a Hearing, and that it must be conducted by a director. Both of these are completely unnecessary for a smaller non-unionised company and, in an organisation that needs to act quickly, that maybe only has a small number of directors, the policy should be changed.

The other potential issue we often find here is that smaller organisations have been signed up to one of the big HR support providers. I am not going to name names but these contracts are expensive and, whereas some do offer a good service, manuals get left on the shelf to gather dust and HR don’t take the time to navigate the ‘one size fits all’ approach to online policies and other documents. I appreciate I am open to the accusation here of ‘you would say that wouldn’t you?’ but having a consultant that can tailor the service and documentation to the company’s specific needs, in our opinion, often works better.

Once the initial gaps are resolved and the HR function is fit for purpose with processes and policies in place in all the critical areas, the focus can then move on to other areas where the HR consultant can add value and help the organisation to thrive. This may involve training programmes ranging from the basic half day programmes training managers to manage absence, disciplinaries, poor performers etc to more in-depth management development programmes in change management or succession planning. There are so many advantages both to individuals and the company of having a robust succession plan in place.

There will also come a point where diversity and Inclusion training and myriad other HR initiatives will be beneficial to the employer and its employees.

At 186hr we offer a full HR consultancy service and can help organisations with all of these issues. Contact us for more information.