Just as people grow and change during their careers, so do companies. The needs of companies change as they pass through different stages of growth, and your ability to make successful hires at the higher levels can depend on your being able to identify the dislocations between the corporate growth-cycle position of both your company and your candidates.
Depending on their success, companies pass through five stages of growth: they are start-up, growth, maturity, atrophy and turnaround. A company's nature and its manpower needs at the more senior levels can change quite dramatically at each stage.
Start -up
The start-up company can begin on a kitchen table or in a garage, comprising just its founders and employees. The founders struggle with an idea, a service, or a product, its development, and its initial "bringing to market." From this point the company may continue to struggle for survival and stay with few or no employees, or it may begin to grow. At this stage, any employee may be in direct daily contact with the company owner; there is little in the way of systems & procedures; and the mission is relatively simple: "Pay the phone bills and the rent to stay in business while we find a market." This start-up phase can rapidly accelerate into the growth phase with the influx of capital.
Growth
The company finds its market (or sometimes just its funding), and begins to grow. The focus is on gaining customers and then market share, rather than just struggling to keep the doors open. Staff is hired in response to overload rather than planning. At least in the early days the founders are still involved in every aspect of the business, and communication is largely verbal. The main focus of a growth company is the marketing/sales process to enhance that growth. Many growth companies never grow beyond a size that the founders can manage personally. An entrepreneur's inability to let go of even the tiniest details is seen as the Achilles' heel of many growth companies; they stall out because the founder is the only individual with any authority, overseeing perhaps seventy-five personal assistants, and there is no management structure.
The Mature Company
The third phase of growth comes when the company is stable and at the top of its stride. All communication necessarily becomes formal, with more emphasis on written communication. More and stricter systems and procedures are implemented; the Human Resources department moves into ascendancy; there is less room for individual creativity; the company is unlikely to be alone in its market; and that market may even be reaching the saturation point. The aggressive investments in marketing/sales that typify growth-cycle companies begin to be replaced by a greater focus on operations. While in earlier stages a company worries more about getting the job done and making sales. The mature company, finding it more difficult to increase sales & profit margins by increasing volume, begins to look more seriously at cost containment as a viable profit generator. Automation, downsizing, outsourcing and offshoring of jobs and processes come to the fore.
The companies larger size necessitates more levels of management. It becomes possible for careers to flourish simply by avoiding mistakes, and as the mature company relies more on committees than on individual initiative, such avoidance becomes easier. Risk taking changes, partly because now any risk is so much greater and partly because of the increasing "analysis paralysis" practiced by ever-growing numbers of managers and administrators. The once vibrant concern has become a bureaucracy, sluggish with overhead. It behaves like an institution, swelled with self importance, blind to maladies that it believes to be strengths. The mature company under all these pressures eventually begins to stagnate.
Atrophy
Here begins the decay stage of the corporate life cycle. Early signs are an acceptance of the same old profit margins and standards; excuses that the market, the economy, or the numbers of competitors now flooding the field make it impossible for anyone to make a living; and complaints about the lack of competent employees. The focus is on cost cutting. The finger of blame points outward, and no one sees where the other three digits on the hand are pointing.
Turnaround
The fifth stage is recognition of atrophy and sustained, concerted action to achieve turnaround. Consultants are everywhere, turnaround experts are brought on board, and the focus becomes one of returning to the vibrancy of the growth company.
Hiring and the Life-Cycle Challenge
At the higher levels, the suitability of a candidate for a position depends in part on the corporate life cycle history of the candidate, and, in part, on the personality of that candidate. A person from one phase of the cycle may, or may not be appropriate for a company in another phase.
Start-ups will frequently benefit most from executives who have seen their prior employers at least through the growth phase and possibly into calm waters of organization and maturity. Growth-stage companies benefit from a combination of executives with experience in that stage and from those who have seen the successful transition into maturity.
Companies in the fourth and fifth stage need fresh blood, executives that can raise the dead. These people come mostly from start-up and growth companies, yet sometimes they and the turnaround experts (who often have experiences at the different stages) just don't fit in the mature and wilting company. The bureaucracy drives them crazy, and they upset everyone else on the train. Of course, that is really why they are there in the first place.
Finding someone who has successfully operated in all these phases is rare indeed, as each demands different approaches and skills.
Now, what does all this mean? It means that in the selection of important positions, you need to have an awareness of where your company stands in its evolutionary cycle, and where it is headed:
- When you are in start-up mode or in the midst of strong growth, you are wise to look for someone who comes from a similar cultural environment ... unless, of course, your strong growth is tilting you toward the need for order and organization that typifies the mature company.
- If your company is approaching transition, you could benefit from someone grounded in the next phase of the corporate life cycle.
- If your company is in a state of atrophy or turnaround, you will want people from the earlier stages of growth and vibrant maturity to re-energize your corporate situation.
None of this means you should reject otherwise qualified candidates out of hand. But it does mean that when you know where your company stands on the continuum, and therefore the type of management it needs, you are likely to make more productive hires.
