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When to introduce a new level of leadership?

When to introduce a new level of leadership?

Leadership challenges for fast growing business.

Any sensible person will tell you that leadership development is crucial for all businesses. It gives you the best chance of thriving because effective leadership ensures the culture, standards, and compassion are balanced so that there’s an environment where people can excel.

Fast growth, or even scaling businesses, face challenges because often people are brought in to meet specific operational needs. This means the practices that ensure great leadership become increasingly time consuming.

In the fast paced, competitive, business landscape we operate within, it’s far too easy to lose sight of the so-called “soft skills” all organisations need so the people can thrive.

Personally, I detest the term “soft skills”; the subconscious impact of that phrase makes them feel less important. While consciously most people understand how essential they are, when we’re busy we often operate on autopilot. 

When we’re in autopilot the subconscious is in control. I.e., we’re getting on with things, moving from task to task, without thinking about it too much. The subconscious is exceptionally powerful; when business owners are experts in their fields, and their existing staff are motivated and experts in their own right, the flow state we enter means our performance can be extraordinary.

When our company has a reputation for extraordinary performance, leads come to us, more business comes our way, so we hire even more staff to meet the increased demand. This is when things become difficult.

When we hire people with established expertise, we’re not only hiring the skills and experience, we’re also hiring their previous employer’s culture, plus any biases and judgements they have from their past experiences.

When we hire inexperienced people with the intent to develop the skills, we’re placing a huge time burden on either ourselves or our staff.

Despite the impression a lot of leadership experts give on social media, the structure, processes, and practices required for effective leadership are hard work, and take time. Leadership is not about just being a decent human being – it definitely helps, but time and high skills are just as important.

When a new business is born, and the MD hires their first staff things are relatively simple – as long as the MD is a decent person. The MD and their team work closely together, so the team bond is simple. It’s also very easy to spot when a new hire isn’t working.

As the team grows this becomes more and more challenging. The MD’s focus becomes split between each individual, the operational output, and the strategic goals. It’s only natural the MD will then focus more on the operational and strategic elements, because when they’re maintained the staff get to keep their jobs.

However, the loss of focus on the people presents significant challenges. This is why it’s important to ensure there are people in place that can assume the day-to-day leadership responsibilities.

My recommendation is as soon as you get to a position where 5 people are reporting directly to a single person, it’s time to consider an additional level of leadership. 

Different people will have different capacities and skills. So it’s possible for a single person to have more than 5 direct reports, but it’s incredibly inefficient when the number becomes more than 8.

That doesn’t mean you need a new manager every 5-8 people – that’s going to be a huge financial burden on growing businesses. When a manager has between 5 & 8 direct reports, providing them a supervisor (or 2) to assume responsibility for junior staff is sensible.

Here are some flow charts to demonstrate my recommended organisational structure.
New business (MD & up to 8 staff member reporting directly to them): 

Scaling business (each management level can have between 5 & 8 direct reports each):

Growing Business (replicate manager stream 5 to 8 times, until senior managers are introduced):

These models are examples of an ideal structure; different types of business will have different nuances. For example, the larger a business grows, the more in-house services there will be, e.g. marketing, sales, finance, operations, etc. This model can be replicated and adjusted as necessary to suit your particular circumstances. 

The final consideration is the leadership skill at each level, and for each individual at that level. The higher the level an individual is at, the higher the leadership skill needs to be. This is to ensure continual mentoring and development of those skills at each subordinate level.

By having an effective leadership structure in place, MDs will have the time and capacity to focus on the strategic objectives, without detriment to the leadership provided to all staff at all levels.

Should you have any questions about this article, reach out to it’s author – Andy for support.

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