Help with growth crises in companies

Typical issues that need to be addressed in growing companies

Your company is growing fast and is successful – but suddenly things just aren’t moving forward? Are your employees’ workloads constantly increasing, is the atmosphere in the company deteriorating, are customers dissatisfied, are conflicts the order of the day? Your organization may be experiencing a growth crisis. Depending on the size and age of a company, growth crises are a completely normal development that requires active change management.

In our last blog post, we wrote about how you can recognize such growth thresholds in good time. In this article, we describe how you can successfully overcome growth thresholds or growth crises.

1 – Professionalization of management

Phenomenon in fast-growing companies:

In organizations that are growing rapidly, there is often a shortage of managers. Due to high work pressure, management positions are often filled quickly and without preparation. Often the new managers are still quite young, have little management experience and are not trained as managers by the company. They have to see how they get on. The requirements for managers are often not really clear; competencies and responsibilities have also not been clarified. In addition, managers are often not properly managed themselves, as the company’s focus is on growth and coping with the associated stress. This leads to employees becoming frustrated due to a lack of or incorrect leadership. The mood in the company sinks. The fact that the management is poorly staffed means that many problems are not addressed and the situation of the employees and the company continues to deteriorate; the growth crisis gets underway.

Successful change management:

The first step should be to establish a common understanding of good leadership in your company. Based on this idea, for example in the form of a mission statement, the existing managers should be assessed: To what extent are they fulfilling their leadership role? By assessing their skills and development potential, a development plan should be drawn up to help managers fulfill their requirements. Of course, it is also necessary to sift out those who do not meet the company’s management standards.

2 – Maintaining a positive corporate culture

Phenomenon in fast-growing companies:

If the company is young and the employees are still in the initial spirit of optimism, then there is often an innovative, lively corporate culture. The employees are full of inspiration and the desire to create something. We communicate a lot with each other, the team spirit is strong and we work hand in hand. As the company grows and more employees are added, the connection between the individual employees and the founders usually diminishes. Rules, structure and bureaucratization are introduced in this phase and the open, innovative, exciting corporate culture is lost. The company loses its special character and becomes more and more similar to a normal, large company or group. Employees’ identification with the company decreases.

Successful change management:

The company must set itself the task of ensuring that each individual manager maintains the innovative, motivating corporate culture in their team. This requires strong management cohesion within the company and an awareness of the importance of this issue. Management should be actively involved in conducting frequent dialogs with employees on the subject of culture and cooperation and should feel responsible for the culture.

3 – Finding structures that do justice to the size of the company and enable growth

Phenomenon in fast-growing companies:

When a company grows, it can easily happen that the structures do not grow with it. Additional employees mean that departments are getting bigger and bigger, but the efficiency of the departments cannot be maintained to the same extent. Why not? Management spans are often too large, i.e. too many employees are managed by too few managers. This results in confusion and a lack of coordination, which in turn reduces the efficiency of processes – and increases costs. Structures have often grown organically. However, it may well be that these structures do not support the growth of the company and at a certain point are no longer useful and efficient, but instead encourage uncontrolled growth.

Successful change management:

To find the right structures, you should ask yourself two questions.
1) If you were to build the company in its current size on a greenfield site, how would you do it? What should the structures look like then? Existing structures have often grown around people, customers or necessities. If the company were to be redesigned and planned, the structures would usually not be built in the same way as they were created organically.
2) Are the structures aligned so that further growth can easily take place? Will the company continue to be able to manufacture its products or services in good quality? Do the current structures create scalability? When finding the right structure, further growth should be considered at the same time.

4 – Establishment of meaningful processes and tools

Phenomenon in fast-growing companies:

What works in a small company does not necessarily work in a large organization. In a small company, many approaches are possible: Everyone can find their own solution, you can talk to each other until the best solution emerges, the employees can experiment with each other on the problem until they have found a solution. It doesn’t bother you if a completely new process runs every time. However, the larger a company becomes, the less personal exchange can work. It is now important to recognize which processes need to be standardized. Of course, the company’s flexibility and ability to innovate must not suffer as a result of standardization. However, if there is a proliferation of processes, this leads to great inefficiency. This can be seen in the fact that more and more employees are being hired, but the new employees do not reduce the workload at all. Costs are rising, but the margin is not growing with them. Standardization and tools make things easier throughout the company.

Successful change management:

It is a well-known fact that efficiency increases considerably if a process is not run through for the first time, but for the tenth or twentieth time in the same way. In order to standardize processes optimally, the company should ask itself the following questions: What are our most important processes? What are the processes that occur most frequently? Where is it important that we maintain a high level of quality – even if our company is large and a large number of employees are involved in carrying out the relevant processes? After implementation, process standardization must be consistently maintained. This is the only way to increase efficiency.
The same applies to the introduction of tools: once a company reaches a certain size, it is easy to standardize using IT tools. However, this can only work if the various solutions that have already developed organically are made compatible with each other. Once a decision has been made in favor of a tool, it is essential that it is then introduced consistently and that other solutions are switched off or prevented without compromise.

5 – Set up an efficient recruiting process / onboarding and induction of employees

Phenomenon in fast-growing companies:

When a company grows, so does the volume of work. To remedy the situation, new employees are often hired quickly and easily. Unfortunately, due to a lack of time, new employees are often not thoroughly checked to see whether they are a good fit for the company and whether they are the right person for the job. Incorrect appointments are often the result. Thorough training is also usually neglected. Unfortunately, it is common practice to throw new recruits in at the deep end. New employees are therefore often unable to develop their potential. It often takes a long time for new employees to be able to fully perform their tasks, so that no more work is done despite an increase in employees. In order to reduce the ever-increasing workload, more employees are often hired at this point. If former hopefuls in your organization perform poorly or leave the company during their probationary period, this is a signal to take a closer look.

Successful change management:

It is necessary to ensure that employees come into the company who meet the company’s own standards of high quality. These employees should be deployed in the right place so that quick decisions can be made even in pressure situations. This can be done very quickly and effectively with a good recruiting tool. Find out how to find the right recruiting tool here.
Of course, the focus should then be on training these new employees. Do you have a good induction process? Instead, the company should ensure that onboarding is carried out quickly, that someone feels responsible and that this responsibility is taken on.

6 – Financing model at critical growth thresholds

Phenomenon in fast-growing companies:

Many organizations fail at growth thresholds due to the fact that they are only able to properly perform the business that is now developing if investments are made. The investments required for this are often very high. Such investments can be, for example: New, expensive machines, a larger office, the development of a structured sales organization, new marketing and so on. These investments often cannot be made easily and represent a high risk. Without them, however, the company runs the risk of no longer being able to meet the increased needs of its customers and of alienating them.

Successful change management:

It is important to find a financing model before the child is in the well. This planned financing helps the company to exceed the growth threshold without putting the company in a precarious situation. If a company realizes the need for such an investment too late for reasons of economy or thinks for too long that it can carry on as before for a little longer, it will quickly find itself in a difficult situation. As a result, the banks no longer consider the company to be creditworthy, which causes even greater problems. Dealing with upcoming investments and their financing in good time is a critical success factor.

7 – Managing change / dealing with complexity

Phenomenon in fast-growing companies:

Above a certain size, you need someone in the company to manage change. A growing company tends to start many change processes at the same time. This is not a bad thing per se. However, if many departments are constantly introducing changes into the company, then the individual employee or department can fail. This is because everything is constantly new and there is a lack of orientation. Nothing works anymore, you can’t rely on anything because everything is constantly changing or in limbo. This makes it difficult to maintain quality for the customer. This means that change and growth work best when they are managed in a targeted manner.

Successful change management:

The company needs an office that coordinates the various change processes and ultimately decides how many changes the company can support at the same time. When deciding which changes should be tackled first, it makes sense to focus on bottlenecks. In other words, you should ask yourself the following questions: Where is our next bottleneck? What is the issue that holds us back the most? What prevents us from growing the most? This allows you to overcome this bottleneck in a concentrated manner, implement the necessary change and give the company time to integrate the change into everyday life. As soon as everything is going well again, the next changes can be tackled. To coordinate all this, the company needs a change manager.

8 – Ensuring the company’s ability to innovate

Phenomenon in fast-growing companies:

Innovation is created on the basis of an innovative corporate culture. This culture is usually present in small companies: There is a spirit of optimism, various brilliant minds are keen to realize their potential within the company and master a challenge together. There is a lot of communication. However, as the company grows and slowly enters a more bureaucratic phase of growth, it often happens that the new structures prevent innovation. Young, dynamic people often leave the company because it is no longer the innovative company it was in the beginning.

Successful change management:

To ensure that the company remains agile, innovation must be stimulated within the company in a targeted manner. We have described how this works in a separate, detailed blog post: 10 simple tips on how to promote innovation in your company.

Are you interested in the topic of growth crises? Take a look at our website: www.berlinerteam.de
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