It’s not unusual for companies to grow faster than their employees. Many of the CEOs and executive team members who’ve recently attended the Australian Centre for Business Growth’s programs identified this as a major problem in their organisations. The people they have are not the people they need for growth, and many CEOs aren’t sure what to do about this situation.
We asked Terry Gold, former ACBG Growth Entrepreneur in Residence, and now Managing Director, Techstars Adelaide what he did and how he handled the growth needs of his organisation.
TG: Imagine, when you start out, that you hire an entry level accountant. If this is your first company, you may not know that if you achieve your growth goals, you’re going to need a CFO in three years. The obvious solution is to hire someone now with the knowledge and skills you’ll be needing in three years. But that person is probably more expensive than you can afford. And if you do that, you’ll be paying for more than you need at this stage of growth, you may not be able to keep them challenged, and there’s a risk that they might leave before the third year.
Another alternative is to hire someone in an entry level position, and help them grow and develop. An entry level accountant is not going to have the knowledge and skills to be a CFO, but over three years you can support him or her to gain some of the knowledge and skills required. If you don’t invest in developing your people, there’s very little chance they will be able to grow, develop and be ready to take on new roles and responsibilities. Instead they will be left in the dust as your growth company tries to take-off.
There is a third alternative. If you know that in three years you’re going to have to hire an experienced CFO, you need to have that conversation with your entry level accountant when recruiting them. Tell the recruit they have a very important role to play at this level of growth, but that as the company grows it will need someone with more knowledge and experience than they will have. The good news is that the person you expect to bring in as their manager will be able to mentor and coach them to higher levels of performance and proficiency. If you set the right expectation from the beginning, you’ll reduce the chances of a negative outcome. In other words, reframe the need to bring in someone at a higher level in terms of skills growth, rather than because of a skills deficit.
A constructive conversation early on helps the person in the accounting role see that bringing in a CFO will enable them to develop their skills and potentially help them gain the knowledge and experiences required to move into a CFO role sometime in the future.
Terry suggests the CEO take a positive approach: ‘You are really going to start learning once we bring in a CFO who can teach you, because neither I or anybody in this company knows enough about accounting to teach you how to be a CFO.’ Setting expectations that a CFO (or VP Sales or VP Marketing etc.) will be hired in the future reduces the friction caused by your employees who want to, or expect to, step into that senior role in three years – without sufficient knowledge or experience to succeed in the role.
TG: Be honest with your employees about their level of skills and experience, support them to grow and develop, but bring in people with the right values and appropriate level of competence who can coach and mentor them and enable them to grow in their jobs. If you let them think that in a year or two they’re going to know enough to be the CFO, they will be very disappointed when you bring in someone else over them. And more times than not, you’ll find yourself looking for an accountant and a CFO!
The way to avoid two-track growth is to think ahead about the roles required to execute your three-year growth plan. Analyse your current staff, determine their current level of competence and performance, what knowledge and skills they need to acquire over the next few years, and who should have what kinds of training and development. Make sure you set appropriate expectations with each employee about what the company needs to be successful, what kinds of people, at what levels will need to be recruited, and how these new people will benefit the company, as well as the employees who will be reporting to them. Make it a win for the company, for you, and for the employee.