Growth is a good thing. Right?
After all, if a business doesn’t grow, it is likely to disappear in the end. All businesses start work each day with the goal of growing toward a better, and more profitable, tomorrow.
But, there are tons of challenges that come with growth, and leaders have to be ready to adapt.
The more people you have, the more complex your organisation becomes and the more leadership challenges you face. That is not only true of companies. It’s true of any business unit made up of many people so it applies to departments and functions too.
The good news is that there are predictable phases of leadership in business that any unit experiences as the number of people increases. The leadership-growth journey outlines the leadership challenges associated with each one. It can help you predict what support leaders will need to overcome these challenges.
Leadership in Business: Â 5 Phases of Growth
Phase 1: Creativity (up to 12 employees)
At the start, any new company or business unit grows through creativity. The founding leaders – whether it is a single person or a group of people – have a vision and they start to bring that to life. The focus is on the creation of new products and services. During this phase, founding leaders identify the needs of key stakeholders and react to their demands. The style of leadership in business is entrepreneurial and visionary.
Leadership challenges
What are the strengths of the founding leaders? In what roles can they add the most value? What are they not so skilled at? Which activities would be best delegated to others?
The biggest challenge for leaders at the start is to hire their first employees to take on roles they don’t enjoy and aren’t skilled at. This will free them up to focus on where they can add the most value.
Implications for leadership development
To spend too much time working on “delivery” rather than “development” is dangerous and can paralyse growth. But it can be hard for founding leaders to let go of managing the operation and to operate more strategically.
RecommendationÂ
Provide founding leaders with support from an executive coach or mentor.
Phase 2: Control (approx.12 – 25 employees)
As the unit grows past 12 employees, informal communication is less effective, and new people are less dedicated to the product or service. There’s a need for more formal controls and people management. One person, or even a team of people, cannot make all the decisions. So, the top leaders delegate those decisions to mid-level managers. The style of leadership can be quite directive.
Leadership challenges
In Phase 2, the challenge of “letting go” and delegating to others extends beyond the leader(s) to the whole top team. The top team need to work together to lead the unit while leaving managers to deal with specialist areas. The top team and managers need to have the right leadership skills and ambitions. It is not enough to have good technical skills.
Implications for leadership development
The increasing complexities and the transition to leadership roles may prove challenging to members of the top team. On an individual basis, they may need help to transition to a more strategic role. As a whole, they may need help to operate as a cohesive team.
Recommendation
Provide support from an executive coach or mentor to the top team. Support could include individual leadership coaching or leadership team coaching.
Phase 3 – Communication (approx. 25 – 50 employees)
By Phase 3, your company or business unit is starting to feel quite sizeable. It’s still small enough for everyone to know each other and go out together for social events. But it’s starting to get unwieldy. It feels like problem-solving and decision-making is too reliant on the top team. The unit starts to feel less like a family and more fragmented. The style of leadership needed is a coaching one, empowering others to take ownership and responsibility for their areas of work.
Leadership challenges
More people, more complications. During this phase, mid-level managers often find themselves battling with top-level leaders not letting. At the same time, they may be unsure how to take ownership and responsibility for their area. They may need help to feel confident about their team, about their work, about their own identity as a team. They may need support to be accountable as their team evolves and matures.
Implications for leadership development
Top-level leaders continue to need support – as individuals and as a team – as their roles adapt and evolve. There is now also a need to support the mid-level managers. They need to develop the skills and confidence to get the best out of their people. They also need to work collaboratively with their peers and meet the needs of the top team.
Recommendations:Â
- Continue to provide coaching and mentoring support to top-level leaders – as individuals and as a team.
- Provide support in the form of a Manager Development Programme for mid-level managers.
Phase 4 – Collaboration (approx. 50-100 employees)
As the unit grows past 50 employees, there is an increase in structure and reporting. There is a danger that will create tension, conflict and silo thinking. There needs to be a focus on collaboration so the unit is working together from one function to the next. Leaders show they value people’s input and work to get commitment through participation, not dictation.
Leadership challenges
In this phase of growth, there are several leadership challenges to address. It’s more difficult for the leaders, to have an overview of every single person in the organisation. They need to rely on managers aligning employee performance to the unit’s goals. It becomes harder for employees to feel ‘valued’ so employee engagement can be an issue. There needs to be a focus on team performance to improve coordination between functions.
Implications for leadership development
There is a continuing need to support the top team and mid-level managers. During this phase, there may also be a need to help frontline employees work better in teams and to take ownership of developing their career.
Recommendations:Â
- Continue to provide coaching and mentoring support to top-level leaders – as individuals and as a team.
- Continue to provide support in the form of a Manager Development Programme for mid-level managers.
- Provide support for teams to build trust, help teamwork and collaboration.
- Training for all employees to understand the mission, vision and values.
Phase Five – Change (100-500 employees)
Once any business unit gets to about 100 employees further growth tends to involve significant change or restructure. The style of leadership needed is strategic and visionary.
Leadership challenges
At this phase, a huge number of collaborative challenges can present themselves. Challenges include getting staff buy-in to the new vision and managing the change.
Implications for leadership development
There continues to be a need for the support provided in the other Phases. But now the focus will be on developing the skills needed to develop vision and strategy, engage employees and manage change.
Recommendation
Develop a powerful strategic plan and an associated leadership development plan.
So is it really all about the number of employees? Â Often, leaders say to me, “But I work in a company that has thousands of employees and we have the kind of leadership challenges associated with Phase 3.” I believe that’s because the company is made up of lots of different business units and each unit will be in a different phase of growth with different leadership challenges.
Growth has always been and will continue to be, a great thing. But, it is also difficult. Like all frameworks, we know that real life is not so neat and tidy.  Nonetheless, my clients find the Leadership-Growth Journey a useful way to think about and discuss the challenges ahead. Then, they can expect them and navigate them safely.
What do you think?  Is this framework helpful for understanding the leadership challenges in your organisation?  Where are you on the journey? What are the implications for leadership development?
 Take Action
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