Your company is growing fast and, as result, you are occasionally adding to your team. You are being careful not to expand payroll costs too quickly and you are keeping a keen eye on the cash balance. We all know that growing companies have a habit of eating money, as people and space requirements expand, and so do accounts receivable and inventories.
But your team is already overworked and you need more hands on deck. Another hire can’t be avoided any longer, and this new management position, once filled, should take some stress off at least one part of the organization and off you as well. You set out dutifully to draft a job description and flowing from that, the type of skills and experience that the successful applicant for the position will require. A title is chosen that seems to fit, and a compensation range that should attract the right type of candidate. Recruiting begins and within a few weeks you have a short list of the best candidates currently in the marketplace who match the criteria. Interviewing follows and soon you have narrowed in on a single candidate. An offer is made and accepted (after some negotiation), reference checks are completed and the successful candidate enthusiastically starts in the new role shortly thereafter.
After a period of orientation and familiarization, the new manager settles into his responsibilities and a sense of relief descends on this one corner of the organization as the load is shared across another pair of hands and the new manager’s direct reports are now going to him for answers instead of you.
[Fast Forward 18 Months]
The company continues to grow apace – more customers, more staff, another office location, more transactions, and more complexity. The new manager’s area has grown as well, as have his responsibilities, not only in terms of people but also in terms of the pace of business.
The signs of stress are starting to show in his manner, and in his inability to keep on top of things. Responses to inquiries are slow in coming. His staff members are becoming frustrated and inefficient because he is unable to answer all of their questions in a timely manner and so they are hampered from completing their work. Some of them are starting to come to you again for direction. That is causing other parts of the organization to seize up. Call volume is beginning to mushroom as customers don’t just call once and get an answer, now they call repeatedly trying to get a single issue resolved. They are holding payment until their issue is addressed, so accounts receivable are beginning to rise and cash available is negatively affected.
What happened here anyway?
It could be that the problem stems from the creation of a job description which was ideally suited for the situation that existed at that time but not for the job as it would be a couple of years in the future. The candidate who was hired may have been ideal for the existing position, however did not have sufficient potential to grow into the more challenging role that this position would become.
How could this have been avoided?
One method that we at Kathbern recommend is to always develop informal future organization charts for your organization, or at least for the part that you are responsible for. These will be based on the growth plans for the company, perhaps based on a strategic plan that has been adopted. Ideally, there will be one organization chart relating to the anticipated situation three years from now, two years from now, one year from now and six months from now. These don’t need to be fancy at all and could easily by hand-drawn unless you like the computer generated variety and have the necessary skills. They will cause you to focus on the fact that you are going to have to get ready in advance to grow your organization and, when you try to slot in the names of current staff into your six month and one year organization charts, it will become apparent to you whether it is reasonable to assume that each individual has the potential to grow into a more responsible role or whether new talent will have to be acquired from outside to fill in the gaps.
This exercise will also help you to imagine how a particular position is likely to evolve and will enable you to anticipate the skills and experience that may be required not far in the future and therefore should be included as part of the search criteria to fill a given position, even though they may not be strictly required for that position as it stands today.
What if your future organization charts turn out to be incorrect?
They will almost always be wrong in one manner or other, but you will be closer to making a better informed decision for having gone through the exercise than having just dealt with the status quo.
A single senior level hiring event which fails will, on average, cost a year of progress, recruitment and severance costs and have a negative impact on the organization’s goodwill as perceived by other employees, customers, shareholders and outside agencies. In financial terms, a fair estimate of the cost of replacing mis-hires is approximately two and a half times the person’s annual salary.