Create a NatWest Business Hub account to subscribe to your favourite topics and to hear about our business events.
For businesses aiming to scale up, assessing and revising your company structure is key.
Last updated: 12 May 2021 6 min read
As a small company grows, the impact on the structure of the business can be significant. As more employees join and new departments are created, you may need a new managerial structure with additional responsibilities, and even an executive team. However, any changes to organisational processes and structures need to be aligned both with the growth strategy and with the current business environment.
Central to this is the preparedness of the leadership, the strategy – and the clarity with which it is communicated – which relates back to changing customer needs and consumer behaviours.
“A leader has to be confident and quick to adapt,” says business coach Elena Meskhi. “They are the driving force of the whole project, and should make the necessary adjustments to structures and processes if the metrics show the company is getting sidetracked from their strategy.”
Well-defined organisational structures establish the roles and processes that enable businesses to get things done. During a growth phase, when a company might be launching new products or expanding into new markets, will these structures be flexible enough to support the new initiatives?
A hierarchical management model can be good or a bad thing, depending on the business. In large organisations with thousands of employees, hierarchy can have its limitations. Some have scrapped the concept in favour of a flatter structure. Smaller, growing businesses, however, can benefit a great deal from the proper hierarchy, as start-up consultant and adviser Laurent Gibb explains.
“It may seem that managing and running a business with fewer people is easy, but the reality can be quite different,” he says. “Smaller teams, a friendly work environment and flexible working hours, within an unclear or confusing hierarchy, can be a recipe for disaster. No matter how relaxed and flexible your business environment, in a growing business your employees need to know who is the leader, the immediate boss, the manager, the team lead, and, most importantly, they need to know their place within the hierarchy.”
Businesses should be prepared to adapt role descriptions for staff to align with these growth targets, and the importance of alignment between growth objectives and job descriptions cannot be underestimated, says management consultant Nimisha Brahmbhatt.
“Misalignment between the two can cause employees to feel uncertainty around their role and the actions needed to hit the targets set,” she says. “It can also give way to suffering imposter syndrome, based on not feeling sufficiently equipped to achieve objectives, which over time can erode confidence and reduce employee efficiency.”
With the right management structure and leadership expertise in place, one issue for growth businesses is whether they have the skills required to scale. Conducting a competency audit of all staff will provide a clear picture of the capability of the current team to meet growth targets.
“Many small businesses start out hiring for character over skill set, which works well to ensure a team works well together,” says Brahmbhatt. “As a business looks to scale, it’s equally important to ensure staff not only contribute to a cohesive company culture but can also deliver on the actions needed to not just sustain but grow the company.”
Growing companies need to invest in the necessary training to upskill their staff to perform in the roles they are now being asked to do. “Many founders make the mistake of assuming that staff will be able to do the new work required to meet the adjusted objectives,” says Brahmbhatt. “Often external consultants can offer an objective overview of what’s required at an organisational level.”
“In a growing business your employees need to know who is the leader, the manager, the team lead, and, most importantly, they need to know their place within the hierarchy” Laurent Gibb, start-up consultant and adviser
The advice from Damon Bonser, CEO of the British Design Fund, which supports early-stage product businesses, is to bring in a chairperson with experience of building businesses through painful growth periods. “They can bring on the right people as your budget allows for it – but simply having someone who you can sound out about your concerns, who is not there day-to-day, is a good starting point.”
The current environment demands a digital approach. Consumer expectations that businesses should have e-commerce capabilities, making it easier to access products and services from home, have exploded.
Jessica Jackson, investment director at GC Angels, says: “Growth mentality suggests that the best way to scale up is to hire more people. While having the right talent is important, finding digital solutions that enable you to do the work of multiple people remotely may be the best measure. Business plans that are top-heavy in their salary lines may struggle to flex in response to the shifting landscape of the market.”
Scaling up a business comes with inevitable pain points. Cash-flow problems, for instance, have always kept leaders awake at night. During the coronavirus crisis, businesses across all sectors have struggled to cope with the enforced shutdown and the impact on their customers, with many needing to access the various government loan schemes set up to support businesses through the pandemic.
It should come as no surprise that the past year has not been the best time to raise new funds, though some sectors have seen a boom. “Savvy investors may be receptive to the right opportunity,” says Jackson. “If funds are tight, it is always easier to go to existing investors and request more funds than it is to start afresh. Make use of existing relationships and demonstrate the opportunity that your business has if it can survive the pandemic.”
Brahmbhatt says that the biggest mistake the leader of a growing business can make is failing to see a need for operational and structural changes in the belief that they can continue to do it all, remaining stuck in the mindset of building and growing the business in a lean manner.
“This will not work when you are growing or scaling at pace,” she says. “Bringing in a growth expert, someone experienced at helping businesses grow, to review your plan and advise on implementation and metrics will speed up progress and help mitigate any obstacles along the way.”
Leadership and Management