Last month we took a new approach to the Sweat Equity (SE) phase of a company. In brief, we noted that while the SE phase usually describes a company in its beginning days, it now includes companies that may be going through a turnaround.
Once the wheels are under your company, it enters the Organization phase. Now organization is a vague word, so we will define it a bit.
During the SE phase it is all about survival and some growth. There is simply no time to iron out many of the wrinkles. You can take care of that later. But here’s the rub: The very things you do in the SE phase can sink the company as it moves to the organization level.
Here’s why. During the SE phase, the company is usually small, or at least composed of people who know each other. There are few company policies, no real job descriptions, no evaluation system, no disciplinary protocol, and communication is often verbal because there is much to do and well, the people understand one another anyway.
That cannot continue once you stabilize. With growth comes two things. First, you will likely be hiring outside your “friends and family” circle. In short, you will have people who have no personal stake in the success of your company. They are there because they want to make a living and often not much else.
Second, things become much more complex as volume and activity grow. There are more “jobs,” more specs, different customers, and on and on.
The reason so many companies never get to the Planned Growth phase is not due to bad fortune or a rough economy. It is because they never put together a solid organizational framework. Hence, they are forever scrambling to fix the errors, plug the leaks, and extinguish the fires.
Here are a few things that you need to do to make it through the Organization phase with black ink on the bottom line.
Mission and Vision
What do you want to be now and in the future? That is the sum total of what these terms mean. You need not over-define this, but the clearer you are about what you are (product, service, market, goals) and where you want to go, the more likely you will succeed, because that provides a Constitution for your company.
Of course you can change this, but have something to change, and be sure everyone in your company knows the direction now.
Hire Very Carefully
Never hire a “body” for the XYZ department. Hire people. That means you need to interview applicants (often with more than one interviewer), check references (and yes, you can still do that legally), and test people for key positions. Good testing shows again and again that the best hires are often the ones you don’t make. A couple of extra hours and bucks on the front end can save you five figures worth of grief on the wrong person.
I have written a lot on evaluation systems because assessment is so critical. This does not have to difficult or time-consuming, but it needs to be done as it gives you control that you badly need to have. It pushes employees from mediocrity to competence and on to excellence, and it can mean you will be paying for performance only.
Disciplinary systems are like insurance. You only need them when you have an accident (or incident). Without a logical disciplinary system you can become a hostage of a bad employee. With a solid system, you can remove him or her with little concern over lawsuits or hearings.
Don’t undersell these in your own mind. If you can do some or all of them yourself, by all means do so. If you need help, I or another reputable consultant can assist, and it should not cost much money. But do it.
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