I saw it again this week……

Working with the C-Suite of a firm that has 250 employees, I see that they are struggling to scale their business because they forgot to attend to “the 3rd factor of scalability” to ensure success. I understand it. I really do. The “3rd factor” is a mystery to many companies so this particular company is no different than many others focused on gaining ever greater revenue and reach.

Their leaders are driven and committed. They have held many strategy sessions to create a compelling  mission and vision statement for the company. They’ve gotten clear on who their true customers are. They have crafted a lengthy strategic plan and developed strategic goals and objectives for their management team and staff. A significant portion of their budget has been allocated to strengthening their technology infrastructure and interfaces with their clients.

Yet they are struggling……

Many mistakes of scaling up are common across industries and geographies. Whether growing a business through organic growth or acquisition, the “3rd factor” is almost always forgotten. I should provide some context first. The 1st factor is determining the company’s strategic path and position. This includes the strategic plan, market analysis and plan, financial forecast and funding for the business. The 2nd factor focuses on the operational aspects of the business; the development of a solid infrastructure, including systems, technology, organizational structure, processes, and policies. The 3rd factor focuses on creating a company culture and building a leadership team whose skills are aligned with the company’s mission and growth projections. Because leaders often think of “the 3rd factor” as soft, “touchy feely” and not critical to the business, it is often overlooked….at least until problems start to arise and the company struggles both internally and with external issues of product and/or service delivery.

This heartache can be eliminated by a little planning and forethought. Here are 3 strategies to help you avoid the headache and pitfalls caused by ignoring “the 3rd factor” of business growth:

Start by Assessing Your Leadership Team

Your leaders probably have the skills needed to move your company from start-up mode to where it is today. Now that you are ready to expand your business, assess whether they have the skills needed to manage at a higher level and with a broader scope.  Most often, growing the business means growing the team’s skill level. Getting ahead of the competition by figuring out what the market will look like five years from now is something most companies try to do. Ensuring that leaders have the skills needed to manage at that 5-year mark are often overlooked.  The skills required of your leaders will be different.

If you determine that you have the appropriate leaders in place, it is now a matter of adopting these 3 strategies to ensure they develop skills needed to carry the business into the future:

Strategy #1: Coach Leaders to Learn to Let Go

Leaders, in the start-up or early phases of a business, and even in their career, have learned to individually handle many aspects of the business expertly.  They have deep knowledge of the industry and are flexible and fast. They make solid, quick decisions and do well as individual contributors and in leading a few other workers. They keep tabs on business activity by personally being involved in each aspect of their area of responsibility.

As the business grows and the company brings on more employees, this need to be involved in all areas of the work causes bottle necks as each employee must now run everything by the leader before taking action. Leaders become overwhelmed, over worked and the quality of their decisions diminish as they face competing demands.

I coached a leader several years ago who was being groomed to take over a much more responsible senior corporate finance role. He had worked for the company for 20 years, had deep corporate finance and industry experience, and was well thought of by C-suite leaders. They were concerned about whether he could make the transition to this position and asked that I coach him.

During our coaching sessions, it became clear that this leader was an expert in his field. He stayed involved in every aspect of the business and managed closely all work completed by his employees, who were all highly qualified professionals. He enjoyed being known as the expert and the “go to” person by top leadership and reserved much of the interaction with senior executives for himself rather than his staff.

As a result, several of his most talented employees had left the organization to take positions offering greater challenge and career opportunity elsewhere. Staff members reported, in 360 interviews, that they felt unempowered, micromanaged and that their leader did not trust them to do the job on their own. Furthermore, a few deadlines had been missed recently and work proceeded at a much slower pace, as employees waited for review and feedback of their work in order to proceed with important projects. Employees were not allowed to interface with senior leadership and reported “lack of exposure to senior leaders” as one of their biggest complaints about working for this manager.

This leader had to learn the very difficult skill of letting go; setting clear expectations, delegating more and trusting that a competent staff could achieve the results needed. Ensure that your leaders have training and practice in how to set clear expectations and understand that the work does not need to be done exactly the way you would do it. They just need to achieve the same end result. Coach managers (or provide leadership training) to equip leaders with the skill of knowing how to delegate effectively. Equip leaders with a solid understanding and skill set to develop trust with their employees so that employees trust their leader and the leader trusts staff members to make the right decisions and get the work done on time. Reading Covey’s “The Speed of Trust” is a good place to start.

Strategy #2: Coach Leaders to Manage Other Managers

When your leaders are managing direct reports, they are focused on reviewing the specifics of a project underway, such as the action steps, status of each action and results that are being achieved.  A leader’s time is spent more in coaching individual contributors regarding how to do the work. When you grow your business and your org chart expands, your leaders now need to manage other managers who have their own direct reports.

Their time should be spent in more one-on-one sessions coaching leaders to increase their ability to manage others.  At the same time, they are modeling a management style that their direct reports will likely emulate. This may not be so much because the skills they are using are the best, but because they are showcasing what leader behaviors will be rewarded and reinforced in that department. If you are not careful, you’ll have one or more managers modeling a management style that is not conducive to future organizational success.

Your best path forward is to observe your leaders as they manage their business units. Observe the positive and/or negative impact of their words and behaviors on others. Provide them with feedback to help them understand this impact and coach them to develop and fine tune their leadership skills.

Get to know the staff members who your leaders are managing.  Allow them to get to know you too. This provides multiple advantages. Having direct access to senior leaders provides staff members with career opportunity and the ability to learn from top leaders. This access provides senior leaders with feedback and input about the staff’s overall knowledge of the company, their skill level and company commitment, and the gaps in what they know about the business vs. what they should know to make the best business decisions.

This can be best accomplished by holding quarterly of bi-annual skip level meetings where you (or the leader of several managers) meets with the staff of their direct report while the leader is not present.  Holding lunches, coffees and breakfasts by group/department are other good ways to get to know staff members and gauge the effectiveness of each leader.

If your leaders lack management and leadership skills, make sure they receive training. Even the smartest managers can derail if they do not know the basics of good management. As they become more skilled, they can then coach their own managers more effectively.

Strategy #3: Help Your Leaders Lead Change

Your organization is going to go through the usual growing pains as you add new employees, clients, products, services and expand organizational structure.  Because your business must move fast, and everyone must make quick decisions and execute rapidly and with flexibility, your leaders must become extremely adept at leading change. Not just leading their employees through the many changes ahead, but managing their own ability to change and adapt.

Leaders need to understand the dynamics of change, how to pace changes in their organization to avoid “change fatigue” and how to help employees become early adopters of change. Lastly, leaders need to ensure that whatever changes have been implemented are sustainable over time. This is a very difficult task. Usually during times of rapid growth, employees (and even managers) experience confusion, receive conflicting messages about why the change is occurring, and what they personally need to do. They often push back with subtle passive/aggressive behavior to avoid the change if they perceive they might lose ground with whatever change is in process.  Coach your leaders to involve every layer of employee in the change so they are invested.

Leadership should also build a communication strategy that grabs both the hearts and minds of employees. Leaders often make the mistake of making a sound business case for why the change needs to occur, such as “we need to penetrate this new market” rather than reaching people emotionally which actually creates commitment. Work with your leaders to craft messages with both rational and emotional components.

As you prepare your company for greater scale and scope, remember to add the often missing “3rd Factor” that relates to equipping your leaders with the skills they need to lead your company into the future. Putting these 3 strategies into place will ensure that you scale your business with the least friction and the greatest outcome possible.

Marie Snidow is an Executive Coach and Leadership Development Consultant who helps build strong leaders, teams and organizations through training and coaching.  Albright Snidow offers leadership training and coaching for 3 leadership levels: Emerging Leaders, Mid-Level Leaders, and Senior Leaders.