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7 Stages of Growth: Stage 4

7 Stages of Growth: Stage 4

Professional: 35 – 57 Employees

What does a Stage 4 company look like?

Stage 4 is all about internal focus and internal processes, whereas Stage 3 was all about delegation and the CEO letting go. The necessity of that lesson will become painfully clear if the leader heads into Stage 4 still micromanaging — he/she has to let go.

Why is one of the challenges in Stage 4 employee turnover? If the company hasn’t begun advancing strong, experienced managers, employees will leave. People stay at a company because they respect their manager. If a leader can begin to provide employees with managers who know how to manage the work of the company, as well as manage the people, employees will feel less frustrated, more productive and receive solid input on their performance on a regular basis.

Stage 4 is also about helping all managers feel confident about their team, their work and their identity as individual teams. The leader’s job is to help the managers gain that confidence. Don’t worry about integrating these managers across the company just yet. Help them find their own way with their own team and work with them to be accountable as their team evolves and matures. The organization will avoid a lot of blaming others and department disputes if the CEO lets each manager build a stronghold and develop his/her own sense of commitment and team synergy.

This isn’t just about training qualified people to move up in the organization. Yes, that can be done; however, experience proves that it’s generally just an easy way for CEOs to avoid doing the harder work — finding experienced, already trained people hardwired to help them grow their business. Successful CEOs surround themselves with knowledgeable, experienced people — they want to be challenged on decisions, knowing that the more diversity of ideas and even attitudes they bring on board, the more depth they create in their organization.

Required Leadership Skill Base:

  • The awareness to recognize a need for managerial sophistication.
  • The ability to release control to competent managers.
  • The willingness to commit to new management systems and to manage growth.
  • The ability to see personal management deficiencies and train for them while still delegating and macro-managing.

As the company moved from Stage 3 to Stage 4, it went through another Flood Zone: an increase in the level of activity. The leader is teetering on shifting the major control of the company over to experienced managers, he/she should remember to focus on key processes, which are key systems that will provide foundational building blocks to manage that shift.  In Stage 4, the company is much more complex. With upwards of 57 employees, there is no way the company can rely on the CEO to micromanage.  The level of activity has become very difficult for one person to manage.  CEOs will be tempted to throw more employees at the activity.  Resist that temptation by focusing on making the systems more effective and efficient.

The top five challenges for Stage 4:

  1. Weak Project Management
  2. Difficulty Diagnosing Problems
  3. Employee Turnover
  4. Not Getting Systems in Place
  5. Organization Uninformed About Company Growth

As leaders navigate through Stage 4, their primary goal is to become operational senior executives by transforming the business into professionally run organizations built on professional teams of managers. How do leaders do this?

  • Hire or promote knowledgeable, experienced and successful professionals to head up the major functional areas (production, sales, marketing, finance/accounting, IT, HR, etc.).
  • Affirm, encourage and support them to find their way, develop confidence about their team and role, and develop strong departments, operational processes and management systems.
  • Allow them to help by encouraging, welcoming, respecting, considering and using their input and collective intelligence.

During Stage 4, the leadership modality should be Facilitative. The Specialist role is diminishing (20% of the time) but the CEO must continue to understand how well the product or service is meeting the needs of the ever-changing market and constantly evaluate if the products and services are solving customer problems. Now is not the time to be a Visionary (10% of the time) as the leader needs to focus on getting his/her team ready for Stage 6 and Stage 7 (when the leader gets to be strategic/visionary).

During Stage 4, leaders should be hiring professionals who have extensive experience and success in a functional area.  Stage 4 was a big adjustment, learning how to effectively delegate.  This delegation continues as leaders allow experienced managers to step up and take on more responsibility and decision-making authority.

It’s critical that CEOs continue to provide direction without overly asserting their authority or relying on a ‘what worked before’ attitude. When managers want the CEO’s direction or opinion, his/her response should be “how do you think we should handle that?” Instead of having all the answers, encourage others to think on their own.

The Builder/Protector Ratio (BPR) is a measurement of “confidence vs. caution.” It is a critical tool to gauge the business’ ability to accept change, respond with confidence to change and successfully navigate the change.

Builders:

  1. Thrive on risk
  2. Are always looking for new opportunities
  3. Don’t back down from the everyday challenges

Protectors:

  1. Thrive on caution
  2. prefer to apply the brakes (and should be encouraged to do so when appropriate)

In Stage 4, because experienced managers have been hired and the CEO is delegating more and more decision-making to them, the protector mindset is slightly less than the builder mindset. In Stage 3, as the company shifted from CEO-centric to enterprise-centric, the ideal BPR was 1:1. For Stage 4, the Builder/Protector Ratio is 3:2 — three builders to two protectors.

As the leader works hard to allow new managers to step up and manage their operations, it’s important to let go and let these experienced employees utilize their knowledge.  But, even experienced managers must learn how the company works, how problems are dealt with, how issues are resolved and how decisions are made. Thus, the leader needs to maintain a certain amount of caution when monitoring progress. This will require that management systems are in place to catch mistakes before they cause major problems. The goal for managers is to build their own department to a level where their department is operating effectively as its own entity, with a strong team, confident in what they provide the company and how they deliver upon their promises. The departments are focused on understanding, developing and delivering a set of goals and objectives for their respective department. Of course, these goals and objectives need to line up behind the company’s goals but the focus right now is building strong, stand-alone departments with capable management.

Processes are very critical when a company has outgrown the CEO’s ability to keep his/her fingers in all aspects of the company. The company has outgrown the ability of any one person to manage it. The leader is no longer able to (a) catch all problems before they occur, and (b) make all the decisions. Thus, processes must become a leader’s best friend as the company grows. Consequently, during Stage 4, it’s critical to review all processes to determine if they still provide value and the control needed to prevent or catch errors quickly.

Foundation Building Blocks for Stage 4:

Management Systems

Utilize a performance management system that addresses objectives, goals, measurement, feedback, evaluation, and rewards. There should also be a project management system and templates.

Financial System

The financial system should include a profit plan, financial modeling, cash flow forecast and dashboard.

Work Community

Use a hiring system that identifies the skills that are needed and then helps find, recruit, select and hire great employees. Have a plan for each employee describing expectations, performance measurements and actions that will be taken to help him/her succeed.

Marketing/Sales

Develop a well-defined sales and marketing system that all salespeople use.  It’s time for a major upgrade of the sales system and probably the CRM system.  There should be a customer intelligence system to stay abreast of customers and marketplace.

The Non-Negotiable Leadership Rules for a Stage 4 Company:

  • Hire or effectively train professional managers for each department who have demonstrated the ability to be responsible, accountable and proactive.
  • Create strong performance driven departments that compete with each other.
  • Allocate 5 -10% of gross revenue to identification, acquisition and implementation of new systems.
  • Identify and set in place, with management team, the company’s master processes.
  • Establish a strict company project management template

 

What does a Stage 5 company look like?

Recent Press

EEOC and OFCCP-compliant assessment company distinguishes Mindy Bortness with Stages of Growth certification. Read more...

Associations

BBB
TTI
Corp
Kapa
NAW

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