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4 downsides of scaling your business too quickly

David Bator
by David Bator on September 21, 2017

IMG_2260-874201-edited.jpgA ton of coverage is granted to organizations experiencing explosive growth and raising great sums of money. Much less is devoted to what happens when a downsize or pivot in the business is required.

In many respects, the latter is the more important topic since 74% of tech companies fail because of rapid growth.

I once had an advisor ask how long a year was in technology? Before I could reply she answered her own question "3 months!" And while it's true that the pace is often nuts, perhaps it makes sense to pump the brakes a little from time to time.

I was delighted to welcome Megan Woerlein, Head of HR & Operations from Joist to speak with the #TorontoHR community as part of our monthly speakers series. Megan shared a perspective on the decisions that sometimes need to be made to make a business smaller so that it may be poised for future growth.

Among the downsides of scaling too fast:

  1. Hiring for the wrong roles
  2. Decision making based on growth projections or unproven business models
  3. A mismanaged or broken culture
  4. Layoffs

HR has an enormous role to play in being the compass for the organization and mitigating pitfalls like these. HR is transitioning from a largely tactical, administrative function to a more strategic role focused on creating value for the business by linking the expectations of executives with the day to day requirements of department managers.

Megan demonstrated how a combination of business acumen and a solution-centric outlook are critical to driving impact on the big things that keep your CEO up at night - Customers, Productivity, Succession and Profit. In a nutshell, whether you're growing, stagnating or shrinking, HR's role remains the same:

  1. Stay on top of the financials
  2. Assess every company decision through a people focused lens
  3. What should your HR org look like at 50, 80, 200?
  4. Can your managers manage?

So the question is, if you've been part of downsize, what would you add to this list? Think about it.

David Bator
Written by David Bator

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