Growing Pains – HR Challenges in High Growth Companies

Posted on by Leave a Comment

Whether you call it HRM, HCM or simply the people side of work, Human Resources is a challenge in the best of times. Overlay its inherent complexity with a year-over-year growth rate of 30-50% or more and suddenly you’re juggling madly—with knives!

Balboa Park Botanical Building, by Herb Neufeld, Wikimedia Commmons

Whether rapid growth is happening in a small start-up that suddenly gains traction, or in a more established company that’s growing due to acquisition and globalization, there are some common challenges each will face as a result of unbridled success.

HR Challenges in Rapid-Growth Firms

Researchers Donald C. Hambrick and Lynn M. Crozier of Columbia University identified the following four fundamental challenges that confront rapid-growth firms[1].

  1. Instant Size: These firms double and triple in size very quickly. This in turn creates problems of disaffection, inadequate skills, and inadequate systems.
  2. A Sense of Infallibility: By virtue of their success to date, rapid-growth firms often view their strategies and behaviors as infallible. The unfortunate irony is that they become convinced of their wisdom while the environment is turbulent and large competitors are entering.
  3. Internal Turmoil: As a social organism, a firm growing at 50% per year is under great strain. There is a stream of new faces, people who do not know each other and who do not know the company. Decision-making suffers, turf battles abound, and people burn out.
  4. Extraordinary Resource Needs: Rapid-growth firms are typically cash starved. Instead of abundance, they often face a bare-bones existence.

When growth occurs as a result of globalization, things get even more complicated. According to this Ernst and Young survey, 42% of respondents identified talent management as the second most challenging function to manage globally, with four specific areas of difficulty appearing consistently. If the rapid growth in your firm is the result of globalization, you are likely facing these four additional challenges:

  • Cultural differences
  • Conflicting internal perceptions of talent management
  • Difficulties in balancing global and local talent
  • Lack of a reliable leadership pipeline

Successfully Navigating Rapid Growth

With respect to the first set of challenges above, some of the strategies and characteristics Hambrick and Crozier observed in companies who successfully navigated the turbulence of rapid growth include:

  • The chief executive is able to envision and anticipate the firm as a larger entity.
  • The team needed for tomorrow is hired and developed today.
  • The original core vision of the firm is constantly and zealously reinforced.
  • New “big-company” processes are introduced gradually as supplements to, rather than replacements for, existing approaches.
  • Hierarchy is minimized.
  • Employees hold a financial stake in the firm.

When it comes to the challenges of growth due to globalization, Jeff Charriere, Ernst & Young's Canadian managing partner for accounts and markets, suggests:

“…the most effective mobile management teams will demonstrate sensitivity to local markets while being adept at harnessing diverse perspectives, producing better results and making their global mobility strategy more sustainable."[2]

While companies and managers with these characteristics may emerge intact from a defined period of rapid growth, those who identify sustained high growth as a strategic priority will need to embody some very specific strengths to succeed. One study that analyzed a sample of 50 rapid-growth and 50 slow-growth firms found that the four most important variables for not only achieving, but also maintaining, high growth were[3]:

  1. Founder characteristics: better educated, a more compelling entrepreneurial story or stronger entrepreneurial motivation, a higher incidence of prior industry experience.
  2. Firm attributes: a stronger commitment to growth, more involved in inter-organizational relationships, utilize a growth-oriented mission statement to a greater extent.
  3. Business practices: add more unique value and have a deeper level of customer knowledge.
  4. HRM practices: emphasize training, employee development, financial incentives, and stock options.

HR Best Practices in Times of Rapid Growth

One thing stands out quite clearly across all of these results: rapid growth can wreak havoc on your people and your company. It's critical that additional attention and resources be allocated to Human Resources in high-growth environments. The following list of HR best practices for small, rapid-growth companies[4] provides some practical, actionable ideas, particularly when combined with the observed characteristics mentioned earlier (e.g. start today to hire and develop the team needed for tomorrow.)

Recruiting New Talent

  • Recruit experienced management from other companies to help lead the change.
  • Clearly communicate the mission and vision of the company to inspire them.
  • Connect with local universities to bring in new talent.

Training and Staff Development

  • Use current experts to help train new employees (mentorship).
  • Provide learning and professional development opportunities.
  • Develop leadership from within.
  • Ensure clear communication between top management and all employees.

Incentives and Performance

  • Use meritocratic pay and stock options.
  • Provide employees the opportunity to utilize flexible work schedules.
  • Provide opportunities for cross-department interaction and teamwork.
  • Foster better knowledge sharing to keep employees connected.
  • Encourage creativity through company led programs that allow time for employees to work on side projects that ultimately could be used for future innovations.

The issues facing HR during times of rapid growth are not different; they are just magnified and accelerated to the extent that everyone becomes hyper-extended and the necessary processes can’t be developed quickly enough to meet the changing reality or create a shared understanding of the organization and its culture. In such an environment, it’s more important than ever to select for and cultivate (in yourself as well!) mental agility, openness to change, strong communications, critical thinking and problem solving skills, initiative, flexibility and, above all, the desire to grow.


Subscribe to our blog for regular HR insight and resources to support a changing workplace.

Photo Credit: by Herb Neufeld. Licensed under the Creative Commons Attribution 2.0 Generic license, Wikimedia Commons.
[1] Hambrick, D. C. and Crozier, Lynn M. (1985) Stumblers and stars in the management of rapid growth. Journal of Business Venturing.

[3] Barringer, B.R., Jones, F.F and Neubaum, D.O (2004). A quantitative content analysis of the characteristics of rapid-growth firms and their founders, Department of Management, College of Business Administration, University of Central Florida, Orlando, FL 32816, U.S.

[4] Pillay, A., Satanekar, N. and Simons P. (2010). Human resource practices in small rapid-growth companies. Information School, University of Washington

Learning From Failure

Posted on by Leave a Comment

Not a Mistake The problem with the word mistake is that it comes packaged with a weight of condemnation and is usually accompanied by shame, disappointment and sometimes even the fear that someone may stop liking us. But we need our mistakes. Without them we can’t learn or grow or change. If, instead, we think about mistakes as feedback in a loop of continuous experimentation and improvement, we can appreciate them as positive input into our development rather than weapons of self-destruction.  Flickr/StormKatt Learning from Failure There is a lot of talk lately about learning from …

Making Change Stick

Posted on by Leave a Comment

One of the greatest challenges inherent in any change initiative is making sure that new behaviors stick. It is easy fall back into old familiar habits once management focus shifts away from the change initiative and on to other things. What is not as clear is why, after weeks, or even months, of doing things differently, these newly established patterns can be knocked off track allowing old habits resurface. It Takes Time to Replace Old Behaviors They say it takes about 21 consecutive days to form a new habit. But it takes only a moment to break a new habit and …

Providing Context in a Changing Workplace

Posted on by Leave a Comment

Recently, I watched a man using the self-check-out line at the grocery store for the first time. After a few attempts, he managed to scan his first item. With the can of soup in his hand, he immediately tried to scan another item. The machine wouldn’t work and told him to get help from an attendant. His frustration mounted. The attendant arrived and told him to put the first item in the bag before scanning the second item. So he put the soup in a bag and put the bag in his cart, then moved back to scan …

Battling the End of Summer Blues at Work

Posted on by Leave a Comment

Have you started to detect a little “end of summer blues” creeping into your workplace? If you think you’re just projecting your own wistful nostalgia over losing the more relaxed environment that summer often brings – think again. As the summer draws to a close, two themes converge in most workplaces. The first is the sadness felt by those who pack a lot of summer fun into those few months that used to epitomize freedom from the restrictions of the school year. For these employees, as the days perceptibly shorten, energy and motivation often dips just …

The HR Administrator’s Guide to Managing Vacations and Other Employee Absences

Posted on by Leave a Comment

With the Fourth of July and other summer long weekends right around the corner, businesses the world over are expecting an increasing number of employee absences, as employees stretch 2- or 3-day weekends into 4- or 5-day breaks. But since not every absence comes about in the same way, your response to each one shouldn’t be identical either. After all, one employee’s long-planned and long-prepared beach weekend has much less of an impact on your business’ operations than another employee’s surprise no-show on the day after a holiday. Here are the four types …

Should HR Insist on BYOD?

Posted on by Leave a Comment

Last week I got a call from a telemarketer. I field dozens of calls from salespeople and potential business partners every week, so this in itself wasn’t an exciting occurrence. What was interesting, however, was the complete misalignment between the centralized IT purchasing services the gentleman on the phone wanted me to invest in, and the bring-your-own-device (BYOD) policies I promote to my team. This got me thinking. Not about BYOD in and of itself — I’m a fan, and its benefits have been covered extensively, including most recently here on TLNT by Michelle Smith — …

How Much Should HR Policies and Procedures Accomodate Millennials?

Posted on by Leave a Comment

Generation Y (also known as Millennials) can seem like a bit of an enigma. They were still tweens when American Idol first aired, they cringed (and secretly cheered) when Justin Bieber found fame using YouTube, and they grew up alongside Mark Zuckerberg as he went from baby-faced student to billionaire. Gen Y grew up with messages from society telling them to work hard, because “you can change the future.” The dream for this latest batch of fresh faces to enter the talent pool is distinctly different from that of previous generations. Accommodating Millennials can be both a blessing …

Should We Organize a Company Retreat?

Posted on by Leave a Comment

Are company retreats a good idea? Ask yourself: Does it really make sense to pack up your team and their gear, ship them off to a hotel somewhere nice, and spend a few days developing a long-term vision, cranking out a new product, or getting to know each other better without outside distractions? Or, would it make more sense to save your money, spend a little more on the perks you know your team enjoys, and focus on building a stable, scalable, in-it-for-the-long-haul company culture? Let’s take a look at both sides of this issue. Company retreats improve …

Next Page

Experience TribeHR for Yourself
Contact us to schedule a demo of TribeHR.

Book A Demo
The Latest from Workplace Tribes
Communicating With Purpose April 18, 2014
Why HR Should Toss the Annual Compensation Review April 16, 2014
Working Offsite Boosts Creativity and Focus April 11, 2014
Training: It Takes all Types April 09, 2014
Spring Forward at Work April 07, 2014
Why Employees See Things Differently April 04, 2014
Compensation Equity April 02, 2014
Compensation Design: Beyond Foundational Needs March 31, 2014
5 Ways to Hack Your Job Search March 28, 2014
HCM Research Sampler March 26, 2014