13 Mar Scaling, selling or looking for investment in your start-up? Ensure you have the right People Strategy in place
Is your People Strategy stopping you from scaling your start-up, selling or gaining investment?
According to CBI Insights, number 3 of the top 20 reasons why start-up companies fail is because they don’t have the right people strategy in place. Whether you are looking to scale, sell or attract investment, here’s how to minimise this risk.
Jeffrey Rayport, Harvard Business School Professor advises that if you want to scale your start-up you should follow the “Six S Framework”. These are Staff, Shared Values, Structure, Speed, Scope and Series (financing).
Whilst ‘staff’ and ‘shared values’ relate directly to your people, all of the Ss are, of course, inter-connected as well as inter-dependant. The right ‘structure’, the ability to deliver ‘speed’ of decision making and to respond quickly to changing market dynamics very much depends on having the right people, processes and technology in place at the right time. This is also true of your company’s ability to expand its products, services, channels and geographies ahead of your competitors.
“What got you here, won’t get you there”
As Marshall Goldsmith says, “what got you here, won’t get you there”. Whilst all companies want to keep their operating costs as low as possible, it’s a balancing act. You might want to show as much profit as you can on your bottom of line to attract investment or to sell your business. However, don’t let short-term-ism blind you to the fact that you need a team of dynamic cross-functional experts who have the skills and behaviours to scale your business, attract investment or, convince would be buyers that your business has the ability to achieve long-term profitable growth.
Not only do you need to think about whether your team have the skills and behaviours to drive growth, if you don’t invest in the right number of employees, you run the risk of running too lean. Without the right resources you may only have the resources to run day-to-day operations with no capacity for the non-urgent but business critical long-term strategic initiatives.
Similarly, your team may also be so over-stretched that balls will inevitably be dropped. Not to mention that employees may become disillusioned and burnt out. Should this happen, even the promise of equity may not be enough to keep them engaged and productive.
It’s all about the sweet-spot – getting the right balance between managing your staffing and operating budgets whilst knowing when, and in what areas, you need to pay money to make money. This is where careful talent and workforce planning comes in.
Here’s how to put together an effective people strategy to maximise your chances of success. This works not just for start-ups but for all sizes of company whatever your industry, level of maturity and growth plan.
Step 1: Organisational Design
Start with the end in mind
Define the people, processes and technology you need to drive current organisational capability and to execute your 1-5-year growth plan.
To do this you will want to work backwards from your ultimate end goal and over-riding vision to ensure that your organisational design is responsive to, and can be adapted in-line with, the cadence and sequencing of all key focuses, activities and growth targets. This includes factoring in any new technology and systems you will be implementing, capacity builds and any expansions to products, services, channels or geographies.
Minimise disruption by avoiding a big bang approach
The phasing of focuses and activities may mean that you have to go through a couple of transitional interim structures to get to your optimum year 5 end structure. Even if changes are not until year 3 or 4, it’s important to build out your long-range organisational design structure and the supporting talent plan, long-range salary and operating budgets to ensure that as far as possible, you can transition to your end plan thoughtfully and incrementally.
Step 2: Define the skills and behaviours that your team need to be successful
What ‘good’ looks like
Use your organisational design model (the end state and any interim transitional structures) and overlay this with your Company vision, values and mission and your 1-5-year growth plan to define the skills and behaviours your team need to drive current organisational capability and long-term growth.
This is an area where companies often fall down.
Some of the companies that I have worked with have overly focussed on whether someone has the right skills to be successful at the expense of ensuring that they also have the right behaviours.
Why is this important? Well, consider some of the people you may have worked with or for. How many of them have had great technical expertise but have not been able to inspire and lead others? Or, even worse, have achieved strong sales growth at the expense of their team members? This may be sustainable in the short-term but if high sales growth is steadily eroded by high absence and labour turnover costs, this won’t drive long-term profits.
Silence your silent assassins
Consider too the silent saboteurs who fundamentally don’t agree with the Company’s vision, mission, values or way of doing things and quietly derail change initiatives behind the scenes. This is one of the biggest reasons why change initiatives often fail. See my videos on Change for tips on how to optimise your Change Strategy.
This is why it’s essential that you focus on both the skills that are needed to do each job and the right business building behaviours so that the job gets done in the right way.
What ‘good’ looks like now… and then
Another mistake that I often see, is that some companies focus only on the here and now – the skills and behaviours that teams need at that particular point in time without considering what capabilities are needed for the future and planning for these in advance.
My top recommendation to all companies
If I had to give just one recommendation to business owners, it would be this – use your ‘what good looks like’ skills and behaviours framework to under-pin each stage of your talent strategy so that you attract, retain, develop and reward employees who demonstrate the right skills and behaviours to execute your short, mid and long-term growth plan.
If you have fragmented approaches to each segment of your talent strategy the Company values and standards of behaviour will also be unclear and disjointed. A holistic approach to talent means that everyone knows what they have to do to be successful and how to do it.
This joined up approach ensures that ‘what good looks like’ becomes part of the everyday fabric of the business and makes sure that new employees joining the business have the same (right) skills and behaviours as your existing employees. It also drives parity of bench-strength across your company, making talent and succession planning easier and more consistent and effective.
Step 3: Developing your Talent Plan
Strengths, weaknesses, opportunities and threats – reviewing your talent against your ‘what good looks like’ talent framework
Once you’ve defined the skills and behaviours that each team member needs to demonstrate to ensure success, carry out a SWOT (strengths, weaknesses, opportunities and threats) to identify any gaps between their current skills and behaviours and those that are needed to execute your growth plan in years 1 through to 5.
Evaluating the insights
Once you have assessed your talent gaps, evaluate, consider and decide:
- Which capabilities should you build versus buy in? Should you develop existing team members or hire new ones and in which department or area?
- Do you have time to get people to where they need to be, or do you have critical needs now?
- Do you need to focus on behaviours, skills or both?
- Are there foundations you can build on, or, is there a fundamental issue with organisational capability that means you need to take a more radical approach?
- Who are your high potentials, high performers and blockers? How does this impact your plans?
- Are there external skills shortages in critical areas. If so, do you need to start talent acquisition now to buy in skills that you will need, say, in a year’s time?
- Are you making false economies in some areas by paying under-market rate and, as such, not getting the skills and results that you need?
- Do you need to spend money to save and make money by bringing in new capabilities with staff who can increase productivity, drive efficiencies and innovate?
- If you increase staffing levels, skills-sets, increase capabilities when will you get a payback on these costs?
- What impact do these cost-versus-benefits analyses have on salary, training and operating budgets? How does this impact your short to long term budget forecasts?
- What talent succession gaps do you have?
- Have you identified who is ready to take on a critical role in the business now, in a year, in 1-3 years’ time, if your top talent suddenly leaves, retires or gets run over by a bus?
- How are you going to accelerate organisational learning? face-to-face training, mentoring, virtual on-demand learning, secondments or a blended learning approach dependant on individual needs? (Blended learning always gets my vote as it provides a something for everyone approach based on how people like to learn)
Create, communicate and implement,
Use these insights, considerations and decisions to create and implement your phased end-to-end talent strategy and execution plan.
You will also want to ensure that you communicate this to your team regularly so that each of them understands the part that they plan in achieving the Company’s overall goals and what they have to do and importantly, how they need to do it, to be successful.
Let them know how the Company is tracking, invite their input and suggestions, particularly if you are not close to the day-to-day operations, as they are much more likely to have a handle of the processes and systems that are needed and what works and what doesn’t work. Ask, what have I missed? What don’t you understand that I can explain in more detail for you? What suggestions do you have to drive growth?
Monitor and refine
Finally, monitor and measure your plan regularly against the success of your overall Company strategy and execution plan and adapt and refine it, as and when needed, in line with the changing needs of the business.
What other burning questions do you have about maximising your People Strategy to scale, sale or gain investment?