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3 People Related Leadership Challenges Small Businesses FaceStarting a small business is tough. A founder has to figure out all the in’s and out’s of running a business while somehow keeping themselves afloat financially. From offering a viable product or service to finding customers to finding the right systems, every aspect of a small business has to be considered and dealt with quickly.

And then you hire employees.

At times more stressful than the customer side of owning a business, is the people side. Hiring, motivating, training, paying and sometimes firing employees is draining on even the most organized and skilled among us. In our work with startups and small businesses who are experiencing growth that creates a need to hire, sometimes a high volume of candidates, we have uncovered three people related challenges that seem to pop up over and over.

Hiring First, Thinking Later
I’m a big fan of this philosophy and follow it in most areas of my business. Jump first, build the parachute on the way down. It serves many of us well as entrepreneurs. Until it comes to hiring people. Founders find themselves needing help and leap before they think. They will hire a family member or someone they think can do the job without thinking about how it should work out. And by work out I mean both the basics around how they will get paid and what laws have to be considered as well as the more advanced around hiring structures and performance management.

Too Many Layers
The amount of instances in which this challenge creeps up is astounding. A 20 person businesses does not need three layers of managers. It doesn’t. I will fight to the death on this one. This typically happens because a family member or friend was hired and wanted an executive title. Then someone decided they needed a team and that team needed a layer in the middle. Before you know it you have a whole lot of “managers” who really aren’t managing anything. This leads to so many complications such as pay disparity, general lack of continuity and ego based decisions.

Here is what I have seen work best. Everyone reports to a founder(s) until the founder(s) can no longer effectively manage everyone, then another leader(s) is hired or promoted. Only adding leaders as necessary and being very clear in the division of duties when new leaders are appointed. Beyond that, layers are only added after intense discussion and when everyone agrees that it makes the most sense. Leaders shouldn’t be added because someone thinks they need a leadership title. They should be added when it makes business sense.

Not Thinking Long Term
I have a new client from another country who is bringing their product to the US for the first time. During our first call they asked me what types of activities we could do around culture and building the type of environment they felt was important. Before we talked about a payroll system or the vacation policy, we talked about culture.

From the moment a business hires it’s first employee, it is creating an environment for employees to work within. The business can either be deliberate about it or let what happens happen. Either way, 3 years from now an environment will have been created. If a founder gets caught up in today and doesn’t at least think about a few months and years down the road, something may be created that they aren’t happy with.

And undoing that can be nearly impossible.

There are many other challenges that businesses face, like growing too fast or not dealing with issues swiftly, but these are the three that seem to hit small businesses on a regular basis. The people side of the business should be taken as seriously as the customer side. It should be as well thought out and planned as the product of service you are offering. Leaving people matters to chance may work for 1 in a million new businesses. Not sure that’s a chance I would be willing to take.

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