Insufficient Investment in Talent May Cause Stress

by Nov 21, 2023Culture, Diversity, Entrepreneur, Growth, HR, Talent

I’ve discussed the potential hindrance in organizational growth when there’s a deficiency in middle management. It’s a common pitfall. Organizations often prioritize investment in C-suite executives or frontline producers responsible for product creation and revenue generation. Yet, sustainable growth may plateau without a robust foundation of middle managers and supervisors to seamlessly connect various aspects. This necessity typically becomes apparent as your organization’s headcount surpasses 50 to 100 employees.

But there’s another lesson to be learned here, especially if you are the CEO of a fast-growing company: Your organizational capacity to execute must outpace your company’s growth rate. In other words, you always need some buffer.

Put another way, if you’re not investing in growing your team’s overall capacity and capabilities, your organization will begin to suffer and stop growing. Your growth might already be stalled because you’re understaffed or overworked.

Here’s how you can tell.

Look for the Symptoms

Some recognizable symptoms tell you your organizational capabilities are at their breaking point. That list can include:

  • Mistakes are increasing, and quality is going down.
  • Customers are not happy with their experience.
  • You’re beginning to miss your financial objectives.
  • Stress levels are through the roof, and everyone worries about work-life balance.
  • You might even see a bump in your turnover rate.

Do any of these issues sound familiar? If so, there’s a good chance your organization is begging for spending to expand your team’s capacity.

Case in point: I recently talked to a CEO who shared that his people were all stressed out. When we discussed the company’s strong growth with the CEO, it became clear that he didn’t have enough people to keep up with their growth objectives. This CEO had underinvested in his people and was now paying the price.

The good news is that there are a couple of strategies you can turn to for help.

Adding Talent

The obvious and fastest solution to an organizational capacity problem is to go out and hire more people. Ideally, you will identify highly qualified individuals who will bring new skills and expertise into the organization in ways that enable new areas for growth and expansion. It is even better if they are A-players who will find ways to be more efficient with the talent you do have.

But there’s a catch with relying on adding talent into the mix. Unless you are exceptionally good at the hiring process, the data tells us that the success rate of most hires is not greater than 50 percent. If you do the heavy lifting to bring in a new COO or a VP of engineering to expand your operations and product development capabilities, there’s a 50 percent chance that person is a dud.

Making a bad hire disruptive and expensive. Worse, you might send your organizational capacity and finances backward if forced to replace that person.

Growing Talent

The alternative to bringing in people from the outside is investing in your current talent pool to expand their capabilities. I’ve written before that some of the best organizations allocate about 1 percent of their annual revenue to developing their people by continually broadening their skills and experience, such as allowing them to attend classes or join cross-functional teams.

Choosing to grow your talent is also far more predictable than adding outside talent, because you should have a better sense of the individual you are investing in. But the obvious downside is that it takes time and patience for anyone to learn new skills or gain expertise–which your organization might struggle with if you’re already suffering.

Making the Investment

If you are running a fast-growing company, you’ll need to hire talent and develop it from within to keep up the pace of your growth. Ideally, you’ll find a way to fine-tune your hiring process in ways that give you a better than a coin flip’s chance of landing an A-player while simultaneously making the kinds of investments in your current team members that will help power your growth well into the future.

If your organization is stressed and underperforming, look at your organizational capabilities. It might be time to bump it up by making some new investments.