Driving profitable growth is at the top of every leader’s priority list. Yet, according to Bain and Company, only 10% succeed in achieving sustainable profitable growth.

While growth is the life-blood of every business, at some point, your company will experience the double edge sword of growth.

Either your company will grow faster than your internal capacity to handle it. Chaos, breakdowns and burnout are the result.

OR

Your company hits a wall and growth flattens. As a result, panic often sets in and leaders make rash decisions – either prolonging the stall or causing the company to spiral downward.

Unfortunately, there are no alarms to warn you of either impending challenge. Growth does not follow a linear path. It can be unpredictable and erratic. Growth walls often catch leaders by surprise.

Some companies don’t survive growth walls. They either go out of business or stay in “no man’s land.”

The focus of this article is to address the latter issue – ie., growth walls. While many leaders see growth walls as a revenues issue. The truth is that flat numbers are the byproduct — not the cause — of stalled growth.

The good news is that there are predictable pitfalls and signals that leaders need to heed to scale their companies. This article focuses on 7 of those growth pitfalls.

 7 Pitfalls That Stall Your Company Growth

1. Running After Growth in all the Wrong Places

Initially, growth is critical for survival. However, as your company scales, not all growth is healthy or good.

How, as a leader, do you distinguish between good and bad growth? Healthy vs. unhealthy growth? 

What % of your new business is coming from your core competencies? What % requires capabilities beyond your core?

Do all your new revenues provide healthy margins? If not, is it a market issue, a competitive issue, a behavioral issue or something else preventing you?

According to Bain, companies leave significant money on table because they are not fully leveraging their core.

Tim Cook (Apple’s CEO) says it best …”At Apple we say ‘no’ to great ideas every day in order to do one or two things very well.”

How much of your new growth focuses on what you do best?

2. Success Blind Spots 

Companies that hit a wall have experienced past successful growth.  They are meeting or exceeding revenue goals. Their leaders and employees are proud and rightfully so.

However, success often creates cognitive or psychological leadership blind spots.  Below are 2 examples how.

• Blind Optimism

You make unconscious assumptions that company growth will continue on the same trajectory if you keep on the path you have been. However, markets change and so must your path to future growth.

• Over-Confidence

Past success can exaggerate your ability to control events. And you over-estimate your company’s capabilities.

When over-confident, leaders tend to take on risky opportunities, not ask for help and believe they can handle it all.

Whose unbiased perspective can you access to right-size your decisions and perceptions?

3. Crashing into the Leadership Glass Ceiling

In my extensive experience with growth companies, the number one reason why companies hit the wall is because their leadership team has hit a wall.

Organically grown leaders don’t know what they need to know to get to the next level. As a result, they keep on doing what they have always done – only working harder — expecting a different result. Yes … that’s called insanity :))!

As a company scales, leadership roles also scale and change dramatically at each growth level. To avoid the leadership ceiling, CEOs must ask themselves —

Are you willing to make a major investment in growing your leadership team to the next level?

Does it serve the greater good of your company to be loyal to long time leaders whose roles have outgrown their capabilities and capacities? 

Is it time to hire outside seasoned passionate leaders who have been there and can help you grow?

Both options – ie., cultivating your leaders from within or hiring from the outside – have their upsides and downsides.

If your leadership team has hit a ceiling, get outside help in evaluating the options. Doing nothing will keep your company stuck at the wall.

4. External Oblivion

As a company scales, significant focus is spent on building internal infrastructure. As a result, leaders lose sight of changes in their external environment.

A once fringe competitor may now emerge as a looming threat to your company. Your customers’ needs may have changed without you realizing it.   New disruptive technologies may displace your products/services as alternative solutions to your markets.

Successful growth leaders who break through the wall anticipate the unexpected and turn the unexpected into the profitable.

Are you overly focused on internal superiority that you are missing the cues of external changes?

How are you proactively anticipating and responding to external changes?

5. Hiring for current skills, not long term capabilities

As a company grows, the tendency is to hire employees with current needed skills by your organization.   When small, hiring for the short term is necessary as your resource needs are not always clear.

Once a company hits the $10 – $20 million milestone, hiring people with capabilities to grow your company in next 2 – 3 years is crucial.

What capabilities do you need to hire today to achieve your desired growth for next 3 years?

6. Culture Meltdown

When a company has less than 20 employees, rarely is culture a dominant issue. As the company scales in size, structure and complexity, culture becomes the heart and soul of its growth success.

What causes a culture meltdown as a company scales?

It’s not one thing. It’s multitude of factors that amplify with scale, such as …

• Not Scaling Culture

Some leaders will argue that company culture cannot scale. I both agree and disagree :)).

Your company culture cannot scale if you perceive culture as fixed, unchangeable and static. However, the culture your company needs at $20 million will be different than the culture you need at $50 – $100 million

As you add new people to your organization, as well as your markets evolve, so must your culture evolve.

How are you adapting your culture to the changing needs of your organization and those of your customers?

• Core Values Without Success Measures

While your company’s culture may seem intangible and elusive at times, you can make the intangible tangible and measurable.

The key is to define an abstract value into an operational, measurable success outcome.

I have one client with a core value of excellent customer service. Their measure of success is a customer excellence rating of 25:1. For every 25 customers that rate their service as excellent, only 1 or less customers will rate it as non-excellent.

How do you measure success for each value?

• Healthy Values Gone Bad

Every positive value also has a dark, unhealthy side. However, most leaders are not aware when their values have crossed that line.

A value of excellence, in the extreme, can become perfectionism. Acceptance, at its extreme, can become (unhealthy) tolerance. Customer service, to the extreme, can cost you significant profits.

It’s good to set the bar high. At the other end, know when your values become your Achilles heel, especially as you scale.

7. Mediocrity Sets In

The final danger as companies scale is backsliding into complacency or mediocrity.

Success is a lousy teacher. Complacency often sets in as your company loses its drive and hunger. Nothing will kill growth faster than losing your sense of urgency.

High growth companies should celebrate success. If your company has hit a wall, however, it’s time to take stock.

Has your success morphed into over-comfort and contentment? 

If it has, it’s time to raise your bar, set new sights and refuel your organization’s fire.   Commit to scaling not only in size. Commit also to scaling big WHY and purpose.

Getting Back on the Growth Track: Initial Steps

• Educate yourself about your company’s growth life cycle and the common pitfalls at different growth stages.

• Get your leaders out of day to day operations.

By the time you hit $15 – $20 million in revenues, your leaders should spend about 80% time leading – building teams, delegating, creating strong culture, focusing on long term goals/projects, etc. – and only 20% on daily operations.

To prepare for the transition, ask yourself:

Do your leaders know how to think strategically?

Are their brains wired for big picture, future-orientation, goals/results thinking?

Do they have strong delegation skills to get out of the weeds?

Remember … not all leaders will be able to make the leap to the next level.

• Invest in infrastructure and systems that provide built-in capacity for growth.

• Get outside perspectives

An advisory board or board of directors … visits to “friendly” competitors to see how they do things … hiring a consultant with experience in growth companies. These are all ways to get beyond your blind spots and tap into expertise that may be missing in your organization.

• Invest in scaling your company culture

Continuously communicate your company’s vision and purpose. Entrench your values and behavior norms at all levels of organization. Change your culture as needed.

• Download our complimentary handout — Developing Leaders of Growth: 5 Critical Factors for Driving Double/Triple Digit Growth

The post 7 Leadership Pitfalls That Sabotage Company Growth appeared first on The Empowered Business.

As mentioned in our article “The Shocking Costs of Hiring Mistakes … And The Secrets to Avoiding Them,“  too many hiring decisions are based solely on past experience and current skills without any regard to the real drivers - – mindset and “fit” – – of top performance.

With permission to reprint his article “Hire for Will;  Teach the Skill,” Ron Alvesteffer, CEO, SEI Service Express, Inc., shares how his company hires top-performing employees – – his secret to achieving SEI growth goals and cultivating an exceptional organizational culture.  Enjoy his wisdom!

(Reprinted with permission from March 27, 2013)

Hire The Will; Teach the Skill

by Ron Alvesteffer

It’s a phrase I often use with leaders at SEI, particularly when they’re recruiting for talent at our organization.

Because SEI is a growing company with an exceptional culture, we’re fortunate that we attract applicants with a high level of skill and aptitude in their areas of expertise.

But we don’t just hire people who can do the job.  By the time they’ve made it past our initial screening process, we’ve determined that they have both the skills and the aptitude to succeed.  We also have many candidates who rise to the top because they have an advanced skill set.

It can be tempting for hiring managers to rush the process because they have extra work that needs to be off-loaded, they don’t have time to sit through more interviews, or they feel pressure from others to fill the position.  In my experience, rushing this critical process does a disservice to the new employee and to the business.  In the end, hiring the wrong person often leads to more work because employees are left to clean up.  Work loads are compounded, the recruiting process must begin all over again, and the pressure that hiring managers feel is exacerbated.

A recent study uncovered that 46% of new hires don’t make it past the first 18 months of employment.  Of those, 89% didn’t make it because of attitudinal reasons, while 11% didn’t make it because of lack of skill.  As a result, companies are experiencing high levels of turn-over which put s a significant strain on productivity, innovation, customer service, revenue, margins, growth and employee engagement.

At SEI we don’t hire the skill; skill can be learned.  We hire the will.

While there are simple tests that can measure both skill and proficiency, for many organizations finding A Players can be both challenging and more resource intensive.

Because one person’s attitude has a significant impact on the culture of an entire organization, recruitment should be a high priority.

David Packard once said “No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth.”

We guard our culture fiercely and decided early on that we would would take the time necessary to hire people who are a great culture fit for SEI.

SEI is exceptional because our people are exceptional.

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About Ron Alvesteffer:

Ron Alvesteffer is the President of Service Express, Inc and is the author of The SEI Way. He speaks and writes about leadership and on building workplace cultures that produce great results.

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Questions to ask yourself:

• What are the criteria, traits and attitudes that differentiate an “A” player from a “B” and “C” player for each role in your organization?
• Is every leader on your team performing at an “A” level?  If not, what is your development plan to raise the bar for that leader?
• How do you interview, screen and select for the right attitudes and traits for a given role?
• What lessons have you learned about your own blind spots from past hiring mistakes?

Share your experience, questions and challenges in hiring top talent within your organization in the comment box below.

The post The Secret to Hiring Top-Performing Employees appeared first on The Empowered Business.

One costly hiring mistake that I have observed with leaders is the unconscious avoidance, denial and/or toleration of under-performing employees.

Shocking costs of hiring mistakes

More commonly known as the cost of a mis-hire.

According to Tony Hsieh, CEO, Zappos, hiring mistakes have cost his company as much as $100 million!  That’s alot of dollars immediately subtracted from the bottomline.

For many companies, that one mistake can make the difference between surviving and thriving, between mediocrity and high performance.  Mis-hires and under-performing employees are the #1 profit leak in companies today.

Why Does This Issue Perpetuate Unknowingly in Many Companies?

For one, few companies actually take the time to calculate the hard and soft costs of even a single mis-hire.  Ignorance is not bliss in this case.  The higher the level of the position, the quicker the cost of a mis-hire increases exponentially.

To understand why such a large number, let’s look closely at the long list of direct, indirect and long-term opportunity costs of a mis-hire:

• costs associated with your time, your team’s time and any outside recruiting help in finding, screening and interviewing the pool of possible candidates
• costs associated with reference checking
• hard and soft costs associated with training a new employee
• costs associated with manager’s time to get a new employee up to speed
• costs associated with the lost productivity of a new employee for at least first 3-6 months
• long-term opportunity costs – seldom considered – with a mis-hire

-   substandard service

-   lowered employee morale and the resulting substandard performance in other employees

-   missed deadlines

-   customer dissatisfaction with product quality, customer service and/or lost trust/faith in the company

-   missed sales opportunities

-   and so much more

According to Guy Kawasaki, best selling author and former Chief Evangelist at Apple, there is another hidden high cost of mis-hires. “’A’ players tend to hire ‘A’ players; ‘B’ players tend to hire ‘C’ players and so forth.”   How does that translate to you and your organization?

If you are hiring anything less than “A” performing leaders, your leaders will hire mediocre employees that are not as good as they are, due to their own insecurities.  Perpetuating that under-performing cycle throughout the organization, your “B” and “C” leaders will cost you many times more than the $6 million we quoted above.

Can your bottomline afford that?

Why Is the High Cost of Mis-Hires Rampant?

Below are the 4 most common reason for hiring mistakes I have found in working with companies for over 30 years:

• Hiring decisions are at least 80% made as “gut feeling” or “based on appearances”  — such as, “I liked the person,” “they seemed honest and hard working,” etc.

• Scarcity and/or urgency mindset — a belief that few candidates have the skills you need or you are driven by outside pressures to fill the spot immediately and settle for mediocre candidates.
• As a hiring manager, you are dazzled by first impressions, how good the person looks on paper, credentials, advanced degrees, well-prepared interview responses, etc. In addition, the highly competitive job market has triggered an increase in exaggerated claims, embellished resumes and “half truths” often missed in the hiring process.
• Not understanding the difference between and/or having the needed tools to discern top talent vs. best fit talent.  With all the buzz about hiring top talent, many companies seek the most impressive backgrounds, past successes and prestigious credentials in their pursuit of top talent without any regard to best fit talent.

Past success and experience are often an unreliable predictor of future performance.  Why?  Because different people are motivated by and excel in different work environments, organizational cultures, job opportunities, etc.  Competencies and skills only account for 20% of future performance.  The right attitudes, motivations, values and goals for a given role and company predict 80% of performance.

What are the 5 Best Secrets to Avoiding Costly Hiring Mistakes and Finding Best Fit Employees?

Secret #1:  Shift your mindset from hiring employees to hiring partners.

Your employees are your most important partners and stakeholders.  Hiring employees is like finding the best marriage partner or close circle of friends.

You seek those who have similar values, will make you a better person and provide synergies for both of you to create something bigger than you can individually.  While you may value their past accomplishments and expertise, it’s what’s on the inside and the synergies between you that will make that partnership fly.

Secret #2:  Hire those with the capacity to excel and exceed you.

I emphasize finding those with the best capacity to excel and outperform others, including yourself.  Capacity not only includes current capabilities.

Capacity also includes the right mindset, motivational drivers and thinking necessary to ignite future potential.  It takes extraordinary self-confidence, soul searching and inner security for leaders to recognize when they hire those that exceed them, everyone wins.

Secret #3:  Hire “A+” players based on attitude, motivation and culture fit.

How you assess best talent fit for your company and for each role is the single most important ingredient to successful hiring and maximizing employee performance.

The best tool I have found to help clients assess attitude and motivation fit is an online assessment tool (IWAM), uncovering 48 unique attitude and motivation drivers that best predict future performance.  Although all patterns are important in varying degrees, there are usually 6-8 drivers most critical for company/culture fit and a handful of other drivers important to A performance in a given role/function.  For more info about how IWAM can help you hire best fit talent, go HERE!

In addition, to further assess culture fit, it is important that leaders learn scenario building interviewing skills, or hypothetical “what if” questions for assessing values and traits, without the candidate’s awareness or ability to prepare for such questions.

Secret #4:  Develop a mission statement, results-oriented job description and list of non-negotiable traits before you start the hiring process.

You can’t know how to assess a best fit candidate unless you know why you are hiring someone, how will their contributions impact company goals and be measured and what traits are needed to excel in that specific role. 

Most job descriptions are long laundry list of tasks and responsibilities without justification why the position exists or a scorecard how to evaluate success and performance.  Without this information, the probability of finding those with greatest chance to succeed and raise the game is very low.

Secret #5:  Stop relying on intuition; start relying on unbiased, objective due diligence.

I’ve have heard too many leaders’ hiring regret stories.  Examples of when they were convinced a candidate would work based on feelings and impressions, only to find after a year of frustration, procrastination and endless coaching, that they made a mistake.  A million dollar (or more) mistake, at that.

To avoid this pitfall, develop a rigorous hiring process.  Develop screening criteria and use objective data to eliminate candidates right away.

Examples could include driving history check, credit check, drug tests if necessary, etc.  What you are seeking are personal records that reflect a candidate’s character.  Also check character references, asking truth-telling questions, like … on a scale 1-10, how well did the candidate get along with co-workers?  And, why that #? 

After 1-2 stages of screening, have a team of individuals from a variety of positions interview candidates with list of prepared questions and hands-on problem solving scenarios of common role/company issues.  To ensure a candidate is aligned with company purpose, you should also ask “purpose based” questions such as, “what do you want to be remembered for?  Or “when in your life have you been so passionately focused on an activity that you lost track of time and what were you doing?”

Hiring, by no means, is a science.  Even with the best hiring systems, mistakes will be made.  The key is to hire slowly, fire quickly.  Your credibility and reputation as a leader, inside and outside, depend on it.  Be rigorously honest about your past hiring mistakes, your own hiring blindspots and the changes you will make to start hiring your best employees.

Let’s keep the conversation going.   Visit our blog to share your comments, biggest hiring mistakes, stories of regret, burning questions and valuable resources for finding and hiring best fit employees.  We want to hear from you!

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