Five key lessons I learnt as an HR leader during the scale up phases at GE, Cisco and Freshworks

Companies in the scale-up phase often find themselves in a state of flux. The growth is fast, they’re hiring more and more people, the complexity of the organization is increasing at a pace that’s tough to grasp and team dynamics are changing and the context is changing rapidly. Amidst all this, leaders need to keep revising their strategies and steer their businesses to sustain the growth rates as well as creating stable organizations.

I’m Nathan Sheranian, Senior Director of HR at Freshworks and I head the company’s North American people operations. With nearly two decades of experience, I have spent most of my years working at various GE business units and Cisco in addition to having been an Adjunct Professor at the University of Maine for a year.

In the crucial phase of scaling up, I have seen organizations and leaders struggle with the inflection points of growth and I’m outlining some of my thoughts and lessons from my experiences of having worked with companies in the scale-up phase, including at Freshworks, where I was instrumental in growing its North American team from around 50 to over 200 employees in a short span of time.

I have provided some guiding questions or principles that each of you, as HR leaders and practitioners or business operations leaders, can begin to use as you analyze your organization’s growth trajectories and the things that you need to watch out for yourself.

Here is the video session:

1. What got you here, won’t get you there

Marshall Goldsmith, a thought leader and coach, has written a book by this very same title. This is a fantastic book, I highly recommend it for any leader who’s going through a big transition, whether it be a new job or whether it be growing an organization to a scale that you’ve never done before.

Let’s say your organization has done very well in the early stages and has reached the $1-2 million-mark. If you want to get to the $10-20 million-mark, you cannot think of your organization in the same way, you can’t lead the same way and you can’t use the same playbook that got you your first couple of million dollars in revenues.

One of the biggest things I’ve seen leaders struggle with is when they have to think of their roles differently as their organization reaches the next level. For example, an engineer may come up with a great product idea, is a domain expert and know the technology inside out. They begin building a team around them and be it any aspect of the product design, the product development, the customer stories or use cases – they are there.

As an organization, there comes a point where you can’t scale to the level that you might want to get to when your leaders are that deeply involved.

Organizations and leaders struggle with the shift of the new paradigm of “I cannot lead the way I used to earlier”. They need to lead through vision and delegation. Sometimes, company founders and leaders find themselves so deep in the details and decision-making that when they are looking to scale and lead their organization to the next level, they find that they lack the skills and the confidence to do so.

2. People outgrow roles or roles outgrow people

We live in a dynamic world where the business context changes so quickly that those that have been in roles in a certain context may not thrive in another. For example, the situation due to Covid-19 has caused leaders and organizations to throw away the playbooks for leading teams that have worked in the past. There’s a certain type of leadership that thrives in a face-to-face work environment.

In March 2020, that notion got thrown on its side. Businesses, including Freshworks, have had to figure out how to do things differently. In the new context, the leaders who would succeed in the long-term are those that would lead in a different way. Currently, the leaders who have a knack to lead virtual and distributed teams are succeeding compared to those that relied on dealing with their teams in person.

The future of organizations is going to be defined by leaders who can adapt to new environments and that’s what I mean by sometimes, roles outgrow people. It could be in terms of both size and scope. 

Let’s say, there’s an engineering leader who had a team of 10 ace engineers. There’s some cash infusion into the company and now, they have to lead a team of 80 engineers. Maybe, the organization doesn’t have the right leader in place to lead the scaling up. That’s not a good or a bad thing; it’s just a feature of life as a human that sometimes the context changes. Sometimes, it’s really hard for leaders and organizations to make those calls to fit people in the right roles at the right time.

When I once worked with an organization in the hyper-hyper growth phase, there was a domain expert who was really good in this particular area but given the growth trajectory of the company, it was discovered that this person really wasn’t the right fit to lead the team going into the future. 

As part of the leadership, we said – “Okay, this person is great! How do we retain this person in a way that continues to add value to the organization, helps them grow in a meaningful way but also stays true to our needs as an organization to serve our customer in the best possible way to grow and develop the teams in the best possible way?

3. Design your org to optimize for customer, not around individuals

When a company is growing really fast, oftentimes, we tend to think of organizations and people as the same thing and it’s really important for HR folks to help leaders think about the design of the organization instead of around an individual. It makes better sense to design the organization and the business strategy around the best way to serve the customer.

Sometimes, that means realigning organizations and finding new roles for people where they can continue to add value and also, investing in certain areas where you’re helping the organization grow.

Let’s say, I’m the founder of an organization. I’ve got a team of people who are really good, they’re my friends and the company is growing. I want to give them opportunities to grow. As you grow, you start hiring and adding layers of hierarchy, management and bureaucracy. While on the growth trajectory, you determine you need a different go-to-market approach and yet, the team that you have assembled doesn’t have those skills.

In such situations, I’ve seen many leaders design their strategy around people and they often decide to go for a two-in-a-box-leadership model where they believe one person will be good at a couple of things and the other in complementing areas. I hate to be the bearer of bad news, but most of the time when you try to create a Frankenstein’s organization approach, it’s not bound for success.

So, what I challenge HR leaders to do in such a scenario is to ask the business leaders to start with a blank sheet of paper and chart out their organization in an optimal way, keeping in mind the current context and where they want to go in the future to serve their customers in the best possible way.

Take the names off. Talk about the functions and the key processes and roles that you need to scale and serve the customer in the most effective way possible. And, then you work backwards to figure out if you have the personnel to work that. Don’t start the other way around with what you have and then try to fit the organization to meet what you have. My experience lends me to believe that that very rarely leads to an optimal outcome.

Yes, this is a difficult conversation for a leader to have because we’re talking about relationships here. They might be people who might have given their sweat, blood and tears to get the organization to where it is but they may not be the right people to take it to the next level. I’m not advocating for letting people go nor am I saying there should be no predictability in terms of organizational structure/strategy.

I think it’s really important for organizations to be comfortable with starting from scratch in terms of thinking creatively and differently about how they’re set up internally at least on an annual basis, especially if your organization is on hyper-growth mode. If your company is in the hyper-hyper growth mode (50-60% or more in a year), you probably need to ask if your organization design holds up every quarter or so.

I wish I could say there was a clean cookie-cutter answer to this specific scenario. We struggled a bit with this but we looked at the way our organization was designed, which leads me to the next point.

4. Rely on your team dynamics to scale up, not on individuals

A lot of organizations are dependent on individuals, be it the founder who has a great vision or an amazing salesperson who brings in a lot of revenue. However, you’ll find that the organizations that are going to be successful in the future are less dependent on individuals and more dependent on teams.

The extent that you can guide and shape the organization to orient around the success of teams and furthering the company’s mission versus the success of individuals, you’re going to unlock the ability for the organization to scale. You’ll find that teams can absorb scale way faster than individuals can and way more effectively than an individual.

An individual has constrained bandwidth and if you have a dynamic team, one plus one doesn’t equal two. It is three, four or five, depending on what the context is.

When you orient around the success of teams versus individuals, you’ll be able to adjust to the scaling issues that you face as an organization way better than when relying on individuals.

5. Leaders must be equipped with people-leading skills

As an HR leader, you need to ask how equipped are your leaders to take on people responsibilities? What makes a good product designer does not necessarily make a good people leader. One of your key roles is to enable leaders in helping them up skill and giving them the tools, the resources, the guidance and the coaching so that they can lead their teams effectively.

You have to take stock of your leaders’ capability and then create programs and initiatives to help them take on the people’s responsibility because I believe that management is one of the most noble roles that anyone can take on.

Leading teams is not just about knocking out OKRs, it’s about being a guide. It’s about developing careers. It’s about being an individual who cares and leads and develops the team in a thoughtful and in a caring and an inspiring way.  And that doesn’t necessarily come naturally to everybody.

If you’re a brand new manager, you suddenly hold people’s whole career experience in the palm of your hand. Research indicates when people leave organizations, they most likely leave them because the manager. There are a whole host of other reasons too, but a major driving factor is the relationship they have with their manager and if their manager has their back.

Talking about people responsibilities, when a company is at an inflection point and is transitioning to the next growth stage, they are often faced with this conundrum: should they promote your employees from within to leadership positions or if they should hire leaders from outside? It’s a delicate situation and there’s no one-size-fits-all answer to this.

Let’s take a sales organization, for example. You’re a rapidly growing sales organization and you have an account executive who consistently knocks their number out of the park. They’re getting 120% of their quota every quarter and they’re going to the Presidents’ club and they’re getting praise from the CEO. Everyone knows who they are. They’re an ace salesperson.

They’re growing, the team is growing as investment on the team, and suddenly you have a need for another role. And it may be tempting to suddenly go to that person and say, let’s just align people to work under them because this person obviously knows how to get to 120% of their quota. Therefore, we believe that they can replicate that in all of the 10 people that they’re going to lead.

The reality is most of the time that is not a straight line. I’m not saying this person shouldn’t or couldn’t become a leader or a manager. The questions I would ask to check if somebody is the right candidate to be a leader:

  • Have you seen this person do to help others that doesn’t necessarily lead to their own personal game?
  • How have you seen them coach, guide and mentor new employees without being asked?
  • How often do they raise their hands to be on a cross-functional project that may or may not benefit their career that they want to get involved in and make a difference?
  • What do they do in terms of serving in the community or other organizations that their company works with externally?

There are a whole lot of other questions that I might ask but the main point is outward orientation. Success is not a zero sum game. 

The points that would raise red flags for me are:

  • They’re hitting 120% of their quota but they don’t come to team meetings.
  • They actively don’t work with other people because it’s a competition and they want to stand out as compared to their peers.

If someone demonstrates that skill and aptitude and you combine it with great individual performance, I think you’ve got the makings of a really good leader that you can invest in. If you don’t see that outward orientation, I’d really pause and see if it makes sense or if there’s another opportunity to find someone else or think differently about how you’re structured from a leadership standpoint.