As businesses grow, hiring people to deal with waves of increasingly complex work is a dilemma like “which came first, the chicken or the egg?”
The external environment and industry dynamics are constantly changing and evolving.
Nobody can gaze into a crystal ball with any certainty, deciding exact trigger points for additional resourcing.
Managing a growing company is a dark art.
People such as Richard Branson advocate:
“’If somebody offers you an amazing opportunity but you are not sure you can do it, say yes – then learn how to do it later!”
Nobody can afford to have the resources sitting idle whilst they wait for potential work to materialise.
The first thing to expect is that inevitably cracks will open up and things will probably fall between them.
The key is to expect it. It’s how you deal with it that’s important though.
These cracks fall into 2 categories:
either capacity or capability limitations with your current resourcing structure.
In terms of capacity, tell-tale signs of problems would include staff having to work late or come in on weekends to cope with the additional volume. If it’s only a short-term spike, the staff might be happy enough to dig in and ride it out, but this needs to be acknowledged and rewarded somehow.
Time in-lieu, a bonus, movie vouchers and public praise are good ways.
If you expect the spike to continue into the future, then you should look at fixing the under-resourcing problem.
A rule of thumb in delegating is to” keep delegating until you see it start to come out of their ears” and another is to keep saying yes to accepting new work, but speak up when you need help.
It’s vital to foster a culture where staff won’t watch something fall into a crack then say “that’s not my job”.
Employees should be aware that cracks opening up represent opportunities to progress.
It’s the organisation’s job not to take advantage of the willingness of the employees to go the extra mile and deal with things that have fallen into a crack.
Eventually hiring someone on a higher level than the employee who has covered the gap above them for some time is demoralising and is likely to result in the employee becoming disillusioned and leaving.
Also be aware of the lead-time in finding resources and the learning curve that ensues.
Rarely can you just pluck ready-to-go help off a shelf.
In terms of capability, generally what happens when smaller businesses grow is that they reach a point where they find a gap, between their current financial management skills and the amount they actually need to support the business.
They require access to ‘high-level’ expertise to:
- actively manage their business,
- plan the future,
- improve processes and
- implement controls,
but they haven’t yet reached the critical mass to justify the investment in a full-time CFO of their own.
Adding more capacity at the same level isn’t the answer either – skills don’t stack upwards.
2 x $50K people can do twice what 1 x $50K person can,
but not necessarily what 1 x $100K person can.
There are also sensitivities around existing loyal staff, who have done nothing wrong but are now ‘in-over-their-heads’ in terms of the balance between their capability and the complexity of the much larger business and they need supplementary help and guidance.
Perhaps this person was the best available candidate and fit-for-purpose when the business was turning over $2M-$5M, but at $10-$20M they probably wouldn’t have made the interview short-list.
Often the best solution is to engage a Virtual CFO to augment your current team, on an as-needs basis.
VCFO consulting is a specialised area – not merely an ‘add-on’ service offered by a generalist public practitioner.
Instincts are gained from
• years of C-Level reporting in big businesses,
• relentless scrutiny by big 4 auditors,
• and the accountability plus exposure to the wisdom of various boards of directors over many years.
The on-demand basis of the relationship with a VCFO, means you don’t have an underutilised and expensive resource chewing away at your bottom line, you only pay for what you need.
David Dillon is a member of the Virtual CFO Association.
The Virtual CFO Association is an elite peer network, advocating the emerging VCFO sector within the accounting profession.