Successful Scaling During High-Growth: Put The Right Leaders In Place
As a global healthcare platform startup, H1 was on a fast but steady path for growth heading into 2020.
Everything changed in the blink of an eye when Covid-19 hit.
Suddenly, the demand for healthcare data exploded, and our vision of connecting the healthcare ecosystem was put to the test in record time. We had to ramp up and do it fast, or we’d miss the window to respond to the biggest healthcare crisis of our lifetime.
We had just 25 employees in the U.S. as of April 2020, and we clearly needed a lot more to expand our operations and handle the unprecedented demand we were seeing from customers and prospects. We went on a hiring spree last spring, and by January 2021, H1 had 120 employees in the U.S., which meant onboarding nearly 100 new people in a remote working environment and in a relatively short period of time.
Like every other business, H1 had not planned for this unexpected global healthcare crisis and what was required for immediate, exponential growth. Hopefully, another event like Covid-19 won’t happen again, but for entrepreneurs who experience an industry shake-up or an unprecedented event that requires the rapid ramp-up of their organization, I have some lessons to share from our mistakes and our successes.
To better manage through this hyper-growth stage, I researched what other companies did during a period of fast growth — companies such as Google and Airbnb. Google used a rationing system, where managers were allowed to hire only a small number of people per quarter. Airbnb’s process (in the early days, at least) often meant it took six months or longer to fill a position.
I had to strike all these approaches off the list — they were not an option for us, given what was happening in healthcare at the time.
So, I went to our company’s board and advisors. Every single person said that the magical 60-70% number isn’t true and is limiting. Their advice boiled down to this: Once you have the leader in a given function, scale under them. Do not scale until you have the leader in the function. Once they are in place, scale and do it quickly. That may equal a 60% increase in headcount — or a 180% increase. At the end of the day, I was advised that the percentage did not matter, but making sure we had the right leader in place did.
This turned out to be the single best piece of advice I received on scaling our business. I was advised that my job as CEO now needed to be focused on hiring and firing executives. This was hard for me to believe after everything I had been doing across departments, but in fact, it turned out to be true. I soon learned that it was my primary job and the most important task to get the leader for each division of our company in place and let them lead and scale. So, I backed into that role immediately and focused on hiring and firing executives.
It truly worked. It turns out that when you hire a great leader, they know what to do, and you do not need to micromanage them. All you need to do is point them in the direction of the company and its core mission, then set that leader off to the races.
When we tried to scale a team before a leader was in place, it broke. We hired people who were not great culture fits for our organization. But once the right leader was eventually hired, they shook it all up anyway.
Even onboarding did not work well until we had the proper people/human resources (HR) team in place. To be honest, we tried and failed at onboarding until that crucial HR leader was in charge and scaled up their team.
Here are my biggest takeaways from the whirlwind of the last nine months. While hopefully, nothing like Covid-19 will happen again, entrepreneurs should expect the unexpected and be prepared to hire and scale their business quickly. My advice:
• Focus on getting the right leader in place at the core functions of your business: HR, marketing, sales, engineering, customer service, business development. All of these departments need a reliable leader whom you trust to grow your business.
• Once you get that leader in place, give them the freedom to build their own team and lead without you micromanaging.
• There is not a magical number for how many people to hire in a given year. It could be a 60% increase in headcount or a 180% increase. Do not make the number the focus.
• If you have the right leader, hiring and onboarding employees remotely become much easier. People want to work for that leader, they often come with a team that has worked with them in the past, and it remains a tight-knit culture.
When we followed this process at H1, we were able to grow our staff from 25 to 120. Our client base grew significantly over that same period as well, with almost zero attrition. We have also had no management turnover. And when we measured employee satisfaction in April 2021, the results were stellar.
Our experience shows that CEOs who focus their time almost exclusively on hiring the right managers during periods of high growth will put the foundation in place that they desperately need in order to grow without breaking.