How I manage rapid employee growth

David Lawrence founded web design and hosting firm Web Showroom with Garry Viner and James Lawrence in 2007. The firm has experienced some impressive growth since then, reaching $3.1 million in revenue during 2011.

But there have been some growing pains, specifically when hiring staff in rapid succession. While the company had 38 employees late last year, it added 14 of these in the previous 12 months, and has continued to add more since then.

Lawrence says the company has learned some valuable lessons along the way.

How has Web Showroom been travelling since last year?

We’ve had a great year. We sat down at the end of last year and did the planner for the upcoming year, and we’ve been putting into practice the few things we came up with. We’ve had a fair bit more growth and put on more staff.

Your revenue was at $3.1 million – any updates there?

We’re tracking for $4.65 million this year, so we’re doing very well.

You’re growing quickly, does that make you think about how you fit in the SME space?

It’s funny, we probably haven’t thought about the different thresholds of business and the way that all works, but we’ve definitely become more of a serious enterprise. We’re about to move into larger offices as well.

You’ve been hiring a lot of people. When did this rush of hiring first start?

When we first launched the company, we spent a lot of time coding, finding key personnel, and then when we launched we had a number of leads. We did what all good entrepreneurs do, and then took on all the sales. We had all this work to do and just got to it. That was the beginning of our headcount growth and that’s continued to this day.

It’s just constant growth and putting staff on all the time. And that does put strain on cashflow, which is something we’re a lot better at managing now.

What were the initial problems you had when you first started hiring more people?

We didn’t understand the trade-off between growth and cashflow and investing back into the business. Now, we do understand that, but we’re more likely to invest back into the business and grow.

How have your hiring processes changed since then?

Our attitudes have definitely changed about finding the right staff member for the right role. When we first experienced that rapid headcount growth, we were desperately trying to fill positions, which is always tough in design areas, and we suffered a little bit from interviewing candidates and then taking the best. We didn’t just wait for the right person to apply.

We made a few hires that were perhaps not quite right for us, and not what we need. You may get your revenue, but you’re always getting distracted in terms of management and other issues if the employee is not the right fit.

That would obviously put a lot of pressure on the existing employees as well.

The people who are doing their jobs, they don’t want to hear that recruitment is going to take a month or two longer, so it does take a balance.

Your management processes would have to change as well, could you describe what you’ve done there?

The other thing we’ve become more deliberate about was making sure the areas we grow in are areas where we can deliver good revenue growth and profit growth as well. There are always customers wanting us to do certain things and, in the past, we’ve done those. But as we’ve grown we’ve focused more on the work we can do for our clients that brings profit and success.

Has the cashflow strain ever reached a critical point?

We’ve certainly never gotten to the point where we’re never paying salaries or anything. But it has made us more aware of systems and processes, making sure the work we were doing was on the right track. We needed processes to measures staff members and find out what was working and what was not.

You would have had some experience in your previous business as well.

We’re reasonably experienced – we have other business experience – so a lot of that didn’t come as a surprise.

But one thing that we have learned along the way when it came to employees is knowing when to introduce a new level of management. When we had a smaller business it was fine, but as this company has grown we have had to get used to delegating information further down the line and having other people step up.

What do you think is the biggest lesson you’ve learned, one that other SMEs experiencing fast growth might benefit from?

When we were small we tended to hire people that we liked, and then we had people who we liked who weren’t good at their job at all. Then we hired some people who were really good at their job, but weren’t necessarily a good fit. It’s all about finding that balance.

So we’ve come to know that we need to recruit wider in order to find people who we can work with, but who also have that great CV and skillset we can get the most out of. It’s definitely something we’ve incorporated more into our hiring process.