SMALL AND MEDIUM SIZED ENTERPRISES
The capability of the leadership team is the biggest predictor of an organisation’s success. The Covid-19 pandemic has brought this insight into even sharper focus. As an SME scales considerable complexity is added to senior roles and this can quickly overwhelm existing incumbents. Added to this is a lack of attention to a good organisation design. Assemble changemaking senior teams and create value adding structures using The Changemaker Effect’s proprietary science based methodology.
The Case for SME's
The capability of the CEO and the senior team is the single biggest predictor of future business and investment performance. Knowing whether a senior team is ‘big enough’ though is usually left to trial and error. In the case of SME’s this is exacerbated further by a lack of attention to structure as they scale.
The Changemaker Effect’s human capital practice uses a unique science based system to address this problem and brings real rigour and objectivity to human capital due diligence.
At the heart of the science is the notion that we are not all able to handle the same levels of complexity. An early stage business scaling at pace adds significant complexity. The question to solve is what roles will founders and the ‘founding family’ take in a scaled organisation. Without this attention the added complexity overwhelms them and failure is almost certain.
Even where SME owners are big enough their inherent dislike of structure is a major problem. Moving a business from early stage mode where all roads lead to the owner and adding structure and clear accountabilities is critical.
A failure to attend to the 'complexipacity’ of owners, any ‘founding family’ and/or structure has serious consequences as the following case study will demonstrate.
An SME had started to stall in performance. The owner requested The Changemaker Effect’s help to complete some human capital due diligence. The business had been around for 10 years and the original senior management team and ‘founding family’ was still in place and in their original senior management positions. This was exacerbated further by the Sales Director being the owner’s brother in law whom he saw regularly outside of work at family events.
The owner assessed as having very rare ‘complexipacity’ which is often the case with the true entrepreneur. The Directors were all overwhelmed and capable only of operational work all the strategic thinking fell to the owner. As a result the SME was still operating as a ‘founder firm’ with all roads leading to the owner.
The assessments showed that two of the Directors should be repositioned into operational roles or exited. Two new positions were created of Chief Operating Officer and Chief Commercial Officer, the former was filled internally and the latter hired externally but was a known quantity. The operational team were all capable and a structure was created under these two key roles. No operational team members were displaced.
But there was a problem. The Sales Director (and brother in law) now reported to the CCO but it was never a decision that he could quite accept. Nor could he grasp some of the strategic decision making of the CCO because his own ‘complexipacity’ didn’t enable him to see it. Every Sunday he would have Sunday lunch with his sister and brother in law and every Sunday he would complain about the CCO and his actions. Worn down with this ‘noise’ the owner decided to exit the CCO. The Sales Director’s ‘family power’ enabled the wrong decision to be made and the owner in haste and without input took the wrong decision. The business retracted and failed to make the step chain in wanted. The business ultimately settled at the level of the least capable senior team member – the Sales Director which exemplifies commercial impact of getting the people piece wrong.