As noted, in this company, I was to do some management consulting, as well as managing the technical support team. One of the questions that the owners had was about middle management. They had hired a few, and all had failed. To their credit, the owners realized that the problem, in this case, was unlikely to be with consistently hiring bad managers, and was more likely to be something within the company itself. That question was one of the ones given to me to look at.
It took me a while to figure out, and probably longer than it should have. The reason that it took me longer than it should have was that the answer, when I realized it, was very simple. There are breakpoints in a company's evolution. Some may depend on circumstances, market factors, and other external factors. But some of the breakpoints are simply to do with the growth of a company itself. And the simplest of all of these is simply the number of employees.
A startup company has only a few employees. It has a certain corporate culture. Not all companies have the same corporate culture, and corporate culture, as evidence by the different philosophies of those who start companies, can vary in a number of ways. But a startup culture is marked by very open communications, and a willingness to take risks, particularly because the company itself has little value, and therefore risking the existence of the company is not really a major risk.
At about thirty to thirty-five employees, the company becomes a small business. It is at this point that open communication among all employees is no longer sufficient to manage the business. Therefore more formal structures, such as middle management, may need to be adopted. The next break point is at about two hundred employees, where one moves from small to medium-sized business, and requires more formality. The final major breakpoint, at least in terms of size, comes at about a thousand employees, where one moves from a medium sized business, to a corporation. The formality, policies, procedures, and other structures must be more formally established at this point, and enterprises, having become increasingly risk averse as they grow, really don't like risks at all at this size.
The company that I was doing consulting for was at thirty-five employees. It was becoming a small business. It needed more formal structure. And one thing it particularly needed was for the owners to stop dealing directly with every employee in the company. This was undermining the authority of the middle managers who were being hired.
As long as it took me to figure this out, it took me almost as long to convince the owners that this was the problem, and that it was a real problem. I can remember a final meeting with the president where he finally realized what I was talking about. He said, "You're right, but we have other things that we need to deal with right now. Let's meet again in two weeks." I had other jobs that I needed to do to fulfill my consulting, so I readily agreed.
Two weeks later we met. He called me into his office. And closed close the door. (You know it's going to be a problem when they close the door.) He said, "You're still right. But we like it this way."
I still use this story as a cautionary tale for professionals and consultants. At this point my consulting gig was over. It was over because I had fulfilled my contract. I had identified the problem, and I had recommended the solution. The owners of the company didn't like the solution. But it wasn't my job to force them to solve the problem. I had identified it, and proposed a solution, and they didn't like the solution. It was their company. It wasn't mine. They could do with the company as they liked. That is the way business works.
Of course, six months later they had to sell out to a larger competitor. But it was their choice.
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