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Tuesday, February 10, 2015
Don't Grow Too Fast! It's Deadly
You want your business to grow. Are you ready? Can you handle an immediate 10% increase in business, and short-term growth in the 20-25% range? If the answer is "no," you have growth management preparation to do.
Most companies would answer, "Of course! Too much business is not the problem. We need more business!" Unfortunately, as often as not, the company isn't ready. This can be lethal to any business.
Look at your current supply line. Add 10% to the number of unfilled orders for every day for the next month. Can your current staff, equipment, and standard timeline absorb that change without causing any disruption? For the second month going forward, bring the additional orders to 13% above current numbers. How does it look? Do you have enough staff? Is your equipment in shape to handle the additional demand? Where is the breaking point? 20%? 30%? You need to know. You don't want to get there by surprise.
Lucy and Ethel have a delicious problem!
Frequently, companies try to handle the growth in business without increasing their staff or capital costs. Big mistake. More output always costs more money, whether in the short term by paying staff overtime and bonuses, or in the long term by replacing frustrated and valuable long term employees.
When an organization grows rapidly, two things tend to suffer - quality, and morale. Infrastructure breaks down under the additional load. Machines overheat. Computers crash. Files are lost. Deadlines are missed. Overtime hours are ordered. Pressure builds. Newer employees don't perform as efficiently or as loyally as long-term employees; it takes time to bring them up to speed and proficiency. Existing employees are suddenly responsible for substantially larger workloads with no increase in their paycheck. New employees frequently interrupt the existing staff looking for help and guidance. Existing employees become tired and discouraged, and quality and morale are in trouble.
Clients notice the late deliveries, quality control issues, and declining customer service. They are frustrated that quality is fading. And like all bad news, it travels fast. Reputation and market share begin to falter. Rebuilding a reputation in an industry or community is a very, very slow process. Many companies don't make it. (Think Target in Canada.)
In a period of growth, it is important to have a growth plan. Do you need to institute a temporary formalized training program to bring new employees up to speed? Is it time to tune-up or overhaul your machinery? Are your computers due to be updated or replaced? Does new machinery mean you need more existing workforce training?
Growth is great. It often comes as a surprise as a competitor pulls out of the market, or a new ad campaign is unusually successful. As soon as you notice the upswing, it's time to build morale and loyalty. Buy the staff lunch a few times a month. Make sure everyone has the best quality, most functional equipment necessary to perform their job. The best performance from your employees comes when they feel important and respected. A couple of overtime hours isn't a reward to most employees. Relate to them as people. You've hired them to do a job, and to do it well. Give them the right physical and psychological tools.