For our first guest blog post, we're delighted to introduce headhunter and charity cyclist extraordinaire Gary Chaplin, MD of Communicate North. Gary, who has been called the ‘go-to’ man for executive career advice in the North of England, tells us what he believes SMEs should focus on in order to achieve real growth
Growth is a word that we hear a lot of at the moment, often attached to the word ‘negative’ (itself a too-oft used word in the media). As a nation, and a business community we have become obsessed with ‘Growth’ – but not growth as we know it, nor as it should be.
The monthly and quarterly [GDP] growth figures draw immense business, political and media interest. Whether the 0.2% shift is positive or negative provides immense ammunition and or seemingly national importance. But ask any business leader about it – they will cite it as rubbish, or a more colourful form of the same. It has less effect on the majority of businesses than the colour of the MDs underwear.
0.2% is one-fifth of one percent. Business growth or shrinkage of that amount is meaningless, akin to the 25 stone weight-watchers member crowing about a weight loss the equivalent of a shot-glass of water. For context, 0.2% of this screen would fit within these parentheses . Hardly material.
Too many people major on the minor things
The businesses (especially SMEs) that focus on, and get concerned because of GDP figures are not leading their businesses, and are certainly not planning for, nor likely to attain growth. Every business craves growth of one form or another, financial being the most obvious and common. Planning that growth takes the right attitude, the right skills but also the appreciation of what growth both means, and looks like.
To attain (lasting) growth, a business must increase [just about] every area of its operation in identical proportion to its revenue. Volumes, variable overheads, materials, utilities etc are commonly understood, yet often ignored. It boils down to investment. We have all seen businesses where investment in critical components or infrastructure, instrumental in growth is given less attention, and less resource than ensuring the CEOs Bentley is kept clean. These are also the businesses, from my experience, that aren’t growing – usually the opposite.
But the most critical area that businesses often overlook is head-count – and particularly executive head-count.
This typically falls into two areas – new resource and up-skilled resource. New resource is the easier to understand and embrace, but can have the greater impact on your costs. As a business grows it will need extra specialist execs in key areas. A young/small business can likely get away without a Finance Director, or a Sales Director, or an HR Director – with either the CEO/Business owner performing those duties, or outsourcing them to an appropriate provider.
But beyond a certain level businesses will benefit from bringing those functions in-house, or risk spreading other management too thinly, or incurring onerous costs from outsource providers. It is a real leap of faith – talking a CEO through the hiring of an Operations or Managing Director, incurring and committing to a significant £6-figure overhead is not easy. But speak to every single person we have delivered one to, and they all wish they had done it, or at least planned it, months if not years earlier.
The second area is improving the skills within key functions. Old Mavis the book-keeper might be great at getting purchase orders collated before approving anything, but pulling together a set of management accounts, or IFRS reporting is likely to be a challenge too far. Bringing someone in more senior is vital, but can be highly emotive as it will more often than not, signal the departure of another member of staff.
The most common function for such head-count growth is Sales, typically for reasons of pure growth – greater focus, greater strategic power or simply sheer effectiveness of the sales function and its selected routes to market. Whether employing a first Sales Manager/Director, or improving the sales lead into an exec who can encompass Marketing (capital ‘M’), this hire is the most public, the most visible, but also the greatest risk.
The next prime area is most commonly Operations, most commonly to monitor and manage the day-to-day running of the business, leaving other execs/leaders to focus on their areas of strength – typically developing the business; driving growth.
The one commonly overlooked theme with growth driving (and arguably all) executive recruitment is the need and benefit from forward planning. My smarter clients will engage me weeks and sometimes months before the need is even likely to materialise. This facilitates my ability to work with them, map out the role, map out others in the organisation that may be able to fulfil the role and plan the entire process.
That helps me, no doubt, but the benefit to my client is immeasurable. Not only do many businesses then decide not to recruit, opting for medium-term internal solutions, it ensures businesses avoid the always flawed temptation of the knee-jerk reaction of forgoing Mr/Mrs Right in preference for Mr/Mrs Right-Now....or even worse “The mate from the pub” (you would be staggered how many senior management positions are held by the owners mate, irrespective of unsuitability).
Plotting executive talent requirements as an intrinsic part of your growth strategy is vital.
Final word – The Entrepreneurs Smartest Hour
Even the smartest entrepreneurs often miss the most critical phase of their business’s growth – when *they( become a risk to the business, rather than a key asset. The best person to set-up, inspire, motivate and lead a business from 1 to 100 employees, £0-£20m, is almost certainly not the best person to take the business beyond that level and break £50m/£100m/£500m barriers etc.
Look at what it takes to run a £bn business, the skills required are totally opposite to those of the Entrepreneur – neither could do each other’s job. Recognising that occurs right at the point when the first management position needs to be sourced – handing over is a tough task for most entrepreneurs, but finally recruiting a CEO to take over the running of your business, your baby is nigh-on impossible.
...and yet, every time I have been involved in such a recruitment process, the resultant surge in business performance, and growth, has been meteoric.
Growth needs total commitment from the top.
Gary Chaplin is Managing Director of Communicate North, a leading recruitment and Executive Search business.