Owners and senior executives are well aware of the challenges of promotions. Promotions are commonly employed as rewards for hard work and dedication. However, this strategy comes with challenges. Consider, for instance, an exemplary young employee who consistently delivers outstanding performance. Promoting this individual to department manager appears to be a fitting reward, offering increased compensation and prestige. However, a first-time manager has no management experience. On paper, they do not have the necessary qualifications for management. In these cases, employers are faced with the Peter Principle, in which employees skilled at one job are promoted to another job for which they are not qualified. While this situation is not uncommon (and can be managed effectively), it is crucial to recognize the challenges associated with such promotions. Both the employer and employee must acknowledge that the new role demands different skills and approaches. They must commit to training, oversight, and adopting expectations and success based on a learning curve.
Company CEOs Also Struggle with “Promotions”
Successful business owners and senior executives frequently encounter a similar dilemma. As the company’s leader, they strive to grow the business, and each phase of business growth necessitates new competencies.
Here’s where the irony comes in. If they successfully grow the company, they are “promoting” themselves and face the same problems outlined in the Peter Principle. Each phase of business growth effectively “promotes” the owner into roles for which they have no prior experience. For example, managing a $1 million company does not inherently qualify one to manage a $5 million company; the latter requires different skills.
Although it is possible to grow into these new roles and “learn as you go,” the risks are high. If the leader makes mistakes, they risk losing momentum, diminishing margins, losing people, and even sinking back down to the $1 million level.
Running a growing company demands a conscious and continuous effort to address skill gaps, learn, and adopt. While this may seem daunting, it is a natural part of realizing business growth and success. Recognizing one’s skills gap at each new stage of ownership is vital. Approaching each phase with the understanding that new learning is required is essential. If the necessary skills are not acquired, significant difficulties or even business failure may ensue. This is why some companies experience sudden failures after prolonged periods of success.
Understanding that each growth spurt renders one momentarily unqualified to manage the newly expanded company is critical. The organization may experience strain during this transition until these skill gaps are addressed. Awareness of these deficiencies and proactive efforts to close them is essential for continued success and growth.
Managing Skill Gaps
Spotting skill gaps early on is one of the most effective ways to avoid the negative impact of having an unqualified owner manage a bigger company. It’s all about regularly checking in on the skills and knowledge at play. Start by making a list of weaknesses and areas that need improvement. When creating this list, seek the opinions from advisory boards, mentors, or corporate coaches. “Outsides” may find it easier to identify and prioritize professional development.
Continuous learning is also crucial to adapting to new roles. This could mean diving into books, subscribing to relevant blogs and newsletters, listening to audiobooks, or tuning into business podcasts. Formal education, like MBA programs, workshops, and conferences, can also be beneficial. Finding a mentor or coach who’s been through similar transitions can offer invaluable advice and guidance.
Delegation and Team Development
Recognizing the importance of delegation is essential. While personal development is valuable, it may not happen quickly enough to keep pace with a growing company. Assigning tasks to team members with the right skills can bridge this gap. Additionally, hiring experts or consultants for specific needs, such as system creation, CRM onboarding, trade show management, sales team reorganization, and logistics refinement, can help maintain smooth operations.
Investing in leadership development programs can enhance management and decision-making abilities. Implementing oversight and analytics helps identify issues and leverage successes. Regular performance reviews are another way to track progress and highlight areas for improvement, fostering a culture of continuous growth.
Embracing the Journey
Growing a business is a journey filled with challenges and opportunities. The 7 Stages of Business Success framework emphasizes the importance of embracing each growth stage with the knowledge that continuous learning and adaptation are required. Identifying and addressing skill gaps and implementing effective development strategies can prepare owners for successful leadership transitions.
Every stage of ownership demands a new set of skills. By continuously learning and adapting, owners can navigate these transitions successfully and achieve their business goals. 7 Stage Advisors specializes in helping growing business owners and CEOs leverage opportunities, build necessary skills, and organize their firms for sustained growth and profitability. For more information, contact us to schedule a consultation, and let’s continue growing your business together.