5 Critical Mistakes New Leaders Make When Scaling Companies

The Challenge of Scaling Leadership

When a company experiences rapid growth, leadership faces unique challenges. Many first-time leaders or those who have never scaled a company quickly before struggle to adapt. Having gone through this process multiple times, I've identified five critical mistakes that inexperienced leaders often make when scaling companies.

Mistake #1: Over-Hiring

One of the most common mistakes new leaders make is over-hiring. This typically happens because they try to solve short-term pain with long-term solutions.

Why Over-Hiring Happens

In the early stages of rapid growth, inefficiencies abound. Everything needs to be done quickly, often in suboptimal ways. Leaders see these inefficiencies and immediately think they need more people to handle the workload.

However, this approach often backfires. The short-term pain that prompted the hiring may disappear within a few months, leaving the company with excess staff and no clear role for them.

A Real-World Example

I experienced this firsthand with my company Prestige Labs. When launching our supplement line, our customer service manager estimated we'd need 20 reps to handle the initial surge of inquiries. However, after the launch period, we only needed six. We had drastically over-hired based on short-term demand.

How to Avoid Over-Hiring

To prevent over-hiring, I use the "three Ps" framework:

1. Person: Do we truly need a full-time employee for this role?
2. Process: Can we solve this with better processes or systems?
3. Project: Is this a temporary need that could be addressed with a short-term solution?

By considering these factors, you can often find more flexible solutions than immediately hiring full-time staff. Options might include:

• Hiring contractors for temporary surges in workload
• Implementing better processes or technology to increase efficiency
• Assigning short-term projects to existing team members

Mistake #2: The Buddy vs. Boss Problem

Many first-time leaders struggle with transitioning from being a peer to being a boss. This is what I call the "Buddy vs. Boss" problem.

The Transition Challenge

When leading a small team, it's easy to act like everyone's buddy. There's camaraderie and close relationships. However, as the team grows, leaders need to give clear directives and provide feedback - actions that feel more "boss-like."

Many new leaders resist this transition. They fear damaging relationships or appearing authoritarian. However, failing to make this shift can lead to:

• Team members not knowing what to do
• Loss of respect for the leader
• Ineffective leadership

How to Address the Buddy vs. Boss Problem

1. Be upfront about the transition: Explain to your team that your role is changing and why it's necessary for the company's growth.

2. Implement feedback systems: Regular feedback sessions, like "Feedback Fridays," can normalize the process of giving and receiving feedback.

3. Practice giving clear directives: Start small, but make sure you're comfortable telling team members what needs to be done.

4. Balance approachability with authority: You can still be friendly and approachable while maintaining your authority as a leader.

Mistake #3: Delegating Without Quality Assurance

As companies grow, leaders must learn to delegate. However, a common mistake is delegating without implementing quality assurance measures.

The Delegation Trap

New leaders often feel relieved when they start delegating tasks. However, without proper follow-up, they can quickly lose touch with the quality of work being produced.

The Importance of Quality Assurance

Without quality assurance measures:

• Work quality can decrease
• Important processes may be abandoned
• Leaders lose visibility into team performance

Implementing Effective Quality Assurance

1. Track key metrics: Implement systems to track important performance indicators.

2. Use living SOPs: Create standard operating procedures (SOPs) that require active engagement, like checklists in project management tools.

3. Regular check-ins: Schedule regular meetings to review work and provide feedback.

4. Be hands-on: Don't be afraid to dive into details occasionally. The best leaders often maintain a high level of involvement.

Mistake #4: Choosing Hubris Over Humility

Some new leaders mistakenly believe they need to project an image of unwavering confidence and authority. This can lead to a shift from humility to hubris.

The Danger of False Confidence

When promoted to leadership positions, some individuals dramatically change their behavior. They may:

• Act overly confident or arrogant
• Dismiss input from others
• Lose the qualities that earned them the promotion in the first place

Maintaining Humility in Leadership

1. Remember why you were promoted: You likely earned your position through your existing qualities and behaviors.

2. Stay true to yourself: Don't feel pressured to adopt a stereotypical "leader" persona.

3. Seek feedback: Regularly ask for input from your boss, peers, and team members.

4. Admit when you're unsure: It's okay to acknowledge when you don't have all the answers.

Mistake #5: Failing to Loop in Stakeholders

As leaders take on more responsibility, they often underestimate the importance of communication across the organization.

The Communication Challenge

Individual contributors aren't typically responsible for broad communication. However, leaders must keep various stakeholders informed about decisions, changes, and important events.

The Consequences of Poor Communication

Failure to communicate effectively can lead to:

• Misunderstandings and conflicts
• Duplication of work
• Missed opportunities for collaboration
• Perception of incompetence or laziness

Improving Stakeholder Communication

1. End-of-day review: At the end of each day, ask yourself, "Who needs to know about what happened today?"

2. Identify key stakeholders: For each project or decision, determine who needs to be informed or consulted.

3. Over-communicate: It's better to communicate too much than too little.

4. Use appropriate channels: Choose the right medium (email, meeting, chat, etc.) for each communication.

The Reality of Scaling Leadership

It's important to remember that perfect communication is an unattainable goal, especially in rapidly growing companies. As organizations expand, communication challenges will always exist to some degree.

However, by being aware of these common mistakes and actively working to avoid them, new leaders can significantly improve their effectiveness and support their company's growth.

Key Takeaways for New Leaders

1. Be thoughtful about hiring decisions, considering alternatives to full-time hires.
2. Strike a balance between being approachable and maintaining authority.
3. Implement quality assurance measures when delegating tasks.
4. Maintain humility and stay true to the qualities that earned you your leadership position.
5. Prioritize communication with all relevant stakeholders.

Remember, becoming an effective leader during rapid growth is a learning process. It's okay to make mistakes as long as you're committed to learning and improving. By focusing on these areas, you'll be better equipped to navigate the challenges of scaling your company and leading your team to success.

Article created from: https://www.youtube.com/watch?v=RJTcI4nwM3Q