What are the Risks of Uncontrolled Scaling?

Simply recruiting a hundred people to a team without thorough planning doesn't necessarily mean work will be done faster and better. In fact, it causes more problems than brings benefits. Uncontrolled scaling can affect a business's financial stability, cultural cohesion, operational efficiency, and talent management. This article will take a closer look at the problems of growing too fast and share some ideas on how businesses can deal with these challenges.

Financial strain?

One of the primary risks of uncontrolled scaling is hiring without a clear understanding of the market and the project's needs. Financial strain can appear when too many employees are hired at once for unsettled purposes.?

Another thing not to overlook is overpriced candidates. Companies face this risk when scaling without a clear market understanding, which can lead to inflated salary offers. This scenario often unfolds when expanding into new territories or industries without comprehensive research.

How to protect the business from excessive financial losses:

First and foremost, you need to determine your capacity by comparing the number of people you want to hire versus the number you need to achieve your KPIs. If necessary, you can engage external experts to determine the optimal number and type of employees.

The next step is to analyze the market of the country you plan to expand into. Consult with local recruiters and legal representatives to learn about the conditions of employment and then make an informed decision about entering the new country.

If it all seems complicated and time-consuming, a scaling partner is among the best solutions to open up the veil to market insights and easily navigate the process.

Cultural Fit

Fast-paced and extensive hiring can lead to neglecting the crucial aspect of cultural fit. This oversight can cause a decrease in the retention rate and, subsequently, an increase in the cost-per-hire. If employees leave their jobs due to team incompatibility, more resources may be required to find a suitable replacement and perform all the hiring processes once again.

How to ensure a harmonious cultural fit within a team:

When building a team, it's important to define main values, and working culture features that may be a deal breaker. When shared, this information can assist the recruiter and the HR manager in creating a long-lasting team.

Secondly, consider adding a meeting with the HR manager to the interview stages. This stage is called the "Cultural fit Interview" and is held by a team leader, HR Manager, or both present during the call.?

Prescreening for Cultural Alignment

Based on our experience, more than 15% of candidates are eliminated at the prescreening stage due to cultural fit incompatibility. Prescreening with for cultural fit check-list reduces the risk of hiring individuals who may disrupt the existing team dynamics or struggle to adapt to the company's work culture.

Collaborating with a scaling partner enables organizations to implement effective prescreening processes that evaluate candidates for their basic technical skills and cultural alignment.?

Seniority trap

Assigning tasks that don't require high-end expertise to senior employees can hurt your organization's bottom line. Let’s simplify an example to save reading time. Why pay a senior $80 per hour for a task that a junior can do for $20? Of course, the senior will do it faster, but the final cost of this task will be twice as high anyway. Paying a higher rate to experienced employees for tasks that juniors can accomplish at a lower cost can lead to burdening financial strain and a seniority trap.?

How not to get into the seniority trap:?

Careful task distribution based on skill level can help optimize costs while maintaining efficiency. Question yourself the following to get to know whether you really need a senior for that job:

• Does the task align with a senior team member's specific skill set and expertise?
• Is the task time-sensitive to the extent that a senior team member's efficiency is crucial, or is there flexibility in the timeline that allows for the involvement of a less experienced team member?
• Does the nature of the task demand strict quality control?

Senior employees should be tasked with responsibilities that truly require their expertise, while junior employees can handle routine tasks that affect their professional development.?

Operational inefficiencies

When expanding the team or recruiting a new team, all processes must be coordinated; otherwise, the company will experience some of the following issues. Let's take a look at Google's approach and see what it can result in.

Google adopts a unique hiring strategy:

1. They bring in many talents onboard and then build processes for them. The catch? They don't meticulously track the necessity of these processes initially. The result is a maze of in-between managers and tasks that can lead to operational chaos.
2. As time unfolds, Google's management assesses the success of the hiring spree. They thoroughly examine whether every position filled was genuinely essential. If not, the inevitable follows: redundancies. This cyclical process of hiring, evaluating, and potentially downsizing creates a dynamic but unstable situation.

To break free from this cycle and ensure streamlined processes without squandering resources, both in terms of time and money, businesses must develop an expansion plan. This plan should not merely focus on hiring but consider all potential risks associated with scaling.

The essence lies in ensuring that processes are not randomly built around the teams but are instead well-coordinated. An expansion plan acts as a compass, guiding the organization through the complexities of growth and preventing future redundancies.

Talent Management

Unsettled Onboarding?

Effective talent management is essential during scaling, particularly regarding onboarding. Imagine that you have already hired 20 new employees. Who is going to bring them up to speed? Your most experienced team members? How long will it take them to train 20 people? How much project work time will they lose during this process? These are all immense questions - because in reality, it can take 40 hours, 50 hours, or even more.?

How to settle the onboarding process:

Onboarding automation can mitigate the risk of spending excessive person-hours introducing new hires to the business. This includes pre-recorded videos and guides that streamline the onboarding process, minimizing time and financial losses for the organization. Also, along with the full pack expansion plan from a scaling partner, there is a dedicated HR who manages all employees' external processes - their documentation enters them into the systems and helps them adapt.?

Undefined Employee Journey

Failure to define the terms and conditions of an employee journey poses a risk to a business's employer brand. If organizational processes are not consistent (for example, 2 team members had a salary review while others did not), this may result in disagreements among colleagues. Clear plans for onboarding, performance reviews, compensation reviews, and termination procedures are crucial to maintaining cohesion within the team.?

Collaborating with scaling partners in most case scenarios mitigates uncontrolled growth risks by prioritizing cultural fit, carefully balancing senior and junior roles, defining the employee journey, and dealing with many legal issues.

Want to get more scaling insights? Check out our latest articles:

1. Outlook on 2024: Unpacking Business Expansion Trends with Scaling Partner
2. How to Adapt Your HR Processes to a Hybrid Work Mode
3. Top 6 Worst Job Descriptions We've Seen
4. Customized hiring pipelines for dynamic scaling ?

#scaling #sdsolutions #scalingpartner #staffaugmentation