What Stalls Growth? The Capacity and Capability of your People.

What Stalls Growth? The Capacity and Capability of your People.

In my work with mid-market businesses across New Zealand and Australia, I am often asked to help solve problems with growth. Over the years I have identified some key reasons why businesses don’t grow as fast as they should or stop growing altogether. Over the next few blog posts, I will outline the top reasons why growth stalls, and suggest changes that you can make to ensure your business keeps on moving forward.

Capacity Stalls Growth

The relationship between capacity and productivity

Do you have enough capacity in your workforce to grow? Did you know that studies have shown that on average, the general workforce is only productive for 50-70% of the time? Flipping the coin, this means that between 30-50% of the time, nothing productive happens. I regularly see companies contemplating hiring extra staff because they think they have reached capacity in productivity. But in reality, they already have enough staff, they just need to increase the productivity rates of their existing workforce. When the CEO takes a closer look at each role and how productive it has been, they often find that it has not been performing as well as they thought it was.

How to improve capacity and productivity

To improve the productivity of your teams, you need to focus on accountability. For every role, function or process, there should only be one person who is accountable for making sure it works. You should even hold someone accountable for scaling the business.

Accountability keeps your company running smoothly and is linked to the key internal processes and functions that drive your business. Identify one role in your business that is accountable for each of your critical processes. You will need to determine KPIs for each process that tell you if the process is running well and delivering the results you expect. The role is held accountable to delivering the KPIs for the process. Then you will be able to easily keep track of your company’s performance and where necessary, make changes to keep your business running faster, cheaper and smarter.

Capability Stalls Growth

Capability refers to the knowledge and skills someone has to complete a task or role. Capability stalls growth when the capability of your employees does not match the growth of your business. You may have skilled and knowledgeable staff today, but when you are growing fast, will they have the capability to roles of your future business? Do they have the ability, skills and resources to grow with the business? If not, you will face bottlenecks and your growth will be compromised.

Why Capability is so Important

Capability is particularly important when you are growing because you need your employees to not only to do their job well today, but you also want them to build their capability to match the growth of your business. Building capability within your business is all about developing your staff to become more capable. And this is just as vital for your management teams as it is for your more technical staff.

Hire for the future not the present

When you employ someone, take some time to consider if they will be capable of fulfilling the role now, and in 3 years’ time. Hiring a person who fits the bill now but lacks the capability or skill set for what is required in three years’ time, will stall your company’s growth. This is because they usually cause a bottleneck within 12 months, as their skills set does not grow at the same rate as the company’s. Before you hire someone, you need to have a clear idea of where you want the business to be in the future and employ the right people from the outset.

How to hire to match company growth

Your 3-year strategy is set so that you can see what you need now and in the future. Therefore, it should also include what roles are required now and in three years’ time. Your strategy has to be clear on what structure will be required in order for your company to grow. It cannot just be a vision or a loose plan and must include what roles will be required within the future structure.

Your strategy should be in place before you complete the job description of the roles required. Then you will be hiring to match your strategy, deliverables, and growth projection. (I’ll talk more about strategy as a key element to business growth in the next part of this blog series).

Invest in professional development

Make sure you have a plan for your staff to develop their skills as your company grows.  You will then avoid the company stalling because your workforce has not been able keep up with growing their own capabilities as the company grows. I often see problems occur when company growth outstrips the capabilities of the middle and senior management team, in particular, and there is no one left who is qualified to drive growth further.

Additionally, a company that doesn’t focus on learning and development pathways for its staff will have problems with employee performance, engagement and retention. According to LinkedIn’s 2018 Workforce Learning Report, 93% of employees said they would stay with a company if it invested in their careers.

How to develop your teams to match your growth

Make sure your 3-5-year business strategy is clear and accessible to your employees. Talk to them about the future direction of the company. Identify their strengths and interests and offer your productive team members training opportunities that build upon their skills and keep them interested in staying with you. Develop a team that is going in the same direction as your business, and one that will also be able to deal with any problems as they arise.

Capability Builds Capacity

When done right capability building within your business will also build the capacity of your teams. That means you will have skilled and productive staff driving your business forward.

So, if your growth has stalled, check first to see if there is a problem with the capacity and capability of your teams. Once you are sure that all is well with your staff and that you have processes in place to build capability and capacity – the next thing to concentrate on in order to grow your business is your strategy. The goal is to have skilled people, productively executing a great strategy… but more on that next time.

  • About the Author, Leigh Paulden

    Leigh Paulden is the only Senior Certified GI Business Consultant in New Zealand. He works with mid-market business leaders looking to grow. He creates the clarity and certainty needed to make great decisions and achieve scalable and sustainable success.

    Find out more about Leigh or contact him to discuss taking your business growth to the next level.