HR Staffing Strategies for Fast-Growing Companies

Introduction

This paper reviews the staffing practices at Water Tight Irrigation Systems. The author spoke with the Manager of HR and the CEO, who were willing to discuss their recruitment, hiring, employee motivation, and other HR policies at the company. This paper will present the author's findings, review several studies on the architecture and implementation of successful HR strategies, and finally recommend a set of policies that could be implemented at Water Tight.

Water Tight is a company that has grown fairly quickly. From a small shop with five employees five years ago, it has now grown to 250 employees and is one of the leading installation and maintenance companies for irrigation systems in a large metropolitan area. The author interviewed the Director of HR and the CEO in order to understand how Water Tight has found and integrated such a large number of employees in such a short time.

Defining the HR Process at Water Tight

The HR manager was clearly overworked. With one assistant, she was responsible for hiring to cover a net increase of over 100 people per year. Turnover, which was low a few years ago, has climbed to nearly 30% per year. This has a double effect on the HR manager's workload: she must find new employees to add to Water Tight's growing workforce and additional employees to replace those who have left.

Water Tight now performs about 15% of the irrigation system installations in its market area. In the past, it hired employees with experience from competitor companies. Now that Water Tight has grown to a larger size, fewer such employees are available. Part of the problem may be that competitors, not wanting to continue losing staff to Water Tight, improved their own hiring and retention practices. Although Water Tight pays slightly above industry averages, pay alone does not appear to be a sufficient enticement for many workers to leave their current employer.

Training has so far consisted of on-the-job training (OJT). Since many of Water Tight's managers have worked in the field for a number of years, they have generally been able to integrate new workers by having more experienced employees help to show them the ropes. As installation jobs have grown more complex, however, this approach has become a significant problem.

Customers are complaining about leaking installations more frequently than in the past. The CEO attributes these growing quality control problems to a lack of his direct supervision. He noted that when the company was smaller, he was able to bid on every job and ensure that work was done properly. Now that the company has reached its present size, he must depend on managers who are responsible for both bidding and quality control. He admitted some frustration that those managers may not share his same level of expertise or drive — one of the most difficult aspects of company growth for a hands-on founder.

Turnover has risen from approximately 10% per year to 30% over the past year. The HR manager suspects that some departing employees have gone to competitors, but she is not certain. She has been too busy to conduct exit interviews. The turnover adds 75 positions to the 100 she must already fill, significantly increasing recruiting costs. She is considering adding two more assistants to handle the increasing workload, but the CEO is hesitant to approve the additional headcount.

These problems are typical of a fast-growing organization that has moved from owner-direct control to a management layer between the owner and the end product. As in many similar companies, the expertise and drive demonstrated by the owner may not have been effectively communicated throughout the organization. The very elements that fueled Water Tight's rapid growth are now those most at risk of causing that growth to stall.

In short, the CEO and HR manager need to develop an organization focused on better people development and internal communication. This involves more than HR alone, but HR has a central role in the process. Once the CEO has determined the processes he wants to put in place, HR's responsibility is to help the management team find and develop the right people, and to support training and career development in ways that reinforce those processes.

There has been a gradual tightening of the job market over the past few decades. No organization can depend on technology alone to ensure competitiveness — the quality of people recruited and the quality of their training make a significant difference in a company's ability to compete. The authors surveyed a number of organizations and found that 70% were implementing an organizational career development (OCD) program. Notably, the companies did not cite upward mobility as the primary rationale for OCD; instead, most wanted to promote from within, and 14% found a shortage of promotable talent, making internal training a strategic priority.

Problems with the Current HR Process

While the article is helpful in making the case for OCD, it does not go into detail about how such programs are developed or monitored.

The CEO has a critical role in designing and guiding organizational development. This article from McKinsey Quarterly found that CEOs must think carefully about what they want to accomplish and design the organization to make it happen. This may require a shift in the CEO's behavior — from getting things done directly to building an organization capable of embodying the strategies and tactics needed for effectiveness. As part of the article, the authors interviewed Professor Forrester from MIT, who discussed designing an organization for a fast-growing computer firm.

The article is aimed primarily at the CEO, and offers fewer suggestions at the HR level regarding how to support the CEO in building a capable organization.

Annotated Bibliography

This book addresses how to develop learning systems grounded in experience — such as case-based scenarios — rather than relying solely on technique instruction. Although technical training is necessary, grounding that training in experiences the employee or manager is likely to encounter may better prepare them for real workplace challenges. The authors target HR managers responsible for designing training programs and systematically cover training needs analysis, development, implementation, and evaluation. They apply systems analysis tools that provide an objective and thorough examination of organizational needs and the requirements for producing trained, capable employees.

The book makes a strong case for employee training systems but focuses almost exclusively on tactics. It does not thoroughly address the strategies behind training systems, nor the role that top management must play.

I have worked in a company that grew very quickly. While it was in the wholesale electronics business, there were many parallels with Water Tight's situation.

The CEO of that company was a highly effective salesperson who had built a strong network of relationships among retail electronics buyers and stores. She leveraged these relationships when she launched the wholesale electronics company and grew rapidly — from 40 employees in the first year to over 500 in the third year.

I joined the company as a summer worker, so I had limited exposure to the broader organization. I never met the CEO, but I gathered from other managers that she continued to do an excellent job of generating orders with major retailers such as Best Buy and Walmart. As the company grew, she hired managers and placed them in charge of operations, accounting, and sales. Although these managers had those titles, they appeared to receive little direction or communication from the top.

When I joined, the company was struggling to fulfill orders. Purchasing staff worked primarily with East Asian suppliers with a long supply chain and had persistent difficulty coordinating shipments and meeting retailer expectations. They appeared to receive little support from senior leadership.