Article: Dilemmas of a small firm

Strategic HR

Dilemmas of a small firm

As a start-up organization expands, it comes across various cross-roads where critical decisions have to be taken
Dilemmas of a small firm

This is a hypothetical case that narrates the growth pangs of a small firm. As the firm size increases, the organization feels the need for formal processes and the CEO faces the challenge of balancing passion with performance.

Krish the superhero was finding life a little difficult. While he was able to vanquish all the villains who kept cropping up periodically, all this action had been playing havoc with his work life balance. As a result, Krish decided to set up an organization called Jaadu and Company (JnC). The vision of this organization was to create a fear free world where people could live together. The mission was to vanquish all evil and create a sense of self belief in people so that they stop looking for super heroes.

To achieve this objective, Krish created two departments – the Avengers and the Developers. While the avengers headed by Uma helped him fight the enemies, the developers led by Ravi worked on teaching people to develop belief in themselves. Each department had five sub teams of 2-3 members each. He gave them attractive pay packages and ESOP’s to encourage them to work with JnC.

A third department headed by Shikha was created to act as a support function for both Avengers and Developers and also to generate the funds for JnC. Since this was a small organization (about 30 people), Shikha looked after administration, HR, IT and finance support for the whole organization. She had a team of two people reporting to her – Rohit who looked after the HR and administration and Chanda who looked after IT and finance. While the Avengers and Developers went out and did their job, Shikha’s team had to do a lot of background coordination – sometimes even work round the clock to get things done. They had to scan for areas needing superheroes, ensure the Avengers had all the equipment they would require, arrange for their travel, accommodation etc. They also had to provide online support for the Developers, organize meetings where they could address a larger audience and rope in external trainers when required. Shikha herself kept busy raising funds from various organizations to fund the initiatives of Jaadu and Company.

One of the earliest challenges that Krish faced was to evaluate the performance of his people. While evaluating the performance of Avengers appeared easy (given one just had to count the number of people zapped or imprisoned), how could one measure the impact of Developers or of people in the administration function? On what basis should he recruit, train and pay his people? In the absence of a clear picture, Krish decided that since the objective of JnC was service, there would be no formal system of performance evaluation or differentiation. They were doing well and making a difference and that was all that mattered!

For the next two years, things went well. JnC started expanding. They were now a 70 member organization. Although chaotic, JnC was well on its way to deliver on its promise of creating a fear free world. Many organizations started hiring Avengers or Developers to meet their requirements. Soon the leaders of other planets also began calling up Krish to send his best Avengers and Developers to their planets. JnC moved from an organization dependent on goodwill of sponsors to an organization that was self-sufficient – in fact a profitable enterprise.

With this growth came teething troubles. Organizations that wanted to hire the services of JnC started asking for the best people to be sent to them. Although Krish intuitively knew who the best ones were, he was not sure he could justify his choices if asked. In fact, with the number of teams expanding, he was afraid that he may actually not know the best ones! Competition in the form of Jeevan and Sons (JnS) was also taking away people from JnC. However, since there was enough work to be done, both JnC and JnS continued to grow.

Over the next two years, the organization expanded further from 70 people to 100 people. Both Avengers and Developers worked with a passion for the benefit of humankind. As a result, the number of villains started going down and people started becoming brave. Many people in the Avengers and Developers team started ‘sitting on the bench’.

In such a scenario, Shikha called for a meeting with Uma, Ravi and Krish to discuss cutting down the Avengers and Developers team by 10-15%. This would reduce the costs and ensure that the drop in revenues would not impact the organizational profits. She made it clear that if the trend of reduced revenues continued, they would again move to being an organization dependent on external funding.

However, all the people in the meeting were resistant to the idea of rightsizing for two reasons. One, they felt that good and bad was cyclical, good was followed by bad and vice versa and that just because there was peace right now didn’t mean peace would last. They had to be ready when evil came back again. Second, they were unsure if they could identify who to let go of. Even if they let go of some people, they were afraid of the impact on the people who were left behind.

At the end of the discussion, everyone was left with numerous questions crossing their minds. Should they let go of some people? If yes, how should they identify whom to let go of and whom to retain? If they decide to continue with everyone, how to best utilize all of them such that the company can make the ends meet and gradually grow further?

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Topics: Strategic HR, #ChangeManagement, #HRInsights

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