Navigating Organizational Change As You Scale From 1-1,000+ Employees

Why is it important for the CEO and the leadership team to adjust their approach as their organization scales?

Growth puts new demands on the CEO and leadership team – what works in the early stages may not be effective as the organization grows, so adjustment is crucial. Leaders need to evolve their strategies, communication styles, and team structures to match the complexities and challenges that accompany growth.

Processes and teams can inhibit growth if they aren’t equipped to scale – in the early days, your organization might be playing “swarm ball”, where everyone pitches in wherever necessary. However, as the organization expands, the need for specialized roles, clear communication channels, and efficient decision-making processes becomes paramount. Leaders must be astute in identifying when the company has outgrown certain practices or personnel.

What are common problem areas that leaders might face as their organization scales?

Anticipating and addressing talent gaps – leaders must continually assess the capabilities of their team members and identify any gaps that may hinder growth. This includes recognizing when certain individuals may no longer be the best fit for their roles and making strategic decisions regarding hiring, training, or restructuring to ensure the organization’s continued success.

Maintaining communication and engagement – as the organization grows, so does the importance of fostering communication and engagement among team members. Clear communication becomes the lifeline that ensures everyone is aligned with the company’s mission and objectives. Moreover, maintaining high levels of engagement becomes increasingly challenging but crucial for sustained success.

Role changes – leaders must be willing to shed the multiple hats they wore in the startup phase and focus on their core competencies as the organization matures. This often involves relinquishing certain responsibilities, delegating tasks, and hiring specialists to handle specific areas. The ability to navigate these transitions effectively determines the organization’s capacity to scale and thrive amidst growth challenges.

What are the key intervals of employee growth, and how does your organization need to adjust at each stage?

Inflection points: the law of 1s, 3s, and 10s – according to this principle, significant changes occur whenever the organization triples or increases by an order of magnitude in size and, in the earlier stages, in certain multiples: from 10 to 30 employees, 30 to 100, 100 to 300 and so forth. These scale changes impact management approaches, leadership structures, and communication dynamics, necessitating adaptation and evolution at each stage of growth. Recognizing these patterns allows leaders to navigate growth effectively and anticipate the challenges associated with each stage. While every organization is unique and every path different, here are some common patterns I’ve observed.

1-10 Employees
Role of the CEO	Visionary jack-of-all-trades – set the vision, provide inspiration, and manage virtually every aspect of the business outside of product development. Responsibilities encompass fundraising, team building, sales, marketing, legal matters, and more. Their ability to articulate a compelling vision, attract talent, and inspire dedication is crucial for the company’s success. Depending on their technical skill, their coverage areas will differ –  non-technical CEOs are often more experienced and involved with finance and business. Technical CEOs have more experience and will have a heavier hand in product and engineering.
Leadership team structure	Your whole team is close-knit with a high degree of ownership – this team typically consists of individuals with complementary skills and perspectives who are deeply invested in the company’s mission. Everyone knows each other personally, and they tend to be excited self-starters.
Org chart characteristics (anecdotal)	No formal org chart at this stage – swim lanes and areas of responsibility emerge naturally. Personal relationships among team members are crucial, as they spend significant time collaborating and navigating challenges.

In this phase, communication is relatively straightforward – as everyone is closely involved and can easily coordinate efforts. Clarity of roles, responsibilities, and objectives is paramount for laying a solid foundation for future growth.

Key failure points in moving up from here include:

Co-founder relationships – co-founder dynamics lay the foundation for the company’s culture and resilience. Clear communication, aligned goals, and contingency plans for potential conflicts are essential. Establish mechanisms like equity splits and vesting agreements to incentivize cofounders to remain committed to long-term success. 

Losing key team members – family situations change and people’s ability to take on the risks of an early-stage company can evolve over time. Strong relationships and shared commitment to the company’s vision often helps to mitigate this risk. Open communication, transparency, and a supportive team culture are vital for navigating the uncertainties inherent in early-stage entrepreneurship.

10-30 Employees
Role of the CEO	Revenue and fundraising – the CEO still is ultimately, if not any longer solely, responsible for the company revenue line for the company. Strategic hiring –  the CEO must consider whether to hire individuals who can fulfill immediate needs or those who possess the potential to lead the company through future stages of growth. This involves weighing trade-offs between hiring junior staff who can grow into leadership roles versus bringing in experienced professionals who can immediately contribute and potentially lead teams as the company scales but will need to roll up their sleeves and do the job they did years before. Consider long-term suitability – acknowledging that someone other than the CEO may be better suited to lead certain functions in the future is crucial for long-term success. Whether due to scale, specialization, or personal preferences, recognizing the potential need for leadership transitions demonstrates strategic foresight and adaptability. Transition from hands-on to strategic leadership – delegate operational tasks and focus on strategic initiatives. This involves relinquishing certain responsibilities and empowering leaders within the organization to take ownership of their respective areas. Effective delegation ensures that the CEO’s time and energy are directed towards activities that drive the company’s long-term growth and success.
Leadership team structure	Lean leadership structure with limited hierarchy – key executives or department heads are responsible for overseeing specific functions such as engineering, design, or sales. While some departments may require an additional layer of management, such as customer service or support, this should be the exception rather than the norm.  Clear delineation of responsibilities – establish clear swim lanes and define reporting relationships within the organization. This ensures accountability, clarity, and alignment among team members. Department heads or team leads play a crucial role in bridging the gap between the CEO’s strategic vision and the day-to-day operations of their respective teams.  Strategic alignment across departments – while each department may have its own goals and priorities, it’s crucial to ensure alignment with the broader company objectives. The leadership team and CEO play a pivotal role in fostering collaboration, breaking down silos, and promoting a unified vision across the organization. Regular cross-functional meetings, shared goals, and open communication channels facilitate alignment and synergy among different teams. Empowerment and development of emerging leaders – department heads or team leads should be empowered to take ownership of their areas of responsibility, make decisions autonomously, and develop their teams. Cultivates a pipeline of talent to ensure long-term sustainability and success.
Org chart characteristics (anecdotal)	Foster collaboration between emerging layers – as departments expand and specialize, hierarchies start to form, with individuals reporting to others and functions becoming more specialized. It’s essential to bridge gaps and facilitate communication and coordination across teams. Siloed or fragmented workflows can lead to inefficiencies, misunderstandings, and missed opportunities.  Maintain organizational cohesion – despite growth and structural changes, maintaining cohesion and communication within the organization remains paramount. Regular communication among leadership team members fosters alignment, ensures transparency, and facilitates collaboration across departments.

Key failure points in moving up from here include:

• Instilling decision-making accountability – it’s important to ensure that team members understand their roles in contributing to decisions versus making decisions themselves. While input from various departments is valuable, micromanaging or overly debating decisions can hinder productivity and stifle innovation. People with a high tolerance for ambiguity will be helpful. 
• The tendency to seek consensus on every decision leads to decision paralysis and inefficiency – while collaboration from stakeholders are essential, it’s important to empower individuals to make decisions within their areas of responsibility. Over-reliance on group consensus can impede progress and prevent the organization from seizing opportunities. It’s also important that people understand the difference between contributing to a decision vs. making a decision.
• Trust, autonomy, and accountability – team members should feel empowered to take initiative, make decisions, and take ownership of their work. A lack of trust, micromanagement, or a blame-oriented culture can undermine morale, creativity, and productivity. Without cultivating this culture at this stage, these problems will compound with scale.

30-100 Employees
Role of the CEO	Enable scalability through people leadership – a skilled people leader can enhance talent acquisition, development, and performance management processes, driving overall organizational effectiveness. By prioritizing hiring professionals with experience in scaling organizations, the CEO can ensure that the company has the infrastructure in place to sustain growth. Good people leadership pays dividends in talent acquisition, retention, and organizational resilience. Focus on direction and alignment – while the CEO remains key driver in critical decision-making, fundraising, and external relations, their internal focus shifts towards setting strategic direction, ensuring alignment with organizational goals, and evaluating the leadership team’s ability to meet the demands of growth versus doing the work themselves.
Leadership team structure	Expansion of leadership layers – with the addition of two layers of management below the CEO, the leadership team becomes more defined and specialized. This structure allows for clearer lines of authority, delegation of responsibilities, and improved coordination across departments.  Geographic dispersion – the team is likely to expand geographically, requiring new communication strategies and tools to facilitate collaboration and alignment. Remote work, regional offices, and global expansion necessitate adjustments to communication cadence and workflow processes to maintain cohesion and effectiveness across the organization. Formalization of back-office functions – finance and HR among others start to need special attention. Financial considerations like accounting, financial planning, and budgeting become increasingly complex. HR functions, like recruiting, performance management, compensation, and benefits require greater specialization. Great people leadership helps to hire better talent.
Org chart characteristics (anecdotal)	Diverse and specialized leadership roles. A leadership team with distinct functional heads emerges, including some combination of: • Customer support • Finance • Marketing • People • Product and design  • Sales • Technology Shift towards in-house resources – this transition is driven by the increasing complexity of operations and the need for greater control and efficiency. Critical functions often benefit from dedicated internal resources rather than external consultants or fractional executives. By building in-house expertise, companies can better tailor their strategies, processes, and systems to meet their specific needs and objectives, for example in Finance, People and IT.

Key failure points in moving up from here include:

• Caution with C-level titles – while some companies may opt to assign C-level titles to early hires or key executives, caution is advised, particularly in startups. It’s essential to consider the scalability of roles and individuals’ capabilities in handling increased responsibilities as the company grows. Giving C-level titles too early may lead to challenges if the individual’s skills and experience do not align with the demands of the role as the company scales. Instead, opting for VP-level titles provides flexibility and allows for easier adjustments based on performance and organizational needs. 
• Resource allocation – when deciding whether to bring functions in-house or continue relying on third-party vendors, companies must carefully evaluate their strategic priorities, resource constraints, and growth trajectory. Factors such as the complexity of the business, regulatory requirements, and investor expectations can influence these decisions. Additionally, companies may assess the trade-offs between the costs and benefits of internal versus external resources, considering factors such as expertise, scalability, and flexibility.

100-1000 Employees
Role of the CEO	Continue assessing CEOs capability to lead – When assessing whether a CEO is qualified to lead as a company scales, several performance indicators and qualities can provide valuable insights: • Quality of Team Building – observe the caliber of individuals the CEO hires; hiring individuals who have experience in roles larger than the one they’re being hired for suggests that the CEO is thinking strategically about the company’s growth and is willing to surround themselves with competent leaders. • Objective Achievement – a CEO’s effectiveness is marked by their ability to achieve key objectives. This may involve meeting revenue targets while maintaining a steady pace of development, innovation, and quality and spend control. • Problem-Solving Skills – as the company grows, the CEO must navigate increasingly complex challenges, including their capacity to delegate appropriately, empower their teams, and make strategic decisions that drive the company forward. • Balanced Involvement – qualified CEO strikes a balance between being informed about the day-to-day operations of the company and providing strategic direction at the executive level.  Assess of leadership scalability – just as the CEO’s capabilities must be evaluated, it’s essential for CEOs to evaluate whether existing leaders can scale with the company or if new leadership is needed. This assessment often comes too late, as CEOs tend to delay asking these critical questions until the organization is already experiencing significant challenges due to lack of scalability of key functional leaders.
Leadership team structure	C-level title emergence – with three to four layers of management, the organizational structure becomes more intricate. This complexity is exacerbated by geographical dispersion and varying time zones, making coordination and communication more challenging. At this stage, the company is able to handle more C-Level titles to help manage these changes. Focus on scalability – companies that reach this stage have likely found a good product-market fit and are aiming to scale up their operations to capture a larger market share. There’s a clear understanding of the ideal customer profile and target markets, which guides the company’s growth strategy. Readiness to hire replacements – leaders must be willing to hire individuals who could potentially replace them in the future. This means hiring individuals who may have more experience or capabilities than the current leadership team members. These decisions can be challenging but are crucial for the long-term success and scalability of the organization.
Org chart characteristics (anecdotal)	Investment in product development – while scaling up operations, there’s also a focus on expanding product development and research and development (R&D) functions. This involves meeting incremental demands across international or adjacent markets and identifying new opportunities for revenue generation. Expansion of go-to-market functions – The company rapidly expands its go-to-market functions, including sales, marketing, and customer support. These functions are crucial for capturing more of the market and driving revenue growth. Continuous enrollment of employees – CEOs and senior leaders must continuously engage and motivate both new and existing employees. This involves reiterating the company’s vision, articulating the significance of their work, and fostering excitement about the future. By consistently “selling” the company’s mission and goals, leaders can maintain high levels of engagement and commitment among employees.

Key failure points in moving up from here include:

• The vision, mission, and values – despite repeating the same messages, it’s essential to recognize that for many employees, especially new ones, these messages may be heard for the first time. Consistent communication helps align employees with the company’s objectives and fosters a sense of belonging and purpose.
• Leadership capability changes – not every leader that thrives in a smaller company is capable of managing the rapidly growing organization. Leaders who were effective in smaller settings may struggle to scale their leadership to match the company’s growth trajectory. This poses a critical inflection point for both the CEO and other leaders within the organization.
• The leadership team’s perception of the average performance goes down – the company is no longer a darling startup – employees are likely not as invested as the early hires were. Create an onboarding system to help them navigate the company’s processes, systems, and culture, and implement checks and balances around quality.
• Rapid hiring pace – the company is likely hiring at a rapid pace to sustain its growth trajectory. While rapid growth is desirable, it can also strain resources and hinder productivity if not managed carefully. With potentially 50% of the workforce being new hires annually, the average tenure at the company decreases significantly. This frequent turnover can pose challenges in terms of knowledge transfer, cultural assimilation, and productivity.

What do organizations need to keep in mind as they scale beyond 1,000 employees?

Importance of back office leadership – effective leadership in back-office functions such as General Counsel, CFO, and Chief People Officer becomes crucial. These leaders not only need to be experts in their fields but also adept at working collaboratively with the team. They play a vital role in balancing risk management with the need for productivity and performance, as internal processes can start to slow down progress.

Ability to terminate employees when necessary – while there must be protections in place for employees, the termination process should not be overly burdensome. Lengthy paperwork and excessive proof points create unnecessary delays, leaving the organization vulnerable when performance issues arise. It’s essential to have a streamlined process for addressing performance concerns promptly, rather than allowing them to linger for months.

Shifts in company culture – the company undergoes a cultural shift as it transitions from a startup to a scaled organization. More checks and balances are implemented, and administrative processes become more significant. While there are still exciting opportunities, there’s also a greater focus on risk avoidance and operational efficiency.

Avoiding traps in growth – as the company enters a more structured phase of growth, it’s important to avoid falling into traps such as overly rigid annual planning cycles. Instead, the focus should be on maintaining flexibility and adaptability to continue driving innovation and growth.

How do you think about decision-making as your company scales?

Set the tone early on – establish a clear decision-making philosophy from the beginning. For example, some companies, like Amazon, adopt a “disagree and commit” approach, where open, contentious conversations are encouraged, but once a decision is made, everyone supports it. Defining this philosophy early helps shape the culture around decision-making.

Disseminating decision-making authority – determining who has the authority to make certain types of decisions, and what roles and responsibilities those decisions address, is key. For instance, decisions about offering discounts to customers may require approval from both the head of Sales and the CFO. The CEO may be consulted, but have clarity that decisions are made below CEO level below defined thresholds of size and risk.

Scaling decision-making complexity – as deals and decisions become more complex with growth, it’s important to adapt decision-making processes accordingly. This may involve creating committees or escalation paths for specific types of decisions. For example, larger deals may require input from multiple stakeholders, with the CEO serving as a tiebreaker in case of disagreement.

Differentiating between one-way and two-way decisions – It’s helpful to categorize decisions as either one-way or two-way doors. One-way decisions, such as testing different marketing strategies, can be made relatively autonomously by teams. However, two-way decisions, such as entering into exclusive partnerships, may require higher-level approval due to their potential impact on the company.

Fostering informed decisions – it’s important to ensure that decision-makers are well-informed and empowered to make the right decisions. This involves providing access to relevant information, fostering productive conversations, and avoiding unnecessary involvement in decision-making processes.

How do you think about internal communication as your company scales?

Formalize communication processes – while internal communications may have been organic in the early stages of the business, it becomes necessary to formalize processes as the company grows. This includes establishing channels for sharing information, such as Slack channels for announcements and Q&A sessions, and defining the format and frequency of all-hands meetings, creating AMA (ask-me-anything) forums, and multi-modal communications (written, shared video, slideshows).

Ensure leadership alignment – It’s crucial for the leadership team to be aligned on key messages and issues before communicating them to the rest of the organization. This involves regular discussions among leadership to address concerns, share updates, and ensure consistency in communication.

Promote transparency to foster trust – leaders should be open about sharing key wins, challenges, and strategic initiatives with employees. This includes being transparent about company performance, financials, and decision-making processes. Not everyone will agree about a decision, but if they understand the basis of a decision you build trust, which is essential to performance.

Establish guardrails to manage communication – it is just as important to have guardrails as it is to have transparency. This includes setting expectations around response times for inquiries, providing rationale behind decisions, and avoiding repetitive discussions on the same topics.

Create Scalable Systems to Support Communication – in order to maintain both transparency and guardrails, establish a system to support internal communication efforts. This may involve implementing tools for sharing updates and facilitating discussions, as well as establishing protocols for responding to inquiries and feedback from employees. As the company grows, the communication infrastructure needs to scale accordingly. This may involve revisiting communication channels, adjusting formats of meetings, and allocating resources to support internal communication efforts.

What resources and voices can CEOs and executive team leaders lean upon as they scale from 1-1000+ employees?

Board of Directors – the board of directors can provide valuable guidance and support to CEOs and executive teams. Board members bring diverse expertise and perspectives, and they can offer strategic advice, mentorship, and accountability as the company scales. Building a strong and supportive board can be instrumental in navigating the challenges of growth.

Mentors – mentors can play a crucial role in providing personalized guidance and advice to CEOs and executives. These mentors may be experienced entrepreneurs, industry veterans, or business leaders who have successfully scaled companies themselves. They can offer insights, share lessons learned, and serve as sounding boards for decision-making.

Investors – investors, especially those with experience in scaling companies, can offer valuable insights and support to CEOs and executive teams. Beyond providing financial backing, investors can offer strategic advice, introductions to potential partners or customers, and access to their network of contacts. Engaging with investors who have a track record of supporting companies through growth stages can be particularly beneficial.

CEO Peer Groups – joining CEO peer groups or other industry-specific CEO networks, can provide CEOs and executive team leaders with a valuable support system. These peer groups offer opportunities for networking, knowledge sharing, and peer learning. CEOs can exchange ideas, discuss challenges, and learn from the experiences of their peers facing similar growth-related issues.

Executive Coaches – executive coaches can provide targeted support and guidance to CEOs and executive team leaders as they navigate the complexities of scaling their companies. These coaches offer personalized coaching sessions, leadership development programs, and tools to enhance executive effectiveness and performance. Engaging with an executive coach can help leaders develop their leadership skills, overcome obstacles, and achieve their growth objectives.

What are the most important things to get right?

Product-market fit – ensuring that your organization has a strong product-market fit is foundational. Without this fit, scaling efforts will falter. This involves understanding your target market, their needs, and how your product or service meets those needs effectively.

Transparent communication – employees need to understand the company’s goals, priorities, and expectations. Transparent communication fosters trust and alignment, enabling everyone to work towards common objectives.

Outcome-focused approach – define clear outcomes and goals for the organization. What are the most important things for the company to accomplish? Establish systems that make these goals transparent and drive accountability across the organization.

What are common pitfalls?

Resist the “Everything is Important” trap – as the organization grows, it becomes increasingly challenging to prioritize effectively. Resist the temptation to treat everything as equally important. Instead, prioritize ruthlessly. Clearly articulate the most critical objectives, followed by the next most important, and so on. This clarity of direction is essential for maintaining focus and efficiency, even as the company scales.