Headcount increases complexity

I went on a very informative training course for operations leaders last year run by Operations Nation.

We were lucky enough to have a session on organisational design with Ben Gately, the CEO of Charlie, the HR platform. He had a lot of interesting things to say, but one of the ones that stuck out for me the most was:

The size of your organisation does not dictate how successful you are.

Of course he's right.

Having a bigger team is never the right goal. What you want to do is generate more value and impact.

If you can, through innovation, do double the amount of good, and make double the amount of money, with the same number of people working at the same fun and sustainable pace... this is what you should do! In fact part of being a high performance organisation is constantly looking for ways to do more with the resources you already have. However you do it, growing value is the goal - and headcount can be a distraction from this. The big wave of tech layoffs in 2023 showed us exactly that. Even leaders at big companies get tempted to on a hiring spree when there is money in the bank. It’s a speculative bubble if there isn’t enough underlying value-generating capacity in the roles being created. So: be cautious about hiring!

Having said all that, headcount is not totally disconnected from success.

At some point, if what you are doing is working, and there is demand for you to do more - and you want to respond to that demand rather than remain at your present size (not obligatory) - then you will need to hire some more people. And if you hire more people, then the complexity of your organisation grows. If you don’t learn how to manage that complexity then you will find yourselves in trouble.

Small organisations can generally get away with operating informally. If you have fewer than 20 employees, then you can handle almost all management issues through the network of social relationships that already exist. People find out what other people are working on by overhearing it.

Once you tip over 20 people, this approach starts to fail. It's an invidious kind of failure, because it is slow. There's no breaking point, there's just a steady gumming up of the works, as everything becomes a bit harder to do.

All of which is to say: if you have made smart decisions about expanding your workforce, a price of your increasing success is that you are going to have to figure out "being a good organisation". The longer you put off this question, the harder it becomes to address.