Technology Infrastructure Breaks at Each Growth Stage
When you have fewer than 10 employees, loose file permissions work fine. Once you hit 25–30, departments need their own security—marketing doesn’t want other teams in their materials, accounting needs restricted access to financials. At 100+ employees, the statistical likelihood of internal fraud increases, so you need robust access controls and monitoring. Plan for a complete technology overhaul at each of these thresholds.
Management Changes You Can’t Avoid
At 10 employees, you can spend meaningful time with everyone weekly. At 25–30, that becomes impossible—you simply don’t have enough hours. By 100, you may not even know every new hire. This means you need formal systems for management, supervision, and accountability. The book Traction by Gino Wickman lays out the Entrepreneurial Operating System (EOS) for companies navigating this exact transition from 10 to 100 employees. Thousands of companies use it successfully.
Increased Threats to the CEO
As your company grows, so do the threats—lawsuits, people trying to manipulate you, and the kind of scandals that make headlines. The CEO’s accountability increases, and the people closest to the CEO need to actively protect both the CEO’s time and judgment. Delegation becomes essential because you can no longer stay involved in every department and every front-line decision.
Delegate Before You’re Forced To
The biggest mistake growing CEOs make is holding on too long. Your job shifts from doing the work to building systems and developing leaders who can do it without you. If you wait until you’re overwhelmed, you’ve waited too long.
Video Transcript
If You Are Growing From a Small Company to a Midsize Company, What Should You as a CEO Pay Attention to?
Well, I am going to share with you some mistakes I have made as I was growing a company. And I am going to share with you some of the insights I learned from other people.
Technological Infrastructure and Security
First, I will share with you some simple items. From a technology standpoint, usually when you have less than 10 people, you don’t have to have strict permissions. A lot of people can access everything except maybe an HR or confidential folder. But as you grow larger, the marketing people don’t want the other departments dabbling in their materials, and the accounting people don’t want everybody to have access to all the financials, and every department needs its own security permissions. And so as a result, you need a more robust security infrastructure and software infrastructure as you grow.
So typically, when you go from 10 employees to 25 or 30 employees, you need a whole different set of software to support your organization. And then again, when you hit 100 employees or more, again, you need that. Another reason for that is when you have five or six employees, you know what each one of them is doing, but when you have a hundred employees, statistically, you are more likely to have a rogue employee or internal fraud or deception. And so you need to have reasonable precautions in place to protect yourself as a company. That is the IT standpoint.
Management and Relationships
Next, from a management and relationship standpoint. You, as a CEO, are going to go from knowing everybody and being able to interact with them on a daily or at least weekly basis when you are 10 employees to say, 25 or 30 employees, where you can’t possibly spend a half hour or hour with each person each week. So you will find as you hit 25 or 30 employees, that all of a sudden, you have much less time with many of the employees. And then when you go to 80 or a hundred employees, obviously if you just do the math, you don’t have enough time in the week to connect with each person. At some point, you will find you have maybe a small amount of role in the hiring process, but you might even lose track of who some of the new hires are, especially if they are more entry-level employees. What does all that mean? It means you need a whole different system of management and supervision and accountability for each employee in the company.
Recommended Resource for CEOs
If you are navigating these changes, one book I highly recommend is ‘Traction: Get A Grip On Your Business’ by Gino Wickman. It talks about the entrepreneurial operating system or EOS, and it is written for companies of about 10 employees who are going to 20, 30, and 40 employees on up to a hundred. It is an outstanding book used by thousands, if not 10,000s of companies in the United States who are within 10 to a hundred employees.
Addressing Threats and Accountability
So we have talked about IT or information technology. We have talked about HR and the management of people, but now let’s talk a little bit more about the threats.
A CEO often comes under more threats. Those might be threats of lawsuits, people who are trying to get something from the CEO, or mislead the CEO. So the CEO has to be much more careful. We all have heard scandals that involve CEOs, whether it is affairs or other messes that the CEO has gotten involved in. And so, the accountability goes up for that CEO, and also the threats go up. CEOs have to be on guard, and the people closest to the CEO need to guard them. Likewise, the CEO’s time becomes even more important. So in the old days, when an owner of an eight-employee company can be involved in each department and each thing and really stay in touch with what is happening on the front lines, a CEO simply doesn’t have time for that. The CEO has to delegate so that the CEO can elevate her attention to whatever is most important for the CEO to pay attention to. What is that? Usually, the most important thing for a CEO to pay attention to includes the next 10 years and setting a strategic plan, the key outside relationships that support the organization, and holding accountable the key inside relationships, so those are going to be the officers and the department leaders, deciding what the company is involved in and what the company is not involved in. In other words, identifying what you are going to say ‘no’ to and what you are going to say ‘yes’ to, then, of course, the CEO is brought into many of the big problems that arise within the company.
Importance of Awareness for CEOs
I will never forget when I had a conversation with Jean Taylor. Jean Taylor is the daughter of Glen Taylor, who owned the Minnesota Timberwolves. And Jean is an outstanding executive and leader and a coach to leaders. I asked her to come speak to a conference with CEOs and business owners, and she and I had a conversation about what is the most important mistake she sees CEOs and business owners make, and she said the quality that often is overlooked is awareness. Because a business owner or CEO is so focused on what is happening, they may not be aware of the issues or concerns that are coming down the line. Sometimes, they are subtly presented and It was very ironic that at the time Jean told me this, I was not being aware of a scandal that was arising within my own law firm. I remember after talking with Jean thinking about, ‘How do I become more aware? What does that look like?’ Because it is easy to say you need to be aware, but how do you become more aware? I am not going to cover that in this video, but I think it is a great question for CEOs to consider. And what I will tell you is what happened next in my firm.
What I didn’t realize is the person I had entrusted with the finances of the law firm had misappropriated tens of thousands of dollars of money we were holding for clients and used that money for an illegal and wrongful purpose without anyone knowing. Of course, I later found out about it and reported it to the appropriate government authorities, and that person was suspended from the practice of law for a period of time. We repaid all of the money to the clients whose money was wrongfully taken, but it was a legal mess that went on for years. I could have avoided that, perhaps, if I had been more aware. If I had been more attentive to what was going on, if I had investigated certain things more that at the time I may not have realized needed further investigation, but in hindsight, I look back and I realized they did. So awareness by CEOs becomes of preeminent importance.
The Loss of Privacy and Time
The former CEO of Yahoo, Marissa Mayer, I believe her name, talked about when she became CEO of Yahoo, one of the surprises to her was how much she lost privacy. Because all of a sudden, somebody else was handling her email, her calendar, and all her communications with people. In fact, many of her personal errands and personal issues that she needed attending to needed some form of assistance so she could devote more of her time to the company. So often CEOs will find that the more people who report under them, the less time they have and the less privacy they have when dealing with all of their personal and family matters.
Avoiding Arrogance and Encouraging Honest Feedback
One other common problem faced by you as a CEO, as your organization substantially grows, is you will be perceived as having the Midas touch. You will be perceived by outsiders as being so successful. And sometimes, that can get to CEO’s heads because as it is growing, things are going well, the system is working, and you might be getting a lot of credit for it and start thinking, ‘Hey, I am pretty smart. It is pretty amazing what I put together.’ Obviously, arrogance and pride are a great risk for any CEO, but there is another part of that that CEOs often miss. And that is that the people around them often don’t provide honest feedback or constructive criticism of ideas because they perceive, ‘The CEO is so smart, who am I to challenge the CEO?’ That results in the CEO being in more of an echo chamber, the CEO says, ‘Here is an idea I had,’ and everyone goes, ‘Oh yeah, that is a great idea.’ ‘Here is an idea I had.’ ‘Oh yeah, that is a great idea.’ And you may have simply the problem of too many great ideas that you can’t execute. You might also have the problem that the CEO is putting out some bad ideas, and the CEO loses the protection provided from reasonable people scrutinizing ideas and giving honest, constructive feedback on those ideas. So I think it is an important part of any CEO’s job as they grow to remind everybody who works with them that they are not all-knowing. Every idea of theirs is not great, and it is the people’s job who work with the CEO to give critical analysis and feedback.
There are some companies that build this right into the management system. Ray Dalio, a great fund manager and author of a book on important principles of life and success in business, talks about how they have a process of voting on ideas, and when the votes are cast, it is cast by various people in management and people who have a different perspective than management. Now, there may be some waiting to the votes, so you are not giving the same weight to a person who has been in the company for a month as the CEO, and you are going to have an expectation that people will articulate their concerns with a particular idea so the merits of those ideas can be scrutinized. But the idea is many great CEOs build a system into their decision-making process in leadership so that the CEO’s ideas are scrutinized.
Growing Pains and the Importance of Structure
So as CEO or business owner, and you go from 10 employees to 20 or 30, or from 30 employees to 100 or 150, you will be making substantial jumps that require an entirely different structure in all different categories of your company. We have covered IT, HR, leadership, and management. Your financial reporting will have to look entirely different. Your organizational structure will look entirely different. This is why so many companies can struggle in that growth process.
Summary
So to summarize, one of the best things a CEO can do when navigating the growth of a company is to clearly identify what should the CEO focus on and stay laser-focused on that and delegate all the other aspects that would vie for the CEO’s attention.
Conclusion
If you have any questions that didn’t get answered, or if you are watching a recording of this, feel free to put your questions in the comments section below. I would be happy to answer them. If you like videos like this where you can learn about business law and avoid some of the common problems that business owners face as they are growing a company, feel free to subscribe on YouTube or any of the other social media platforms that you use. And if you would like exclusive online educational content for founders and business owners, you can get that at aaronhall.com/free. It includes a checklist of common problems faced by new businesses. It includes videos going in-depth into some of those problems so that you are empowered to set up your company for success. Thanks for joining us today. I look forward to seeing you at the next live session.