The roles of a CEO in a small company

This article describes how the roles of a CEO change as the company grows from 1 to over 50 people.

About 10 years ago we (managing directors of small companies) started stealing the CEO title from the big bosses of giant international organizations. No matter how we call ourselves though, leading a company of 30 is still a universe away from leading a company of 30 000. Furthermore, it is different to run a company of 5, 15 and 50. Here’s why:

Stage one: 1 to 5 people

At that early stage we (CEOs of small companies) are player-coaches. To be honest – more players, than coaches.

Here’s how Wikipedia defines playing coaches: A player-coach (also playing coach, captain-coach, or player-manager) is a member of a sports team who simultaneously holds both playing and coaching duties.

Player-coaches are most common in amateur teams which is exactly what our companies are at that stage 🙂 Still, we aim to be Bill Russells  – he is a professional basketball player who served as the playing coach of the Boston Celtics from 1966 to 1969, winning 2 NBA championships.

At stage one your time is divided in the following way – 70-80% being a player; 20-30% being a coach.

No matter how big the organization is, as a coach you have to take care of 5 things: 1. Strategy (why, what, how); 2. People (who); 3. Structure (roles; processes); 4. Finance (how much); 5. Self (Our organizations can’t grow if we don’t grow).

As a player, you do what you do best – be it sales, product, content, development, etc. Very often, all of the above.

Even at that early stage, we need to start identifying who are the people within our team who demonstrate leadership potential.

Stage two: 6 to 10 people

A very important transformation of the CEO’s roles should occur at that stage. We need to gradually reverse the situation from being a player 70-80% of the time to being a coach 70-80% of the time.

A lot of us get stuck at this stage because of our inability to make that shift happen. As a result you see a lot of organizations that can’t grow their team much larger than 10-15 people.

There are multiple reasons for this to happen – we may not have the right people on our team, our roles as a player may be too specific and we cannot delegate them to anyone else, etc. No matter how good we are at finding excuses, the problems is us – the CEOs.

In order to make that shift we need to invest time in building the next coaches throughout stage 2. When our organization is 10 people old, we need to already have 1 to 3 people who are taking more responsibilities as a coach.

Stage three: 10 to 30 people

Keep it that way and improve. The more we grow, the more leaders we need to develop. At that stage we also need to identify the people who are ready to manage managers (which is a slightly different game :).

The main trouble maker at this stage is structure – roles and processes. I believe that structure is vital from day one. Most CEOs differ – it’s on their low priority list until the organization grows to about 15 people. Until then their operations might be less efficient and they might be moving slower but the company is still able to grow. Some alchemists are even able to successfully lead an organization of 20 which has a vague distribution of roles and no clue of processes.

But that’s as far as we can go without structure. If we struggle to grow beyond the 15-20 threshold, here’s where we need to dig deeper.

Stage four: 30 to 50 people

Let’s do some simple arithmetics. If the ideal team size is 5 to 8 people we can presume that ideal teams have 6.5 people on average 🙂 If the CEO has a team of 6.5 people and each of their direct reports leads a team of 6.5 people, this makes a total of 43.25 people in the organization.

Growing beyond that number requires for us to have a stable middle management layer. We need to start developing these people in stage three in order to have them ready for their new roles at that point.

NEXT: “The four steps to conflict resolution within your team”. Interested? Subscribe to CEOmoments’ mailing list and get it right in your inbox:


About me: Apart from acting as a CEO of DEV.BG (the biggest IT community in Bulgaria) I help CEOs of small companies build their business. If you face a case I can help you with, drop me a message on LinkedIN.


 

Photo by Diggity Marketing