This is Challenge #12 and it shows up in Stage 2 and again in Stage 3.

In my opinion, probably one of the most under-appreciated Challenges of the 27.


Because it creeps up on most all CEOs overnight. As a Stage 1 company, with 1 – 10 employees, it’s very easy to communicate often and effectively with employees. In fact, people often refer to their companies in this growth stage as a family.

When my marketing communications company was in its early stages of growth, we gave out bonuses in the form of shopping trips and nights out on the town. We had an all-female staff at the time, so shopping, seeing a play and having a great dinner fit all of us to a T! We really were one big happy family. As we grew and added more employees, the gap between what leadership said and what employees heard widened. It became harder to maintain consistency in how employees were treated, it became harder to have all the answers and it became harder to keep everyone engaged.

And with up to 19 people to manage, that family atmosphere started to create its own set of issues. For instance, the employees who had started with us now felt threatened to some degree by the new people joining us. Why? Because those early Stage 1 employees were hired for fit not for specific skills.

As a company grows and starts to delineate specific tasks, the CEO needs to start hiring for specialized skill sets. If those employees who joined the company early aren’t encouraged to keep up their own skill development, the company will outgrow them. It’s easy for the CEO to ignore this critical shift and simply assume those dedicated and loyal early-stage employees will continue to hold their own.

Changes must be made and those changes push a business owner into areas they aren’t necessarily comfortable dealing with. Such as:

  • “Difficult” conversations.
  • “Lack of performance” conversations.
  • “You need to move on” conversations.

If leadership pulls back from these conversations, the communication gap becomes one of those obstacles that can hinder growth. There are two elements at odds here. The demands placed on a leader with a growing number of people to manage increases ten-fold and, according to a Gallup Study, 66% of American workers are either not engaged or are actively disengaged.

As we grew, we could no longer rely on the historical data banks of our trusted employees. It was essential that those processes were captured into manuals and onto systems. It became necessary to create performance plans to be able to reward employees with pay increases. The days of dropping $500 on a dinner as an incentive were over!

Out of necessity, systems begin to replace hands-on work that requires a lot of interaction. There is less opportunity for people to connect face-to-face, which only serves to widen the gap between leadership and staff.  A Stage 2 leader must take proactive steps to break down the barriers. The sooner you can minimize this reality, the more successful a company will be. How does a leadership/staff communication gap impact a company?

  • Low productivity
  • Reduced efficiencies
  • Increased rework
  • High incidents of gossip
  • Lack of commitment
  • Customer service mistakes
  • Project scope creep
  • High turnover
  • Finger pointing
  • Blame placing

These are all huge problems that can take a company down. For this reason, dealing with the leadership/employee gap in Stage 2 isn’t an option; it’s a requirement.

People don’t just become good managers, which is why this challenge is one of the hardest to recognize and eliminate. Good managers are taught; but when you are growing quickly, stopping to train people on how to be good managers doesn’t usually make the prime time.

Help your CEOs recognize that your people are their business. Therefore, tending and nurturing them is what good management is all about. As the CEO of a Stage 2 company, he/she need to become good at managing people so that they can teach others to follow their lead. Depending on a company’s cash flow, they may even want to consider hiring a trained and experienced second-in-command to help manage. Understandably, that may not be feasible, but regardless, a CEO has to set the stage for how his/her employees will engage and how their managers will lead.

Starting on page 132 in my Stage 2 book, Sales Ramp Up: How to Kick Start Performance and Adapt to Chaos with 11 – 19 employees, there are 3 Exercises that will help a CEO address this very difficult challenge. You can get yours at


Your Success. My Passion.
Laurie Taylor, FlashPoint!