Most small business owners are in no position to hire a management team in the early days of operation. As the business starts to grow, the owner must take on the role of accountant, advertising executive, human resources director and more. If you find yourself working 16 hours a day and fulfilling every role in your organization, it's time to hire an upper-level management team. Although it's hard to pass power on to someone else, it's something you must do if you want to avoid burnout.
It is important to take all the time you need to plan your management team. After all, you may be hiring your own boss. As you create new positions, remember that you need to match people's skills to the demands of the job. You may be good friends with your brother-in-law, but that doesn't mean he has the skills necessary to run your company. When the time is right, most new business owners hire people for the following positions:
Chief Technology Officer (CTO): A CTO is necessary if your company relies heavily on technology for its survival. This person should be able to stay in touch with technological trends and integrate the important ones into your company's long-term growth strategy. However, the CTO should not be given the ability to purchase every new technology that comes along. One of his or her most important job functions is to come up with programming language that ensures efficient operation of your company's computer systems. The CTO you hire should have strategic planning skills and be able to decide when it's time to upgrade existing technology or invest in better equipment.
Chief Operating Officer (COO): The COO is the person responsible for managing complex operational details. For example, the COO of a package delivery service must plan all the logistics of how millions of packages are going to be delivered in a short span of time. He or she creates ways to track productivity in order to determine if management strategies are working. Even when things are going well for the business, the COO works tirelessly to improve it. This person must possess the ability to analyze data from multiple sources and determine what is useful for the organization.
Chief Marketing Officer (CMO): The CMO is responsible for implementing sales and marketing strategies that will earn the highest possible profit for your company. He or she must be intimately familiar with the products or services your company is offering to the public. It is the CMO's job to differentiate the products or services from similar offerings by the competition and position your company for maximum growth. The person you hire for this role should have the skills and tools necessary to keep up with what the latest trends in the consumer marketplace. More importantly, he or she must understand how to build consumer enthusiasm by releasing new products and services at the right time.
Chief Executive Officer (CEO): If you don't appoint yourself as CEO, you must take care to hire someone whose business strategy, goals and values closely align with your own. That is because this is the most important top-level position in any organization. The CEO has the final say on how company resources are used. He or she also works closely with you to hire the right management team. The person you choose as your CEO should have strategic thinking skills and the ability to see the big picture. He or she must forecast where the business is headed and develop a long-term plan for meeting its goals.
Human Resources Manager: When you are adding employees quickly, you need an experienced human resources manager to help you choose the best possible candidates. This person can help you develop a formal recruiting policy that will reduce turnover in the early months of operation. The human resources director you hire should understand the best methods for identifying ideal job candidates, such as administering skills tests or personality inventories. He or she can also take care of the endless details involved with setting up employee benefit programs.
In many organizations, the duties of president overlap with those of the CEO and COO. It is up to you to decide if this role is necessary in your own company.
Working with an Executive Search Firm
If you are new to the business world, the thought of hiring a new management team may be overwhelming. You have to develop formal job descriptions, research salary expectations, recruit for candidates, interview them and choose who you think will do the best job in each role. An executive search firm has years of experience with finding, interviewing and hiring the best talent. Working with an executive search firm can help you to avoid the significant cost of a bad hiring decision. The following three types of executive search firms are the most common:
Retained: This type of search company is usually under contract to their clients for a specified length of time. You can expect to pay approximately one-third of the expected salary of the person you wish to hire to the retained search firm, whether you actually hire someone or not. Employees of retained search firms often work as consultants to your business. This means that they take the time to get to know your company culture and provide you with the resources you need to find the right candidate.
Contingency: With a contingency search firm, you pay a set percentage of the position you want to fill only when the company actually places someone for you. The payout amount is typically 20 to 30 percent of the new employee's annual salary.
Container: These types of companies offer a blend of retained and contingency services. You typically have to pay an upfront fee of at least $5,000 to start the search and up to 25 percent of the new employee's annual salary once the position is filled.