Leadership in a Fast-Growing Company

Introduction 

Research on fast-growing companies is a rapidly-expanding field in economics, management, and entrepreneurship. Studies on expertise, experiences, and knowledge of leadership strategies in fast-growing companies is scanty. While several studies highlight the uniqueness of fast-growing companies, only a few extend to the scope of examining the unique nature of management challenges faced by such companies (White, Souza & Mcllwraith, 207). This paper focuses on research on fast-growing companies from a management outlook. The paper includes a condensed review of literature from peer-reviewed journal articles as well as academic research reports on the leadership and management of fast-growing companies. 

Overview of the Topic 

The literature on fast-growing firms was virtually fictional until the invention of the terms “Mize and Gazelles” by Birch and Medoff (1994), which defined the differences in patterns of growth between new leisurely growing and new rapidly growing companies. Research has revealed that fast-growing companies generate a bulk of new employment opportunities in the contemporary economies (White et al., Yu, 2017). As a result, most researches on fast-growing companies have been done at macro nature focusing on the contribution of such companies on creation of employment, industrial aspects, production upgrading, innovations, and their outcomes. With only a few studies on leadership and management strategies in new fast-growing companies, there is flimsy knowledge on appropriate leadership practices for fast-growing companies. This gap in the literature is a regrettable one as it leads to a lack of knowledge and methodical evidence about founders and managers of fast-growing companies as well as their actions and strategies in the phase of fast growth. This leaves academia, policymakers, and investors aiming at increasing the rapid growth of companies or facilitating the emergence of more fast-growing companies with an absolute lack of scientific evidence on which to base their recommendations (Yu, 2017). 

Topic relation to specialization 

Executive leaders in fast-growing companies often find themselves at a fix as regards the kind of transitions or administrative changes to make due to the complexity of decision making in such companies. The literature reviewed illustrated various management strategies and their potential contribution to understanding leadership organizations in fast-growing companies (Palalic, 2017; Yu, 2017; Ghafoury, Elyasi &Amiri, 2019). 

Fast growth in a company can be a tremendously volatile phase and, at the same time, a thrilling moment for the company. The company booms, sales, and proceeds too increase significantly. The number of employees and workload also increases significantly, and human resources management may become a challenge to the sustainability of the growth. Team leaders, therefore, need to be prepared and adequately financed to make the right decisions in the phase of rapid growth to ensure sustainability (Ghafour et al., 2019). Discusses below are a few approaches that team leaders can use to handle rapid employee increase and managing workloads. 

Understanding the root of rapid growth could be the first step to handling any challenges that come with it. As a team leader, it is imperative to pinpoint the exact factors contributing to the growth to avoid losing them in the process of solving challenges. Finding a reliable mentor is another approach. Being a team leader doesn’t necessarily mean that they should deal with the problems of rapid growth alone ( Wennberg, 2013) . Asking for help from experienced entrepreneurs could reduce the stress of huge workload and managing team members. The chances are that the mentor has previously experienced the same challenges and knows how to handle it. 

Flexibility to adapt to rapid growth trend would also help team leaders to manage the human resources at their disposal better. This involves testing different strategies of managing rapid growth such as capacity building through enhancing new capabilities and skills among employees to enhance efficiency and effectiveness of the company amidst rapid growth. The approach also involves introduction of organizational, structural, and systemic changes at some point to keep up with the increased workload and number of employees (Minelgaite, Guomundsdottir & Stangei, 2018). At this time, it is important for team leaders to be effective and inspire employees to adopt any potential changes. 

Another approach would be measuring the needs of the staff and managing their workload to avoid employee burnouts due to a stressful working environment. The rapid growth of a company translates to a need to add more staff ( Segarra & Teruel, 2014). Team leaders should be at the helm of assessing the current workers to determine whether their roles can be optimized while ensuring that the workloads are manageable. 

Review of the literature 

Findings from reviewed literature on leadership in rapidly growing companies was categorized into leadership capabilities of managers in fast-growing companies and building proper systems and structures to adapt in the rapid growth of companies (Wennberg, 2013). 

Leadership capabilities of managers in fast-growing companies 

Perhaps the most compact pattern of literature on the leadership capacity of managers in rapidly growing firms concerns their experience and skills in such firms. A study of thirty high growth firms in the United States by Segarra and Teruel (2014) highlighted four general traits of highly accomplished companies with rapid growth. They included the manager's growth into the managerial role, capabilities of the manager, and those of hired employees; a communicated vision of expanding the firm and induction of new innovative structure and systems during growth. 

Mason and Brown’s (2010) assessment of the perceived challenges associated with the rapid growth of nineteen Canadian high growth firms affirmed the findings of White et al. (2007) on the general characteristics of a fast-growing company. The study also reported the challenged encountered by the high growth firms, including managing the rapid growth, financial, and human resource management. As evidenced in the review, the above-mentioned challenges and characteristics of high growth companies are further advanced and substantiated in other recent studies. Case in point, Coad, Daunfeldt, Holzl, Johansson & Nightingale (2014) alluded that executive leaders of high growth companies often have a functionally balanced team with regard to managerial positions, key employees and responsibilities. 

Goetz et al., (2016) comparative study comprising of high growth companies and conventional companies managed by women in the United States revealed that staff in high growth companies expressed willingness to make sacrifices for the sake of the companies and dynamically planned for imminent growth, unlike the conventional companies. Moreover, the study reported that high growth companies adopted the team-oriented organizational design and emphasized leadership concerns in the process of growth. 

A study on family-owned high growth companies in the United States by Demir, Wennberg and McKelvie (2016) opined that team aspects such as intellectual conflict, effectiveness, cohesion, and strength of a group, were positively and significantly associated with a company achieving rapid growth. On the contrary, sentimental conflicts was found to be negatively linked to the fast growth of a company. The study is in harmony with the findings of Mason and Brown (2010 and Goetz et al. (2016) on the factors influencing rapid growth and the characteristics of a fast-growing company. 

The reviewed literature fails to cover the precise details of types of leadership and practices that can influence the growth of a firm positively. However, the literature has quite clear evidence of the effectiveness of leadership behavior and capabilities in new fast-growing companies. Taken collectively, leadership skills and competences in high growth firms are fundamental factors for rapid growth, particularly for small and fledgling fast-growing companies founded by a single manager. The literature review also proposes that having a vast leadership team with explicit capabilities and responsibilities is essential for large mature companies. 

Building formal structures or capacities to adapt in HGFs 

The findings reviewed here relate to the adaptive strategy suggesting that highly effective fast-growing companies need to introduce organizational, structural, and systemic changes at some point during the growth. Various researches have investigated the type of systems and structures to be brought in when a company experiences significant growth-induced change. Apparently, this is not a simple task as planning for and predicting future problems for a fast-growing company can be complex, with many such firms failing in the growth phase when more systems and structures prove necessary to accommodate the rapid growth (Ghafoury et al., 2019). Subsequently, there is no probable “one-type-fits-all” kind of organizational and systemic resolution for high-growth firms. The success of management and structural changes may be highly dependent on company-specific factors. 

A study by Palalic (2017) on ninety-five United State- based high-growth firms found that the firms profited from adopting cost control systems and effective human resource management during the growth stages of the firms. The results were similar to the findings of Coad et al. (2014) , which emphasized that effective management of human resources had a positive relationship with the growth of sales only where social resources like external networks of managers were exceedingly developed. The significance of the external networking capacity of managers was also highlighted in a study on fast-growing companies in the United Kingdom's electronic sector by Shneor et al., (2016) . 

Management of fast growth and evasion of setbacks calls for restructuring and upgrading reporting systems and management accounting, especially for companies experiencing rapid growth in terms of sales. Yu’s (2017) study alluded that high growth firms in Spain differed from declining and medium growth companies in that rapid growth companies have higher solvency and financial liquidity. The study highlighted the essence of management accounting systems in ensuring that sales proceeds do not lower the company’s liquidity. The rapid growth companies ascertained that sales revenues were not held in account receivables. Rather, the revenue was changed into cash. 

Carlsson, Douglas, and Wennberg's (2012) study on high growth manufacturing and business service companies in Sweden indicated that a decline in growth could be linked to financial problems and successive failure, particularly in concentrated sectors. The research alludes that executive leaders should devise proper formal structures, reporting, and billing systems to manage rapid growth in the companies. The study is contradicted by the findings of Minelgaite et al. (2018), who argued that growth is difficult to predict and control through introducing new structures and systems. The authors outline the need for capacity building instead of planning for structural and systemic transitions as an adaptation strategy to the rapid growth of a firm. The argument is supported by research findings of Demir et al. (2017), who reported that planning for transitions and setting specific goals were not associated with rapid growth while customer focus and enhancing the capabilities of managers and key employees were. Precisely, the authors mentioned staff development, human resource training, fiscal incentives, and inventory options as shared traits of a rapidly growing company. 

Brown, Mawson and Mason (2017) maintained that managing fast growth in firms is dependent on capacity building to get things fixed when current structures can no longer sustain the growth. She reasoned that diverse approaches could be applied to cope with rapid company growth, including organizational restructuring, to ensure that employees are not overwhelmed by work and outsourcing some services and activities. Bringing on board people with a better understanding of the problem and how it can possibly be solved as well as new skills development were also outlined as adaptive approaches to rapid growth. 

Similarly, Lopez and Puente’s (2012) study reported that human resource reforms, such as engaging a mix of employees and employing highly competent staff, had a positive influence on growth. In addition, the stratagem of managing rapid growth by adaptive capacity building rather than formal management transition has some back up from Shneor et al., (2016) who indicated that managers are well able to manage fast company growth through shaping time factor in terms of deadlines and pace of production. 

Conclusion 

The current literature on adapting to rapid growth indicates a conflict with some researches arguing that high-growth companies need to introduce systemic and structural changes to manage growth while others maintain that capacity building is more critical in adapting. With the few reports and articled reviewed, different designs and measures applied, no irrefutable evidence can be drawn to decide the best of these two approaches, but a combined strategy is well suited in managing rapid firm growth. 

References 

Birch, D.L., & Medoff, J. (1994). Gazelles. In L. Solmon, and A. Levenson (Eds.), Labor Markets, Employment Policy and Job Creation. London: Westview Press. 

White, R. J., D'Souza, R. R., & McIlwraith, J. C. (2007). Leadership in venture backed companies: going the distance.  Journal of Leadership & Organizational Studies ,  13 (4), 121-132. 

Yu, Z. (2017). Outstanding Leadership Characteristics of Chinese Fast Growing Enterprises. 

Palalic, R. (2017). The phenomenon of entrepreneurial leadership in gazelles and mice: A qualitative study from Bosnia and Herzegovina.  World Review of Entrepreneurship, Management and Sustainable Development ,  13 (2-3), 211-236. 

Ghafoury, H., Elyasi, M., & Amiri, M. (2019). Identification of Organizational Leadership Dimensions in Iranian successful New Technology-based Firms in successful transition to fast-growing stage-Multiple case study. 

Minelgaite, I., Guðmundsdóttir, S., Guðmundsdóttir, Á. E., & Stangej, O. (2018). Moving Icelandic Companies Global Through Visionary Leadership: The Case of Alvogen. In  Demystifying Leadership in Iceland  (pp. 111-124). Springer, Cham. 

Wennberg, K. (2013, May). Managing high-growth firms: A literature review. In  Background Paper for OECD LEED Programme Workshop on “Management and Leadership Skills in High-Growth Firms”, Warsaw . 

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Mason, C., & Brown, R. (2010). High growth firms in Scotland. 

Coad, A., Daunfeldt, S. O., Hölzl, W., Johansson, D., & Nightingale, P. (2014). High-growth firms: introduction to the special section.  Industrial and Corporate Change ,  23 (1), 91-112. 

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Demir, R., Wennberg, K., & McKelvie, A. (2017). The strategic management of high-growth firms: a review and theoretical conceptualization.  Long Range Planning ,  50 (4), 431-456. 

Demir, R., Wennberg, K., & McKelvie, A. (2016). ACE research vignette 055: The strategic management of high-growth firms. 

Carlsson-Wall, M., Douglas, E. & Wennberg, K. Death by Success? Financial Distress in HighGrowth firms. Working Paper, Stockholm School of Economics. 

Brown, R., Mawson, S., & Mason, C. (2017). Myth-busting and entrepreneurship policy: the case of high growth firms.  Entrepreneurship & Regional Development ,  29 (5-6), 414-443. 

Shneor, R., Jenssen, J. I., Vissak, T., Bulanova, O., Isaksen, E. J., & Kolvereid, L. (2016). Growth aspirations among women entrepreneurs in high growth firms.  Baltic Journal of Management . 

Lopez-Garcia, P., & Puente, S. (2012). What makes a high-growth firm? A dynamic probit analysis using Spanish firm-level data. Small Business Economics, 39(4): 1029-1041.