By Matthew Gutierrez
Pittsburgh Post-Gazette
Facebook’s mantra for its developers once was, “Move fast and break things.”
It’s a common theme among young companies: Strive to attain as much new business as possible. Yet gearing for growth is easy to overlook, and its possible effects can cause irreversible damage.
“Growth is fun, but growth is hard,” said Lauren Gallagher, director of operations at Denali Group’s Pittsburgh office, which now employs 55, up from 14 in 2013.
About 50 percent of new companies fail in their first five years, according to a 2014 Gallup report. Even for businesses that overcome early hurdles, new challenges await.
A Florida-based procurement and supply chain management company, Denali Group works with clients such as American Express, American Airlines and Microsoft. On the corporate level, Denali has grown 400 percent over the past decade.
Denali added a talent manager to focus on recruiting, training and retaining employees. There’s now a sense of organizational maturity when it comes to compensation, timing, promotion, transparency and engaging with clients.
But there has been a cultural framework and willingness to mold, Gallagher explained.
“We don’t think we’re perfect,” she said. “We’re always willing to change and adapt.”
A mature firm is expected to have set protocols, said Denali’s manager within client delivery, Jon Bazzani. New hires have begun asking, “You have a process for this, right?”
And while Denali has integrated those new processes, the entrepreneurial spirit that helped drive it past the startup phase is embedded in much of what it does, from impromptu floor meetings to brainstorming sessions to client engagement.
A couple of years ago, if an employee had an idea, the individual would be encouraged to pursue it on his or her own. Now, employees are asked to consult with others in small “thought groups,” where they pause to ensure they’re going in the right direction on projects.
“Sometimes you have to pause,” Gallagher explained. “It’s go, go, go. Stop. Where are we going? We do need to put the foot on the brake and make sure we’re all in the same direction.”
In managing growth, Guttman Energy has had to alter the way it markets itself. When the Belle Vernon, Pennsylvania, oil and fuel supplier launched its website two years ago, it did so with the goal of increasing visibility.
A “Fuel Matters” blog is posted every weekday. The company hopes to soon enable customers to complete transactions with just a few clicks.
“We stood back and said, ‘What makes us different?’” said Scott Cargile, Guttman’s president.
The company has known when to pump the brakes. In the last five years, it has concentrated some of its efforts, shedding business in heating oil and propane.
In 2013, it backed out of retail electricity and natural gas, realizing the synergies it wanted weren’t there. That slashed into employment.
Hiring poses pitfalls
Yet, even in an industry where margins are small and innovation is scarce, Guttman has grown steadily. Over the last 10 years, it has added about 100 employees. The company now employs about 315.
Compensating for additional business has been one of the biggest challenges for Sonny Bringol, president of mortgage lender Victorian Finance. Stretching employees to handle a healthy workload without exhausting them is a challenge he faces daily.
“My worst fear is hiring too many people, then having a downturn and having to fire,” he said.
A former chemical engineer, Bringol founded the company out of his house in 2003. In eight years, it grew to 50 employees. Now it has more than 150, a 300 percent jump in five years.
Bringol hires at a pace in which new employees merge into the culture, rather than change it. He won’t hire salespeople
David Robinson, Guttman’s marketing director, recently helped roll out an employment orientation, where new employees meet with executives to learn about the company’s history.
For many companies, hiring too many employees at too fast a rate can lead to trouble, said Robert Atkin, professor of management at the University of Pittsburgh. With growth, employees are given additional responsibilities — sometimes thrown into a new role that’s not a good fit.
“Typically when you begin to hire, you don’t know how to hire and you tend to hire for skill rather than for a combination of skill and fit,” Atkin said.
Not having a structured hiring process and lacking a solid onboarding program are among the biggest mistakes companies make, according to Caliper Corp., a New Jersey-based talent management company. Caliper estimates a bad hire can cost a firm $20,000 per employee, excluding potential damage to a company’s reputation and employee morale.
At Victorian Finance, a culture has been established from the beginning, Bringol said.
“You have to have a deep passion in your soul that you want to close (mortgage deals) on time,” he said. “It’s the most painful thing in the world to not close on time and that’s embedded in our culture.”
For companies, making headway might mean careening off the runway at times.
“The majority of our problems aren’t necessarily finance problems,” Bringol said. “Those are big, but the day to day is what makes us successful, guiding the Titanic every day.”
The early seeds of a company‘s culture lay the framework for future acquisitions, training and feedback processes, said Atkin of Pitt. He defines culture as a firm’s informal rules or valued standards of conduct.
Through its growth, Guttman Energy has increased communications with employees. Frequently, emails contain information on industry or companywide trends. Other times they contain details about a project or operating data.
Twice a year, Guttman holds a town hall meeting where executives detail future plans and reflect on the past. As employees enjoy food trucks and cornhole tournaments, they can give feedback to executives. Giving employees easier access to payroll stubs and human resources are among further efforts to improve transparency.
“I think that’s helped a lot,” said Mark Harper, vice president of sales and marketing. “It encourages conversation all day long.”
And every morning, Guttman employees meet for 20 minutes to “check one another’s pulses and see how things are going,” Harper said.
“We’re being careful to stay transparent through growth.”
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