What’s one of the most surprising lessons Founders and CEOs learn while scaling their business? It’s not the product development or securing funding that consumes the majority of their time — it’s the people.
In the early stages of building a company, most founders focus on product development, finding market fit, and getting those first crucial sales. However, as the business scales, the complexities around hiring, onboarding, team alignment, and overall people management grow exponentially.
This shift is often a shock to many founders who find themselves spending a significant portion of their time navigating the world of HR — something they may not have anticipated.
The People Challenge as You Scale
Index Ventures captures this transition well in their book Scaling Through Chaos, highlighting that as the headcount grows, so does the founder’s time spent on people-related activities. The chart below, sourced from their research, illustrates how much time founders spend on managing people at various stages of growth:
Key Takeaways:
- In the earliest stage, with a headcount of 1-10, founders spend about 35% of their time on hiring alone.
- As the team expands to 11-50 people, more time is devoted to onboarding and handling HR issues, with around 45% of the founder’s time consumed by people-related activities.
- When the company grows to 126-250 employees, the need for aligning the leadership team starts to become a significant factor.
- Eventually, when a company surpasses 500 employees, people management (including HR issues, shaping processes, and internal communications) takes up to 50% of the founder’s time.
The message is clear: as your company scales, so does the time you’ll need to dedicate to managing people.
Shifting from Product to People
Most founders start their journey with a vision for their product and business. However, the reality is that as you grow, your focus needs to shift from building the product to building the team — and eventually, the company as a whole. This mindset shift is essential for success in the long term.
But here’s the tricky part: managing people is often an area that many founders haven’t been trained for. It’s a world of handling diverse personalities, fostering team alignment, and developing an internal culture that supports growth.
The chart from Scaling Through Chaos is a stark reminder of this reality. The more people you have, the more you need to invest in managing them effectively. This not only includes hiring the right talent but also onboarding them, addressing HR issues, and ensuring leadership alignment.
When to Bring in a People or HR Leader
As the company grows, it becomes increasingly difficult for founders to wear all the hats. There comes a point where it’s no longer practical or effective for founders to handle every aspect of HR and people management. This is when having a dedicated People Leader — someone who can focus on employee wellbeing, productivity, and building robust people processes — becomes invaluable.
Investing in HR early on can make all the difference in avoiding growing pains that come with scaling. Having a strong People Leader can streamline hiring, create efficient onboarding processes, and develop a culture that supports a thriving, aligned team.
Preparing for the Shift: A Founder’s Heads-Up
Scaling a business is as much about managing people as it is about perfecting your product. The patterns highlighted in Scaling Through Chaos emphasise how crucial it is for founders to prepare for this shift early. If you’re on the scaling journey, take this as a heads-up: the more your business grows, the more your role evolves into one of a people manager.
The journey of growth is as much about nurturing your team as it is about expanding your market presence. Being proactive in your approach to people management can pave the way for smoother scaling and a stronger, more resilient company.
Source: Index Ventures – Scaling Through Chaos
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