Growing with structure: the ten symptoms and the map of who decides what

It is half past seven in the evening and the founder of a thirty-five-person company is still at her desk. She has spent the day signing things off. A discounted offer, two holiday requests, a ninety-euro-a-month tool, the salary of someone starting next week. None of those decisions was genuinely difficult, yet every one of them was hers. Her company bills 40 % more than it did two years ago and profit has been flat for just as long. From the outside it looks like success. From the inside, the founder and the team are exhausted.

Dear founder, I know this one is going to be hard.

A book worth reading

Eric Flamholtz, professor at the UCLA Anderson School of Management, described it with Yvonne Randle in Growing Pains, whose fifth edition carries a subtitle that gives the argument away, Building Sustainably Successful Organizations. The thesis fits in one sentence: growing pains appear when the way a company organises itself falls behind its size. The authors illustrate it with an image that is hard to forget, the company billing two hundred million with the structure of one billing fifty.

What matters about that diagnosis is that it separates two things we tend to confuse. When a company is lurching along, the first thing people look at is the people, and what is usually failing is the system those people work in.

The ten symptoms

Flamholtz and Randle identify ten signs that the structure has been outgrown, and they measure them with a survey validated in their own research:

1. The general feeling is that there are never enough hours in the day.
2. Too much time goes into firefighting.
3. Each area has no idea what the others are doing.
4. There is little clarity about where the company is heading.
5. Good managers are in short supply.
6. The prevailing attitude is «if I want it done properly, I do it myself».
7. Meetings feel like wasted time.
8. Plans are rarely made and even more rarely followed.
9. Some people feel unsure about their place in the organisation.
10. Sales grow and profit stalls.

It is worth handing the list to the management team and comparing answers. The differences in perception among the people running the same company are, in themselves, a data point about how information travels inside it.

What are a company's growing pains? They are the symptoms that appear when a company grows faster than its management systems: the feeling that there are never enough hours in the day, constant firefighting, unproductive meetings, a shortage of prepared managers and, the most telling of all, sales that rise while profit stays flat.

They tend to appear in the same place

The model arranges the development of an organisation into six levels built from the bottom up: market, product, resources, operational systems, management systems and culture. The first three get built by any company that survives, because the business demands them every morning. The next two, which are planning, structure, management development and the way decisions get made, are postponed with a reasonable argument: none of them shows up in this month's profit and loss. Those two levels are exactly the eight people decisions every company ends up making, with method or without it.

The bill for that postponement arrives in full and all at once, almost always between thirty and fifty people. Up to twelve, culture travels by word of mouth and the founder's judgement reaches everywhere without anyone writing it down. Past that border there are formed teams, meetings somebody has to convene and decisions taken in rooms where the founder is absent. The question stops being how to push twelve people along and becomes who decides what, and who gets told.

It is worth adding that this can be measured. Bain, drawing on a research programme covering more than a thousand companies, finds a correlation at 95 % confidence or better between how effectively an organisation decides and its business results. Decision quality responds to design, exactly as the quality of an industrial process responds to design.

The decisive moment

Of the seven stages the model describes, measured by revenue, the third is the one that separates one trajectory from another. Flamholtz calls it professionalisation, and it consists of moving from a company that works because its founder is everywhere to a company that works because it is designed to work. It is the moment when whoever founded the company stops doing everything and starts building the system that does it.

That is the real ambition here, and it deserves saying plainly. A company that depends on the daily judgement of a single person is worth what that person is worth. A company able to decide well when its founder is travelling, on leave or simply busy with something else is worth considerably more, as anyone who has looked at a company from the inside with a view to buying it, investing in it or running it already knows.

First who, then what

BE 2.0, the 2020 reissue by Jim Collins of that Beyond Entrepreneurship written with Bill Lazier, supplies the right order for the exercise. Before defining strategy you have to get the key people right, because the right people in the right seats are worth more than the best of plans. A decision map spread among managers who still lack judgement produces bad decisions faster, which is the one way to make the original problem worse.

Collins adds a second requirement, knowing what company you want to build: core values, purpose and a bold ten-to-thirty-year mission. All of it held together by a line that sums up what this work is after, preserve the core and stimulate progress.

The two books need each other.

Structure without vision ends in bureaucracy, and vision without structure ends in exhaustion. Between the two there is one concrete piece that can be written in four meetings, and that is the decision map.

The four roles in a decision

Every recurring decision takes four roles, in this order.

• The person who decides. One person per decision. The moment there are two, the decision turns into a negotiation and drags on until somebody gives in out of fatigue.
• The person who contributes judgement or relevant information. One or two people who have to be consulted beforehand, with an obligation to answer within an agreed deadline.
• The person who executes. Whoever takes on the work once the decision is made, and who is worth listening to beforehand to find out whether it is feasible.
• The person who gets told. Everyone else. They receive the outcome, with the reasoning, through a fixed channel.

Most of the bottlenecks in a growing company come from confusing the second role with the first. Consulting six people is prudent; letting all six sign off is an elegant way to paralyse the company. And a well-made decision that nobody communicates has the same effect as a decision never made.

Who decides what, by company size

The split changes with headcount. This table sets out the pattern we see working in Spanish services and product companies, and it serves as a starting point to adapt to each case.

Two caveats about the table. First, size is an approximation to the underlying problem, which is the number of simultaneous conversations the leadership can sustain. Second, the value of the exercise appears when it is written down and published inside the company. A table agreed in a meeting and kept in the heads of three people leaves things exactly as they were.

Who decides what in a 30-person company? In a thirty-person company the founder decides strategy, structure and salary bands. Each area lead decides who to hire within the approved budget, how to organise their team's work and which tools to buy below a spending threshold. Anything affecting two areas at once goes to the committee.

Dear founder

There comes a moment in the life of a company when whoever founded it stops being in every decision and the company gains speed. It is usually uncomfortable, and with good reason, because the founder's involvement in the detail is precisely what made getting this far possible. Asking them to let go is asking them to give up the tool that has worked for them until now.

The step should be looked at the other way round. Instead of listing what gets delegated, you list the decisions that stay at the top, and everything else goes down. There are five.

1. The direction of the company, meaning which market it plays in and with what proposition.
2. The structure, who leads whom and which areas exist.
3. The salary bands and the compensation policy.
4. Spending above a threshold that is set and written down.
5. The arrival and departure of the people who lead an area.

Handing over the rest fits a three-month calendar. The first month, bring in a general manager and give them room gradually. The second, let the general manager and the area leads decide. The third, let the executive team decide and have the founder review it at the monthly committee.

When should a founder stop approving every expense? When approval starts arriving later than the need, something that usually happens around thirty people. The practical solution is to set a spending threshold, delegate everything below it to each area lead and review the whole once a month. Signing off whatever exceeds that threshold stays at the top.

Three signals

The first is the queue outside the founder's office. When their calendar fills with ten-minute conversations to approve small things, the company is already paying for the delay, even if that bill arrives with no line item. The bottleneck is right there.

The second is the same question answered in two different ways by two people in the same week. A sign that the decision has no owner and that everyone applies whatever criterion they remember.

The third, and the most expensive, is the middle manager who answers «let me check and get back to you». It means responsibility was hired and is being used as a courier service.

There is also a physical limit worth keeping in mind. Gallup's analysis of span of control puts the US average at 12.1 direct reports per manager, up from 10.9 the previous year, with a median of five to six people and 13 % of managers supervising twenty-five or more. A founder with twenty people reporting directly is outside the range in which anyone can give each of them real attention.

From 30 to 50

The decision split also comes with a legal expiry date. On reaching fifty employees, a Spanish company triggers six obligations at once:

• An equality plan, with its pay audit, under Organic Law 3/2007 following the reform of Royal Decree-Law 6/2019.
• An internal reporting channel, under Law 2/2023 on whistleblower protection.
• A planned set of measures for LGBTI equality, under Law 4/2023, developed by Royal Decree 1026/2024.
• Reserving 2 % of the workforce for people with disabilities, with alternative measures where applicable.
• A works council instead of staff delegates, once elections are held.
• A health and safety committee, under the Occupational Risk Prevention Act.

All six require a counterpart, a calendar and documentation. A company that already has who-decides-what written down resolves them in weeks, because each obligation quickly finds its owner. A company that reaches fifty people without that map spends a quarter working out who handles what, with the business running on outside. If the jump is driven by a funding round, it is worth also looking at the first ninety days after funding.

The jump is, moreover, the bottleneck of the Spanish business fabric. The national statistics office counts 85,467 companies with 10 to 19 employees and 76,005 with 20 or more, and only 5 % of companies with employees reach twenty people. The distance between those two groups is covered with structure, and structure starts with decisions.

What obligations does a company have on reaching 50 employees? On reaching fifty people, six obligations are triggered at once: an equality plan with a pay audit, an internal reporting channel, planned measures for LGBTI equality, reserving 2 % of the workforce for people with disabilities, a works council instead of staff delegates, and a health and safety committee. They are best prepared once you pass forty.

Three questions for your next management meeting

1. How many of the ten symptoms do we recognise today? Hand the list to the leadership team and compare answers separately.
2. Which level of the pyramid are we weakest at? It frequently shows up in management systems: planning, managers and performance follow-up.
3. Do we have the right people in the key seats for the next stage? Collins would put this question first on the agenda.

In summary

• Growing pains appear when the way of organising falls behind the size, almost always between thirty and fifty people.
• The ten symptoms work as a thermometer, and the most telling one is sales rising while profit stays flat.
• First who, then what: the map works when the key seats have the right person in them.
• One decision, one person deciding. Everyone else contributes judgement, executes or gets told.
• Five decisions stay at the top: direction, structure, salary bands, spending above the threshold and the people who lead areas.
• The handover takes three months, starting by bringing in a general manager and giving them room.
• Fifty people trigger six obligations at once, and they land far better with the map already drawn.

How we work on this at DO'IN TALENT

DO'IN SCALE supports startups and scaleups in a fast growth phase. The work starts with a diagnosis of the organisation, its people processes and the real priorities of the business. Out of that comes a roadmap with a target org chart, management systems, management development and a hiring plan for the next stage. Then it gets executed, with regular sessions with the leadership and the same criteria applied over time.

Frequently asked questions

When does a company start suffering growing pains? When its size exceeds what its management systems can sustain. It usually happens after a period of fast growth, and the most demanding transition is from entrepreneurial company to professionally managed company.

Does this framework work for a company of 20 or 30 people? Yes. Many of the examples in the books come from large companies, and the logic works the same at small scale: first market, offer and resources, then management systems and culture. The sooner the upper levels are built, the less growth hurts.

Which of the two books should be read first? If the company already feels the symptoms, Growing Pains, because it offers an immediate diagnosis. If you are defining direction and leadership team, BE 2.0.

Judith Ruiz de Esquide Fernández is founding partner of DO'IN TALENT, a people leadership firm based in Madrid. She brings 26 years in people leadership and general management: 16 years of human resources at L'Oréal and Air France/KLM, 10 years as general manager of technology startups and scaleups, 6 years teaching digital transformation at IE Business School and 10 years as an executive coach and speaker on leadership. She holds degrees in Law and Psychology, a PADE from IESE and board education from ESADE. Full professional profile.

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