The Fibonacci Sequence of People Management

Sep 16, 2009

The Fibonacci sequence – that series of numbers that recur so frequently in nature – has no known equivalent in business, but in the important area of managing people, there is an equally important numerical series. Here it is:

1, 4, 20, 75, 250, 2000, 5000

The sequence above refers to the total number of people employed in an organization, and here’s the significance of each:

1. Wow. You’ve actually employed someone – congratulations! Welcome to the world of business. At this stage, people management is like parenting 101 – despite the fact that it seems very important, no-one really told you how to do it, so you’re making things up, reading books and magazine articles, and trying stuff to see what works.

Relax. It’ll be OK.

4. For some reason, when it comes to employees, four is significantly different from three. A break point occurs here – not obvious, not causing any fault lines, but a break point none the less. The culture of the ‘organization’ (it barely warrants that description, but it’s what you have, nonetheless) changes subtly, from playroom to living room.

Up to three employees still gives the founder/owner the luxury of thinking (however subliminally) of the business as a ‘hobby business’. Once the fourth person has joined, things change. Gosh – now we’re serious.

20. At around 20 or so employees, the landscape shifts again. Two things happen in particular: (a) You’re spending as much time doing ‘people stuff’ as you are doing anything else, and (b) You can’t continue to make custom arrangements with individual employees for every little thing. Stuff like time off for sick babies, random bonuses, clothing eccentricities, where people park their car and the like switch from being a cutesy positive differentiator of you as an employer to becoming a negative irritant.

You can still maintain a family vibe, but it’s hard work and doesn’t come easy any more.

75. Somewhere between 75 and 125 employees, the ‘family vibe’ is threatened most by the simple fact that you – yes, you – have too much to do. Now you’re running a substantial, growing business, and those halcyon days of Friday afternoon bull sessions, walking around to visit your key team members unannounced and knowing everyone’s birthday and wedding anniversaries seem like a distant dream.

Or they do to your employees, at least. You personally may well be in denial, thinking this is just a temporary aberration caused by current circumstances, and that soon – when everything calms down – you’ll return to the more bucolic days when you had time, and lots of it, for everyone.

Don’t kid yourself. Although nothing will ever be quite the same as when you were a microbusiness (that’s the nature of growth – things change), you can, in fact, restore a substantial degree of the family vibe, and take some of the pressure of yourself, by, perversely enough, doing something you swore you’d never do: hire a (good) HR person.

By a ‘good’ HR person, I don’t mean an administrator or paper-pusher (though by now, you probably need someone with those skills to keep you out of employment law court), but rather someone with a genuine feel for people, who can make your hiring and skills training better, deal with the myriad issues of managing a 100-strong workforce, and let you concentrate on culture-(re)building.

You’re gonna have to make that HR hire sometime – best do it now, and best make it a good one.

250. This is the size of organization where ‘people issues’ become most expensive on a per-employee basis.

Big enough that you now have your HR person firmly in place (it’s probably a small two or three person department by now), you’re also big enough that new employees expect more from you than just a good salary, skills training and some degree of job security. You’re now at the size where potential new hires are also looking for personal development and career opportunities. They expect you to develop them on the job, and to provide a career ladder they can work on.

Problem is, personal development is expensive (and it’s not a skill you’re good at as an organization), and career opportunities are frankly limited. Until you get to around 1,000 employees (when the per-person cost of development programs reduces to reasonable amounts and career opportunities are numerous), you’re going to have a big decision to make every year: do you budget for an investment in personal development programs and move people around to fulfill career growth needs, or are you going to accept turnover of key employees?

2000. By now, you’ve got a handle on personal and career development. You probably have a corporate (oh yeah – we say ‘corporate’ a lot at this size of organization) training/development department that’s distinct from HR, and your training and development programs are part of the warp and woof of your business.

The only real blockage is right at the top. Your ‘C’-level team (including SVP’s or whatever you call them in your organization) isn’t going to turn over real quickly, so the superstars one level down are apt to get frustrated and leave. It’s time to start building the concept of benchstrength and succession planning – get those ‘C’-level types to start mentoring and coaching their direct reports to identify a likely successor – however far out that event may seem. It at least shows you’re thinking about the issue and may keep some of those hot shots a while longer.

5000. You’re there, baby. If you aren’t – or won’t – provide world class hiring, onboarding, skills training, personal and career development and succession planning, the only way is down. More fool you.