Episode 38: Julie Wheeler On The Hidden HR Problems That Show Up When Small Businesses Scale

Have you ever noticed the minute your business finally starts growing, that's when the people problems start showing up? We're going to talk with an expert about HR issues in small businesses that they don't know that they have yet. So stay tuned. Today we're talking about something that almost every growing business owner experiences, but very few leaders see coming. Growth. When you're a small business, growth feels exciting. You're adding employees, you're bringing in new customers, you're expanding your services. But growth also creates pressure points inside your organization, especially when it comes to people, leadership, and culture. And if those issues aren't addressed early, they can quietly start to break the very culture that made the business successful in the first place. Joining me today is Julie Wheeler, HR Business Partner at Clarity HR. Julie works with business owners every day to help them navigate the people side of growth. Julie, Welcome back to the show.

Thank you. Good to be here.

I'm excited for our conversation today, in part because I think we've both been through some of these traumas together.

Yes, we have.

So, Julie, when businesses start growing quickly, leaders often focus on sales, operations, scaling the company. But from an HR perspective, what are some of the issues that start to show up during growth?

There are several that come to mind. All involve your people. You have the people that have gotten you to where you are and the culture that's gotten you to where you are. But as you grow, those things are going to change. The processes that those people use, the expectations that they have, the communication styles that have gotten you to where you are, all those things are going to change. And those employees are going to notice that and be uncomfortable with that. So unless you have a head start and you start talking to them about growth and what that means and the things that you're going to be looking at differently and how they're going to be held accountable and what your expectations are, it's very hard for them to have their whole worlds change. Yeah. And in their minds, maybe collapse a little bit.

Yeah.

So it's a rough go for your people. Yeah, and your people are what, what really keep your business going and growing.

Yeah. So what are some of those early warning signs that culture is maybe starting to shift that a business owner might miss, but we're going to tell them not to miss them?

Uh, I think people seeming a little bit more disgruntled. Okay. Uh, pushing back.

Little crunchy.

Little crunchy.

Yeah.

Uh, pushing back on suggestions. Um, you hear Well, nobody ever told me that. Or, well, we've always done it this way. Mm-hmm. And they're not so open to change and they're, they're, they're worried. They're seeing too much change around them too fast. And you kind of, as a business owner, you really need to step back and say, all right, let me bring them with me.

Yeah.

Um, I need them to ride this bus with me. Um, I need them to understand Because many times poor employee behavior comes out of misunderstanding, lack of communication. It's not that employees all of a sudden don't love your organization. It's that they don't recognize it anymore.

Oh, I like that. And I think I love what you said about how, you know, growth changes communication. When you add new employees, you kind of change those dynamics. And so processes and expectations need to evolve and you've got to pay attention and be aware. So let's talk about another, thing that I think both of us have seen a lot in growing companies. You kind of called it the tenure problem or opportunity. So someone new comes to the organization and is promoted because they have the skills for a leadership role, but there are other employees who have been there longer and in management longer. And that kind of can create some tension pretty quickly. So why is that such a common challenge?

Well, I think people inherently are looking for fairness. And if they don't understand, then they deem it unfair. So if you've brought this person in recognizing that they have leadership skills, recognizing that you probably are going to want to promote them into a management position, maybe you see them, you bring them in as a customer service person.

Okay.

You let them walk the walk with your customer service team, but they've been a customer service manager before. And you know that they have the skills to do that inherently. They've got them. You don't have to train them. You don't have to develop them where you would with a current employee. Yeah, they don't know that. Your current employees don't know that. No, they don't know that you see those things, that you were looking for those things, that you don't have time to train them, to professionally develop them. In some ways, I'd say that's bad on you. In some ways, I'd say you're not doing very good succession planning, but it is what it is. And especially when we're growing fast, it's very hard to think that far ahead and start grooming people that are already employees to, to step up. Okay. So we look for those skills in people that we're interviewing, thinking we can fast-track them. Okay. And that's fine. But I think that we need to have those conversations openly. If you know that someone is expecting a promotion or you know that someone thinks that that's their next logical step, yeah, then I think it's fair that you talk to them and you say, look, we are in a really big hurry. These are the skills that I want you to develop, but you're not there yet. And this person has those skills. And so we're going to go ahead and put this person into this role. But I want you to understand that I do appreciate you, and therefore, we are going to develop. And this is where you get strategic, and this is where you work with your HR person. You develop tiers. And we did that in a previous organization where we had level 1, level 2, and level 3 senior support. And those senior support people were given leadership skill training. Were given soft skill training to deal with, with managing people so that when an opportunity came up, they would be primed and ready to step in.

Okay.

But if you set up that kind of a program, maybe at the same time that you hire somebody new in to take that lead, then they see their path. They see a way that they can get there. And they also, if you have compensation bands around that, they can see their incremental growth.

Okay.

As long as people feel like they're still contributing, they're still— and they're still growing financially to us, at least to a certain degree. Yeah. Then they should move along. And if they don't, maybe it's not a personality that's going to be a fit for the organization in the long run anyway.

Okay.

But you want to tell them that you want to set them up for success. You don't want to throw them into a role they're not ready for. So that they fail.

So let's talk about expansion of leadership team, because I think sometimes that can be an even bigger challenge. So as the org chart expands, maybe it, it widens, it doesn't— it deepens a little bit, but it widens a lot. How do you ensure— because my assumption in some of the things that we've dealt with, if you have organizations that have founding or legacy employees that have been in the same management position for 5 years, 10 years, 15 years, and now all of a sudden there are all these new people who are in the same type of position. How do you kind of meld that culture from a leadership perspective and not get that culture drift?

I think that you really have to communicate.

Okay.

Oftentimes as an organization grows, the leader becomes more and more removed, which is fine and it's to be expected. But when a leader— when people are used to being able to walk in the leader's door and have a conversation, when people are used to being second in command to that leader, and all of a sudden there are people in between, and they don't know how to handle that, and they don't understand the hierarchy, and you haven't published a new org chart, and they don't know if this person that's over here that's newly hired into the organization really has the same authority that they have.

Yeah.

Or that, you know, maybe this person doesn't really understand all the rules yet, doesn't understand that there are certain requirements to be in a certain job, and they just want to blindly hire, and somebody has to rein them back. Usually, that's HR, usually, but it can really start causing tension in your management team. And if you don't position all of it well, and by well I mean clearly, transparency is key. Because those people that have been with you for a very long time are very important to the organization. They understand why things are the way they are, that the organization does certain things. And the newer person doesn't know that yet. And you need those people that have the tenure to, to to teach those new managers, even if they're on a similar level. The newer manager doesn't have that inherent knowledge that you have just from sheer tenure.

Yeah.

And you need that to be a good relationship. You don't need that to be a combative one. Communication is always key. You don't immediately step out of meetings all of a sudden. Mm-hmm. You don't say, oh, I'm not gonna be in that meeting anymore, and just don't show up anymore. You have a conversation about that. When, when do you need to bring me in?

So how can leaders set the expectation early before they start to see that their org chart's going to widen, they're expanding? How do they set themselves up for success? Is it just— is it as simple as really just communicating?

It really is. I'm watching this in an organization right now.

Okay.

And I think back, what could have prevented this? Yeah, you know, it's, it's a constant rule for me to be learning too. And I think what would have happened if that leader would have taken 2 hours, 2 hours, and put the existing managers in a room and brainstormed what needs to happen, where they have holes and gaps, how to fill them, and what kind of skill set is needed to, to actually fill those gaps and gotten that buy-in from the very beginning.

Yeah.

So that when someone new was hired to step into that role, everybody understood why.

Yeah.

It wasn't a threat to them. It was a gap that they couldn't possibly cover anymore.

Right.

It was an issue that they couldn't— they don't have time to deal with. Their areas are probably growing too. This person's not a threat to them. This person is going to need your help. I think that just an initial investment and, and, and collaboration, brainstorming, communication— you can say as a leader, look, this is where we're headed, this is how I see the organization, this is what I think needs to happen, but I need your input because you guys have been boots on the ground. You've done it. You've done it in your geographic region or your department.

Yeah.

What characteristics do I need to look for in somebody to do it in this region, in this geographic region, in this department? How do we set somebody up for success? What kind of training might you be able to provide? To help this person succeed. So in that, you are developing much more of a collaborative environment between your management team as far as bringing a new person in and bringing them along. I— the next step, of course, is we interview or we're looking to fill that gap. First of all, I don't like just popping somebody in. I think there needs to be a formal process.

You just don't want them to show up in the next team meeting of like, hey, this is another new manager. Yeah, yeah.

You know, all of a sudden our team management—

it's doubled in size.

Team meeting doesn't have enough chairs in the room and we don't know why and what's going on and can we speak freely and what do we do and what do we talk about? What can we talk about? What can't we talk about? All of those things breed discomfort. And we're back to the culture problem, right? We're back to that discomfort that everything is changing around me and I don't know what to do about it and I don't like it. I don't like it because I don't understand it. So I'm just going to push back, and I'm going to be mad, and I'm going to complain about my title.

Which doesn't help.

Which doesn't help, right? So if we just take the upfront time and we help everyone understand where we're going and why and what needs to happen for the organization to even simply continue, sometimes it's not even a matter of growth. Sometimes it's just a matter of, you know, maybe we're losing funding here and we need to develop this new region. Maybe we need to develop a new program. Maybe we need to develop a new product and I need new engineers that can develop this new product, new manufacturing line.

A new technology.

New technology, sure. So there can be a lot of things involved that the people sitting in that room know they're not qualified to do or know they don't have time to do. But if you don't ask, the response is, "Well, you never ask me." Avoid the ability for people to say the common things. "You didn't tell me." "You didn't ask me." "Yeah, I have time to manage, you know, 3 geographic regions." "No, you don't. We all know that." "Yeah, well, you never asked me." Okay, so constant communication.

Yes. Overcommunication, even when you— it's not overcommunication, but sometimes you think it is. Giving your team members the ability to see the full roadmap. Here's where we're going. Maybe telling them, not maybe, but telling them 6 months before you're starting to scale or while you're continuing to scale, these are the positions that we're looking to fill. This is where our organizational chart or accountability chart is going. I heard a statement and I can't remember who said it. It may have been you. It said every time you add an employee, your culture changes. And so knowing that that's going to happen, continuing to be aware can kind of help you navigate some of those challenges.

Absolutely. And adding a person does change the landscape. It does change the culture. You bring a whole new personality in and the people that are there don't know how to respond to that person, don't know how they're going to react when they say something, don't know if they can speak freely, don't know if they can say Well, I'm a little concerned about this hire. And the leader says, why? And the person doesn't want to say because they're afraid. While it may not be a discriminatory statement, they may be afraid it's going to be, be read that way.

Yeah.

And they don't, they don't know if it's a safe place anymore. Their world changed.

Yeah.

With, with one extra body in the room, your world can change, let alone if you had 4 or 5, 6 extra bodies in the room. And now everybody's just looking at each other, not knowing what to say or what to do.

Well, and who are these people? Mm-hmm. Can I trust them?

And what are they— why are they here and what do they do?

Are we all going the same direction?

Yeah. So, and only the leader knows that when, when your management team is reacting that way.

Yeah.

That means that only the leader had this vision. Nobody else understands that.

Not sharing the vision.

Mm-hmm.

So another issue we see a lot is that as the organization grows, the leadership skills of the business owner or the management team don't always grow at the same pace. So, Julie, I would love to know— I mean, we talk about this a lot— why is leadership development, especially for the business owner, so important during periods of growth?

I think that leaders, much like the rest of us, get comfortable in our communications, are comfortable in the way we speak to each other, and all of a sudden things are changing, things are growing, there are more people in the room and they want to talk the same way. They want to say, well, because I said so, and walk out of the room. And now it doesn't work. That doesn't work with a large group. It really works with a small group, but it really doesn't work with a large group. It's— it goes back to that communication piece. And you really have to learn to communicate with all audiences. And while you have been able to get very comfortable in your communication style, yeah, it's going to, it's going to have change and you're going to have to grow too. It's not just the organization. It's not just your current staff. You're expecting a lot out of your current staff. You want them to grow and change and, and develop. Why don't you think you need to? Why don't you think you need to learn new skills? Maybe it's communication, maybe it's organizational structure, maybe it's soft skills, maybe, um, maybe it's finance that you've never had to worry about that much and now you do. And somebody, somebody's got— you gotta take the time to learn it, which means you're taking time away from something you used to do. Yeah, just, just as everybody else in the organization, you may be having to give up things that you love to do because the business no longer needs you to do that. You can hire somebody to do that very easily. You can't hire somebody to have vision. You can't hire somebody to have that, that hero cape that everybody envisions their CEO to have, right? Yeah. You can't hire somebody to be that, that person in the organization, but you can hire somebody to do a budget. You can hire somebody to pay the bills. You can hire somebody to reevaluate your labor every month. Those are the kinds of things that while we get comfortable with them, we may not need to do them anymore. We may need to do more important things and things that are outside of our comfort zone.

Yeah, I've noticed that as, as organizations grow, two things. One, With those tenured employees, sometimes if you've worked with somebody for 6 months versus 6 years versus 26 years, how you communicate is very different. The person that's worked with you for decades can probably read your mind and know what you want to do. The person that's worked with you for 6 months, probably not. 6 days, absolutely not. They're not going to be able to do that. So being able to communicate effectively, I love what you said about, you know, soft skills training and communication because it's really easy to say, I communicate well with someone who you've worked with for almost 3 decades as opposed to someone you've worked with for 6 months.

Right.

The other thing I appreciate that you said is, you know, there is a Greek philosopher named Archilochus that says we fall to the level of our training. So when we refuse or we just say, I don't have time for professional development as leaders, what we're saying is that our team has a ceiling too. And so our ceiling can sometimes be the space that holds the organization back. So I appreciate what you said around, you know, communication at scale and leadership maturity, and that you have to be willing to keep growing, and you have to be willing to hand off some of those things. I think often I see business owners that want to still hold on to everything, like they need to be the hero for all things, as opposed to allowing their team members to be the heroes that they pay them to be the heroes to be, right?

And if they just— you have to allow people to disappoint you. Yeah, you have to allow people to make mistakes. That's how they grow. They may not do it exactly the way you did it, but they may get there a completely different way. And it's the right answer.

Yeah.

And you have to allow that if you are going to have the room to grow. You are dealing with much more complex situations than you dealt with years ago. You are dealing— or maybe a year ago. You are dealing with with much more complex decisions that need to be made for the organization. And you're not— you don't have time to micromanage. Yeah, you don't have time to tell people, first you do this and then you do this. Now hopefully you have some SOPs in place that help people along, but as I have hired people in, I always say, if you have a better way, if you do this my way and understand why we're doing it the way we're doing it and you come up with a more efficient way to do it, I'm all for it. I am right there with you. I'm good. Yeah, there are things that my team is doing right now. I have no idea how they do it anymore. I know how I used to do it, but I have no clue how they're doing it. None. And that's just fine with me. I'm good with that because it's getting done and it's getting done right. And that's really all I care about. And that's where leaders have to progress to. They have to do that with their teams. And you can't just the first time that a decision's made that you don't agree with, write them off. Yeah, you can't do that. And you also, if you've been a micromanager, you can't be mad at your managers for not making decisions. No, you're not allowed because you have to let them. You have to allow them. You have to give them that permission. And if you've never given it to them before, you can't expect that all of a sudden the light switch goes off and they were reading your mind and know it's okay. Yeah.

So Julie, sometimes these challenges can feel overwhelming for business owners that are already juggling a lot. So how does Clarity HR help businesses navigate these types of issues as they grow? And we love doing it.

We do. I— one of my favorite, favorite things to do is to work through strategy with business owners, talk about what their goals are, what their concerns are, who they feel like their A players are, their B players are, and their C players are, where they feel people fit in the org chart, where they see growth in that org chart, how they'd like to see the organization structured. Where I get frustrated, since you asked but didn't ask me this part, I'm going to answer it anyway.

Good, I'm glad.

Where I get frustrated is when I think I'm walking into a strategic planning session and the CEO tells me exactly how he wants it and that's going to be the way it is.

Because I see it, no planning, just decision.

And I see it wrong. I see it right there on the paper wrong.

Yeah.

And I'll say, well, have you thought about this? Or have you— that won't work. Okay. So sometimes I have to sit back as a consultant and just say, okay, if you're bound and determined to do it this way, I'll ride this ride with you.

Here's what I think is going to happen. But then when it does, they go, you were right, right, right.

I was just presented with a candle that has a label on it that says my I told you so candle that I'm allowed to burn brightly. So yes, and I don't, I don't say it. I really don't say it. I just, I just show my shoulders and say, can we, can we do it the way I suggested? Now maybe try it and see if that might work out a little bit better.

With the decades of HR experience that I have and watching people do this, it's a study of people.

HR is a study of people. And no matter how you want to break down a business into widgets or per hour rates or however you do it, it's people carrying out that mission. And if you don't understand the dynamics of the people, then you're going to struggle. Yeah, it's just a given. It's going to happen. So I like to sit with leaders. I like to coach them. I don't ever say you're wrong or no, you can't do that. But I will say, have you thought about it this way?

Yeah.

Have you considered this? Would you consider this? I try to give suggestions. I try to coach them through some of these major decisions, especially in org structure. That's a big one. And people look for it. They want to know. They want to see that chart. They want to see their name on it. Not that long ago, we had a meeting and Someone was upset the page was just not wide enough to put 4 boxes, so they were kind of stacked, but they were all the same level. But someone was literally because their box fell below somebody else's box, even though it had nothing to do with the actual structure. Exactly. But, but sitting in that meeting, that is where that employee fixated. And if you don't understand how something that small can make such an impact on someone in your organization, then, then you're setting yourself up for struggles that aren't worth it. Yeah, they just aren't worth the fight. Let's take the extra 10 minutes and figure out how to make Visio work or figure out how to make Lucidchart work. Yeah, figure out how to make one of these stupid programs work so we can get everybody lined up the way they need to be lined up. So it makes sense and people don't instantly make assumptions as to where their position has gone.

Yeah. Well, Julie, thank you for your time today. So we're going to make sure to link ClarityHR to the podcast page. But as we wrap up, we ask our guests the same question. And since you're a repeat guest, you know what it is. And that is what can business owners do to get 1% better in their business today?

I think it's— it all comes down to communication. I think if they're wondering why they're struggling so much, they need to look in the mirror and say, how have I communicated this with my team? And have I listened when my team talked to me about what I've said to them? Because it's a, it's a two-part. If you're just communicating to communicate one way, it's going to be a problem. If your team brings back and says, "But what about?" You need to really listen to that and respond thoughtfully. Not knee-jerk, not because I'm the boss, not because I said so, not because I run this joint. Really listen and give a thoughtful answer because the more people feel respected in communication, the better and healthier that communication is.

Wonderful. Julie, thank you for your time today. And I'm gonna wrap up in just a minute. I want to reflect on a few things I heard from Julie today because there were some really important reminders for business leaders. First, growth is exciting, but it also changes the dynamics of your organization. The culture that worked when you had 5 employees is not going to work the same way when you have 20 or 50. Second, promotions can be one of the most sensitive leadership decisions that you make. While tenure matters, Promotions ultimately must be based on capability and readiness to lead. And when leaders communicate clearly about expectations and development, they can navigate those transitions without damaging trust. And finally, one of the biggest takeaways for me is this: leaders have to keep growing too. As your organization grows, the complexity of leadership grows with it. The way you communicate, make decisions, and support your team has to evolve, which means as a leader, you have to be willing to keep learning, put yourself in uncomfortable comfortable spaces where you're not the expert and continue to grow yourself. The long-term success of the business is directly tied to top leadership's ability to continue to grow themselves. So if you're growing a business and starting to feel some of these challenges around culture, promotions, or leadership development, you're not alone. I encourage you to reach out to Clarity HR because they work with organizations every day to help them build the systems and leadership structures support healthy growth. And until next time, keep getting 1% better in your business.