Scaling Your Business: It’s All About The People
Listen to expert insights on incorporating HR into your business growth strategy.
What’s the greatest resource for a fast-growing company? If you answered human resources, you’ve got a great head start on scaling for success. Sachin Dhanani, co-founder of Kenyan-based Danco Capital, learned firsthand the importance of having a strategic human resources plan. Hear his story and get essential guidance from HR expert Claudia Salvischiani as you grow and scale your own company.
Sachin Dhanani paid little attention to org charts as he took his manufacturing company in just seven years from four to 240 employees and zero to 30 million dollars in revenue. Dhanani describes Danco Capital as a classic startup with everyone doing everything: “We had no org chart. We had no real job descriptions. So, when it came to things that were sort of in-between, it would be like, who’s got the time, or who’s done it in the past, and let’s just do it.”
By the time Dhanani realized he needed help from Claudia Salvischiani, they had over 160 employees. Too late, according to Salvischiani. She advises, “If you have 50 people, you must have HR. When I say you need HR, you need strategic HR. You need somebody who understands the business strategy and helps you translate that business strategy into organization, people, and culture.”
Dhanani began by structuring the organization and creating formal job descriptions. And that, as Salvischiani describes, creates changes for the CEO as well. She says, “When companies scale, they need to rethink the role of the CEO. And the CEO or the founder needs to think about: How is my role going to change? Because typically the CEO is doing everything. And when you scale, you have to let go. This is a big jump for a lot of CEOs.”
Delegating was no easy task for Dhanani. But with time, both he and his employees learned the value of the new process. He explains, “As leaders, what we need to be able to instill is that this is probably the most important process. It might not be urgent, but it is important. And, if we focus on this, then it just creates such a better culture, but also allows us to get the results that we want.”
Listen to Dhanani’s real-world struggles and successes creating and executing an HR strategy and get practical advice from Claudia Salvischiani on why and how to make HR a priority as you grow and scale.
Grit & Growth is a podcast produced by Stanford Seed, an institute at Stanford Graduate School of Business which partners with entrepreneurs in emerging markets to build thriving enterprises that transform lives.
Hear these entrepreneurs’ stories of trial and triumph, and gain insights and guidance from Stanford University faculty and global business experts on how to transform today’s challenges into tomorrow’s opportunities.
Sachin Dhanani: We were a classic startup at that point where you have some revenues, you have lots of wins, but you have no internal structure at all. Like, my co-founder and I are doing both jobs, doing everything.
Darius Teter: Your business is scaling fast. You’re hiring constantly, but things aren’t working out as well as they used to. Something’s not right.
Sachin Dhanani: And as two leaders we had to realize that we can’t do everything.
Darius Teter: Welcome to the second season of Grit & Growth from Stanford Seed to show where Africa and south Asia’s intrepid entrepreneurs share their trials and triumphs with insights from Stanford faculty on how to tackle challenges and grow your business. Last week, we discussed the ins and outs of talent acquisition. But before you can start hiring, you’ve got to zoom out a bit and ask some pretty fundamental questions.
[Voiceover] What am I doing here? Is there a meaning to life? Who am I?
Darius Teter: Okay. Maybe let’s zoom back in just a little bit.
[Voiceover] This is your captain speaking. We’ve reached cruising altitude of 30,000 feet. The fasten seatbelt sign is now off. Please feel free to move about the cabin.
Darius Teter: Okay, that’s better. I want you to think about your company’s finances. Do you have a budget, a balance sheet, revenue projections? Of course you do. You probably even have a plan for how to spend the money you haven’t earned yet. Now, let’s think about another resource your company has: your people. Do you know the true capacity of your current team? Do you even know what they all do? What skill gaps need to be filled today? What about next year? Will the team you have now take your company where you want it to go?
Too many companies have no idea how to answer these questions. And this is especially important for growing businesses. If you want to scale, you’re going to be spending a lot more time, energy, and money on your people. And that’s where strategic HR comes in. Today, we’re exploring the importance of a human resource strategy to underpin company growth. And we’re going to do that through a great example: Danco Capital. You’ll hear how this fast-growing company unlocked their market potential by refocusing on their human potential, how they survived a growth hangover and became the company their founder imagined.
Sachin Dhanani: My name’s Sachin Dhanani, and I’m a co-founder of a company called Danco Capital. Danco Capital is a manufacturing company. It’s located in Kenya, and we operate in the water sanitation and telecom space. Our current focus really is in the east and central Africa region, and we aim to improve lives through sustainable solutions within the space that we’re working in.
Darius Teter: Danco specializes in HDPE. That stands for high-density polyethylene, and it’s a strong, flexible plastic that could be made into durable piping. In it, Sachin saw the potential to modernize much of Kenya’s core infrastructure.
Sachin Dhanani: We built a good background within HDPE, and we were effectively pioneers in this. And that’s how in 2015, towards the end of 2015, we got our first order, and that was a big win. And there were four people in our company, and we were just ecstatic that we actually got one bit of revenue. And it was one of those things that you kind of look back and think, right, we’re rolling.
Darius Teter: Give me the “before and after” snapshot, or the “how it started, how it’s going now” snapshot. So 2015, you get your first order. You have four staff. You’re finally getting revenue. How many staff do you have now?
Sachin Dhanani: So we currently employ about 240 people. So that’s a lot more than the four that we had in 2015.
Darius Teter: And revenue snapshot? So current revenue roughly?
Sachin Dhanani: Roughly about $30 million.
Darius Teter: Three zero?
Sachin Dhanani: Three zero, yeah.
Darius Teter: Wow. That’s phenomenal. So you start out making HDPE pipe. Now you’re in at least three, almost sounds like four, verticals, staffing from four to 240, revenue from zero to $30 million in seven years.
Sachin Dhanani: Yeah. It sounds like a big deal.
Darius Teter: That’s a home run. That’s awesome. So what I really want to explore is: What does a company go through internally with that kind of growth? You have four people. How fast did you get to 50 people, and then how fast to 100 people?
Sachin Dhanani: So 2016, we sort of had regular orders. And then we had to start building a team of people in production and in other areas. And I would say that we were a classic startup at that point where you have some revenues, you have lots of wins, but you have no internal structure at all. My co-founder and I are doing both jobs, doing everything. We have other people, whether it was a PA or a production manager that chipped in in logistics or driving a truck or anything that came to mind, really.
Darius Teter: So everyone’s doing everyone’s job. So if I was to walk into the door in 2016 and I said, “Sachin, what’s your title?” And you would say, “Well, I’m head of sales, I’m head of marketing, I’m head of manufacturing, and I’m head of product development.”
Sachin Dhanani: Exactly. I’d say I didn’t even have a title. And I don’t think anyone had a title. That was the other thing.
Darius Teter: Could you have handed me an org chart in 2018 that said, “Here’s our structure. This is where you are. This is who you report to. This is who reports to you?”
Sachin Dhanani: No, I could not have given you an org chart. I really couldn’t have. We had no org chart. We had no real job descriptions per se. So we knew what people were doing loosely. So someone in production was in production and they were doing a lot of the production work, but at times they would also get involved with the logistics. Let’s say I would be doing a lot of the sales, and because my background’s in finance, I would look after all the finance. And my co-founder is much more engineering-based. And so he would be looking after some of that, as well. So when it came to things that were sort of in between, it would be, like, who’s got the time or who’s done it in the past and let’s just do it. And so what would be the advantage is that we had lots of people doing different things, but the disadvantage was that there was no real focus, and equally, there could be things that fall between the cracks.
Darius Teter: So this is fascinating. Were you and your co-founder… What’s your co-founder’s name?
Sachin Dhanani: My co-founder’s Suraj.
Darius Teter: Were you and Suraj sort of clear on your specific roles between the two of you?
Sachin Dhanani: Suraj and I both had our own different skill sets, and we kind of naturally knew what we’d be good at and what would be naturally suited to us. But equally in the middle was things like sales and product development that we both were passionate about. And it was a little bit difficult in a sense that you still step on each other’s toes at different times. And that didn’t sit well with me.
Darius Teter: When did you hire your first head of HR?
Sachin Dhanani: 2020.
Darius Teter: 2020. So how many staff did you have when you hired an HR professional?
Sachin Dhanani: 150, 160.
Claudia Salvischiani: I would say for sure, if you are with 50 people, you must have HR.
Darius Teter: That’s Claudia Salvischiani, the HR expert that we met in our previous episode. And Claudia knows Danco Capital well because she helped Sachin build his HR strategy.
Claudia Salvischiani: I have 25 years’ background in HR in different corporations, in different countries. And after the Stanford program, I decided to leave the corporate world and start working with startups and scale-ups in Africa and Europe.
Darius Teter: Is there a working definition of HR?
Claudia Salvischiani: What I refer to when I say you need HR, you need actually a strategic HR. So you need somebody who understands the business strategy and helps you translate that business strategy into organization, people, and culture. That’s what I mean with HR. For me, HR means alignment between business strategy and these three other elements. And there is a need of somebody who’s focusing on this, because people tend to focus extremely on business.
Sachin Dhanani: There’s two parts of HR, and that’s how she described it. The first part is effectively what you’d call the transactional, the compliance part. And it’s all the processes that paying people leave management, the disciplinary matters. This is key. We have to have them really well done. And especially in Kenya or in any other parts of the world, if we don’t do this properly, then you can get into quite a lot of trouble. So I think that’s the first part. And a lot of people think of HR as that and really that only.
Darius Teter: Hiring, firing, compensation, all that stuff.
Sachin Dhanani: But I think the big learning for me was how HR can be very strategic, and it’s key for the growth of the company and the way that we scale, but also just how we look after everyone in the company. And I think that needed a lot more than just a co-founder that has a lot of things to do. And it needs a lot more effort and impact. You can imagine without the org structure, we don’t have any processes. We’re growing, yes, but we’re growing because of hard-and-fast sales and various things happening in the energy, but not necessarily because of the way that we planned it.
Darius Teter: The first step in a strategic HR process is to evaluate the organizational design. Is your company built to do what you want it to do?
Claudia Salvischiani: Based on my experience, I’ve worked in west Africa, east Africa, south Africa, and India. The first challenge is that most of the CEOs do not really think about the organizational design. So once they want to scale, they need to think about the setup. Do I have to change something in the setup? You have to be very aware where your management team is when you decide to go down a certain road. So when you decide on a strategy, you have to think, “Okay, so if I’m going to do this, it means, for instance, I’m going to grow very fast. It means that my management team has to learn very fast, has to take over very fast, this and this and this.” So very often we think the HR strategy comes afterwards and it’s just execution, and it’s not. Actually the HR strategy should really be a very important part of the business strategy, because the question is, is the organization able to implement this? There is a general assumption that the organization naturally develops.
Darius Teter: The design is organic, not intentional.
Claudia Salvischiani: Yeah. “The design will follow automatically what we do in the business.” No, no, there is nothing automatic. You have to think about it. When you scale, my experience is 90 percent of the cases you had to review the organizational structure. For instance, I was working with a company in Botswana. And normally when I start working with a company, the first thing I ask is, “Can you send me an org chart so that I understand how you are, your setup is?” And it was a growing company. It was a scaling company, and I didn’t see sales, the function “sales.” I said, “How do you do sales?” “Oh, now this is done a little bit by me, a little bit by the R&D guy, a little bit by the finance guy.” I said, “Really — the R&D guy, the finance guy, all doing sales.” What I realized is that it’s not that they don’t want to, but they don’t even think about it.
Darius Teter: You said some really fascinating things about a company that has really high prospects for growth, so they’re building their scaling strategy. And one of the first things the CEO needs to do is look at their management team and say, “Is this the right team for the company that we want to become? Can they get us there? Or once we’re there, are they the right people?” I think what you’re saying is, the same actually applies to organizational design, that you have to think way ahead, even if the boxes are empty or you don’t have the funds yet to fill all the boxes. You have to have a vision for how this thing is going to look. And that’s different from, “Oh my gosh, we’re projecting that sales are going to rise by an order of magnitude in the next five years. Therefore, I need 10 times as many sales people. Let’s get on and start recruiting.”
Claudia Salvischiani: And the challenging exercise when I do this with the CEOs is: forget the people, forget the people that you have. What is the ideal structure that you need, thinking about your strategy? Then we look at the people and we will discuss about the gaps, but don’t think of the people first. This is a very hard exercise.
Darius Teter: Organizational design might seem secondary when you’ve got to get bodies in the door to do the work. But it’s essential because recruiting without a plan is like shopping without a grocery list. You’ll get a ton of stuff, but most of it will be unnecessary, and you’ll miss out on the things you actually need. So tell me, what are some of the things that go wrong in a scaling business that lacks that human capital strategy?
Claudia Salvischiani: The typical trends or behaviors that I see, the first one is companies recruit all the time. So they think, “I’m scaling. I have to add resources.” So without maybe thinking about the organizational design, what they really need without planning, they start recruiting, and they recruit a high number of people. I was working with the company in India, and they had hired, I don’t know, 50 people in a year. And at the point when I started working with them, I was like, “Yeah, but actually we have retention problems. We’re losing the people. We have leadership problems,” and they had all kinds of problems, and they were keeping recruiting all the time. So what I often see is that they think, “If I scale, I have to have more resources.” So they keep hiring people. Obviously, it’s very important to have additional resources if you scale, but I think it’s extremely important to plan.
Darius Teter: Now, I’ve worked for some big, clunky institutions, multilateral banks, the U.S. government, for example, I worked for a massive NGO, and I can’t remember once anyone turning to the head of HR and saying, “We need you right here with us as we develop our business strategy.” It was really something like, “We’re going to develop our business strategy, and then you’re responsible for hiring people.”
Claudia Salvischiani: I can absolutely confirm that this is a general problem all over the world. Regardless what size of the organization, HR is pure service, execution, and solving problems. There is a kind of general mindset in the startup world that whatever comes from corporate or whatever is being done at corporate level is bad. We don’t need that. That’s too much bureaucracy. That’s too much procedure. That’s too much paper.
Darius Teter: We want to be agile, blah, blah, blah.
Claudia Salvischiani: We are agile and everybody’s doing everything and so on. So when you reach the point of scaling, you need to have organizational clarity. This doesn’t mean that you need tons of papers, tons of job descriptions, but at least you have to have a clear setup and an org chart. Absolutely, I agree with you, and, at least for the key positions, job descriptions.
Darius Teter: Through instinct and sheer force of personality, Sachin and his co-founder had grown Danco quickly. But to take their next step, they needed some clarity.
Sachin Dhanani: When we set out our five-year plan, we started then building up job descriptions for everyone in the company, and this was a great exercise. And we ended up with people having three different job descriptions in the beginning because they were doing three different jobs. But then we were very, very careful about saying, “Right, you can have two and maximum two, but only for the next six months or next nine months while we transition into one job description per person.” And there’s a lot of learning that goes on, but it was key to our scaling going forward.
Darius Teter: You just used the phrase, “it was key to our plan to scale.” Tell me a bit more. You were scaling fast without it. What does it unlock to have job descriptions and clear lines of responsibility? How does that unlock growth in what looks to be a fast-growing environment with lots of demand for your products?
Sachin Dhanani: The first thing was you can grow and you can grow very quickly, but at the same time, there’s the back end that needs to grow with you. So what happens naturally is that you have a growth spurt, and then you have sort of loads of internal issues that rise up. And you’re kind of like, “Where the hell did this come from?” And so this is because the back end isn’t working as well as, sort of, what you’re doing in the front end. So what’s key is that we kind of always have this catch-up period. I’d say having roles and responsibilities and job descriptions just improves transparency, it improves accountability, and it just gives an easy way for us, as leaders, to see where performance is happening and where performance isn’t happening. And that transparency’s key when you’re growing and when you’re scaling so that you can always make sure that you’re fixing the areas that need fixing.
Darius Teter: Clear job descriptions, functional responsibilities, and coherent organizational design — these don’t just show you what you have. They show you what you’re missing. One of the things that we talk about with human resource strategy is that human resource strategy has to be what supports the growth strategy. And part of that is knowing what talent you need to fill the gaps that have been identified in your strategy formulation. Was there an element like that in your HR plan going after 2020, ’21, where you figured these are key roles that actually don’t exist yet, but ought to exist, and that are part and parcel of supporting the growth plan?
Sachin Dhanani: Totally. And this is actually where HR and having a great HR leader can really come to their own because you look at the strategy. If you look at five years from now, and if you looked at our company five years ago and look at it now, it’s completely different. So if we take where you want to go, and you look at that strategy and you think, “Well, if I’m going to be regional, which is what I want to do, and if I want to have another vertical, then I can now see the gaps of where, structurally, I don’t have a position which I should have.”
Darius Teter: Organizational clarity also brought a measure of freedom.
Sachin Dhanani: I kind of want to touch onto one thing because you talked about it earlier, which is what it helped me do, as well, and it helped Suraj and I kind of divide up the work and it really helped me focus on certain areas. So before, let’s say in sales in particular, I wanted to make some changes and I would probably have to ensure that he was okay with them. And we had very different styles, although our values are similar. All of a sudden I could actually sort of implement some of the things that I wanted to do within the teams that I was in charge of in my way. And that kind of really helped also improve functions.
Darius Teter: It’s kind of this old saying: if there’s more than one person in charge, then no one’s actually taking charge. And so by dividing up your world between the two co-founders, you felt sort of unleashed or untethered to actually take charge of the pieces of the business that you were now explicitly responsible for.
Sachin Dhanani: Correct. I think that was key. That was probably the crux of it. Having the role separation allowed each of us to take charge of the functions that we were responsible for.
Darius Teter: It’s not always smooth sailing. As Sachin learned, your organizational structure may go through some growing pains as it adapts to real life.
Sachin Dhanani: Okay, well, I’ve got this gap, and actually I filled it, and it was a disaster because the sales manager that I hired, she was probably very good at her role, but we didn’t create the right environment for her. Again, everyone was used to reporting directly to me, and all of a sudden I brought this other person in from external, and she had to then take on seven people that were all very boisterous, loud people, as well, and there was no structure behind that. And that was a big learning, as well, from an HR perspective, about creating processes within a function. So actually, what then transpired, she left within six months. And then I actually luckily had someone else that I could promote from within the team.
By that time, I took it a bit slower, and I sort of said, “Well, let’s create the process. Let’s create the KPIs [key performance indicators]. Let’s create the sort of different segments.” So we created four vertical heads effectively, and that was key for her being good at the role that she did. And actually having the foresight to say, “Well, we need to have four people in charge of this, and then one manager,” allows for the manager to have four people reporting to her and actually control it in that way, rather than 10 people with no KPIs and various things like that. So you can have an organizational structure, but if you do not create the processes and the right environment, then actually it may fall to nothing as well.
Darius Teter: What I like about this story is that it illustrates both the importance and the limitations of organizational design. You can’t just drop a manager on a group of individuals that are used to functioning independently. But with the right structure, the sales team could be managed by one person. And in fact, it had the capacity to grow. However, this is only half the equation. Organizational design can make a role simpler and more straightforward, but it doesn’t actually improve someone’s skills. For that, you need development.
Sachin Dhanani: Within the positions that I do have, you can assess whether those people can actually grow into that role, as well. So it becomes a very, very key part of the strategy going forward, because as much as we invest in machinery or invest in our capital, I think especially as leaders in this part of the world, we forget that investing in people is probably more important than anything else. And therefore we need to then be able to identify that, actually, if I have a finance manager that doesn’t understand the finances in another country and then be able to rise up to become a group finance manager, then I need to train that person. Or if I can’t train that person, I need to fill that gap.
Darius Teter: It’s so key. Do you know who your best potential, highest potential people are, because they are … If you can find those people, first of all, the cost of building your team is much lower. Secondly, the risk and the uncertainty is bringing in … Like the first HR manager you brought in, the poor person only lasted six months. The enabling environment wasn’t there.
Claudia Salvischiani: The jobs of today might not be the same ones that you have tomorrow if you change the strategy and you grow.
Darius Teter: So it’s about identifying the skills you need, not necessarily focusing on the skills you have.
Claudia Salvischiani: Exactly. So after organizational design and thinking about your strategy, it is a question of which skills you’re going to need in the future. And after that, you can start speaking about people and recruiting, because actually recruiting strategy comes after this analysis of skills that you need, and whether you can develop the people internally towards these skills or not.
Darius Teter: Developing talent internally can have huge payoffs. So the million dollar question is: How do you build an employee’s capabilities? And this is another arena where Claudia has something to offer. So what is performance management?
Claudia Salvischiani: Performance management is a process that enables people, it’s actually primarily a development process in my view. So it doesn’t mean that you’re just talking nice all the time. You’re talking about results, you’re talking about what the person is doing, you’re measuring, but the final goal of this through the dialogue is to develop the person. Because my theory is, if you develop the people, the people are going to give you back everything. They’re going to be engaged, and you’re going to have excellent results. So focus on developing people.
Darius Teter: So what does that look like? What is a good performance management process that helps develop people?
Claudia Salvischiani: Okay. First of all, you have a goal-setting process, let’s say in general terms, okay, not thinking about a particular organization. But in general, I believe you should have a top-down, [and] a bottom-up, goal-setting process with dialogue.
Darius Teter: Is the top-down part, though, “This is our strategy, this is where we’re trying to get to?”
Claudia Salvischiani: This is what we’re trying to do. I think this year, the priorities should be one, two, three. Obviously, as a CEO, you have to define this, but you have to allow the organization to say, “Yeah, but we have issues here and here. Why don’t we put also this and this as a priority?” They must have the possibility of saying what they see as a priority, so that in setting the goals, and the other one, how they get to the goals — you should give people freedom how they get to the goals. That’s development of the people, because people have to experience themselves how they get there. That’s growth.
Darius Teter: As the next step in their HR strategy. Danco created a performance management system, and it’s been a game changer. It’s allowed Sachin to identify his best performers and understand his team’s strengths and weaknesses. That understanding proved essential in deploying their talents strategically.
Sachin Dhanani: Having this sort of organizational structure plus the performance management system like the OKR [objectives and key results] allows you to actually be able to identify those that can think with different competencies. So my example is that someone that is very good at execution may not be a great strategic mind and vice versa. And actually what your need is and what my need is currently is more strategic minds and more problem solvers. So that person that is a great executioner may not be the person that leads the team going forward. And having the ability to assess that allows you to identify things like this very quickly.
Darius Teter: So is that now part of your HR strategy, identifying high-potential individuals internally?
Sachin Dhanani: Yeah, definitely. I’d say that one of the key things is that we have what we call A-list players and we sort of always try to identify our A-list players. And it’s very important when you’re talking about an A-list player to be able to then say, “What is it individually that they want? What is it that they are looking at? What is their aspiration as well as, then, what aspirations you have, and can you match them?” Because you do need to be able to do that from an individual perspective.
I had a great receptionist that started with me in 2015, and she’s one of my segment heads of telecom right now. So she’s moved from being a receptionist to sort of various roles and moved within the organization. And most individuals, if you look at every one of us, we are always aspirational, and we are always wanting to know where we want to go next. And this is kind of the key thing that we need to be able to transfer to every individual, and in particular, the people that you want to keep. And if they don’t have that growth, then I feel that they’ll either stay for the wrong reasons or they’ll leave, and unfortunately, you’ll lose out as well. So it’s not a great situation to be in.
Darius Teter: A performance management system helps you identify employees to develop, and promotions give them opportunities to tackle new challenges. But the most underutilized development tool is you, the leader. A founder’s time is a valuable resource, and how it’s spent should absolutely be a strategic decision.
Sachin Dhanani: What is it that, as leaders, we’re focusing on that gives the most value to the company? If you’re on the floor looking at the quality of the product, when actually that’s something that you could delegate to someone else and you’re not focusing on the strategy of the company or where you want to move forward to, then actually that’s where your opportunity cost is quite high in the sense that you’re actually losing out there.
Claudia Salvischiani: Leaders can develop people much better than trainings. I’m a little bit extreme in this statement, but I think that the interaction with the leader through role model, through assignments, through giving certain tasks, putting the people in certain situations, you can really have huge development on the people. And I think this is one of the areas where we need to work in companies, make leaders more responsible for the development of other people, and think about how can I develop this capability with this person, and what kind of situation can I put this person [in] so that the person can grow?
Darius Teter: This reminds me of an approach called situational leadership. It’s a standard two-by-two matrix where you have somebody who’s super-enthusiastic and eager but maybe lacks domain expertise, so that requires a different type of management from somebody who has domain expertise but is an under-performer. So it’s something else entirely going on there. And then there’s the person who it’s a completely new role for them. And each of these requires a different management style.
Claudia Salvischiani: But that’s why when you’re scaling — so coming back to the point that we were mentioning before — when you are scaling, you have to shift the focus from product, market, … So obviously, you have to have that under control, but it requires really effort to think about what kind of people do I have, how do I have to manage these people, where do I have to bring these people, how do I develop them, how do I develop the organization? Task the leaders to develop the organization.
Darius Teter: Thanks to Sachin and Claudia, Danco had developed a strong HR strategy. The thing about strategy, though, is, it’s only as good as your execution.
Claudia Salvischiani: What I see very often is that it’s as if, “Oh, I have now the strategy, so I’m going to fly.” No. Now, you have to think, “Do I have the right setup? Do I have the right people? Who owns what? How do I break it down? How do I communicate it?” This whole piece is a development area.
Darius Teter: So what you’re saying is, it doesn’t matter how clear the strategy is, if people don’t understand why those choices were made, and then more importantly, they don’t understand their role in contributing to that strategy, then it’s just going to be like you printed it out, everyone claps and says, “Oh, that’s awesome,” and then it just sits on the desk. How did you first sit down and say, “Hey, folks. We’re going to do this thing, and it’s going to take a while, and it’s going to be really different?”
Sachin Dhanani: Once we had an idea of exactly how we wanted to set up the organization, we called a town hall, effectively, and introduced it in that format. And we then said it’s going to be a three-month transition. And that was mainly to allay the fears and just people reacting in different ways. And that was one of the big things that we did. So it was a very formal event, actually, and it was probably one of our first formal town halls that we ever had.
Darius Teter: So, first town hall in forever, “Hi, everybody. We are going to radically change how we are structured, and we’re going to give you guys titles, and we’re going to give you job descriptions.” Did anyone raise their hand and say, “What the hell?”
Sachin Dhanani: It was a conversation, but it wasn’t “what the hell” coming back. It was more like, “What does it mean, and how does this work?” And you’ve got to remember that a lot of people here, especially in east Africa, they’ve never really, probably, had an environment where they had an organizational structure or they were transparently shown this. So it was kind of new to them. And they were like, “Oh, wow.” And we kind of gave them the opportunity to make their own job descriptions. So it was also involving them in the process, and that was part of the win, I suppose.
Darius Teter: Even though Sachin got incredible buy-in from his team, change is hard.
Sachin Dhanani: I think one of the biggest issues that a lot of people had was they could directly report to me or Suraj, and all of a sudden they had to go through an alternative person that sort of sat between them. And that was quite a difficult transition because from a very flat structure to be accountable to someone else and kind of think, “Well, is that person senior to me or not?” And these were all the sort of little things that came through.
Darius Teter: That is huge. If you used to report to the founder and now you don’t, that can feel like a demotion.
Sachin Dhanani: Yeah, exactly. And these were the conversations that we needed to have, and a lot of them. I think the main thing was educating people on why we are doing this. It’s not to say that we’re not available. We’re available to talk to you, but we do need to have clear processes. And it took a long time. It took about a year to embed these into the process. And it was also a challenge on our part. Many times, I think I overstepped my mark. So, for example, I went to someone indirectly when I should have gone through their manager. And I did that a lot of times, and it was kind of continuously learning. And that was part of our culture that, look, we’ll make mistakes. We’ll put our hands up, and we’ll move on.
Darius Teter: The key to execution is persistence. You’ve got to be willing to stick to it, to prioritize your HR strategy even when there are a million other things to worry about.
Sachin Dhanani: If I was to talk to any other leader, I’d say really, really focus on your people and the structure of the organization and actually take it seriously. So when you do have this OKR or any other program that you want to implement, is to be basically there at every meeting so that everyone knows that you’re taking it as seriously as everyone else, because if you don’t do that, then what happens in general is it dies a slow death, and it doesn’t have the same impact. So I think that was my other learning, is that you have to be on top of it. We have to keep on nagging, keep on bringing it up as why it’s important, and making people understand that this is the key thing that we are going to be driving this year or next year or the year after.
Darius Teter: One of the things that Claudia said to me, she said that so many companies she supported have built in all the processes and systems, but then two years later, they’ve either fallen apart or they’re only being partially practiced or they’ve just gone. Why is this stuff so hard to stick?
Sachin Dhanani: It takes time. Every team has to meet every two weeks, and it has to be scheduled, and then you have to report to someone else. And then every month, you get on a call again, and then you sort of discuss the same objectives. And that requires management time, requires other people’s time, it requires leaders’ time. So when you have something else going on that you think is more important, you always think, “Well, this is okay. I’ll wait for this.” And actually, as leaders, what we need to be able to instill is that this is probably the most important process. It might not be urgent, but it is important. And if we focus on this, then it just creates such a better culture, but also it’ll allow us to get our results that we want to do. And this is kind of one of the key things that people were learning as we went along, that on a day-to-day basis, they’re so busy that they kind of focus on firefighting and everything else. But then all of a sudden, they come to this two-weekly meeting, and they’re like, “Oh, my strategic goal was to do this, but I haven’t spent any time on it.”
And then we start saying, “Well, okay. How do you create time on it? And what are you not doing right now that you can allow yourself to make more time?” And inevitably what they’re not doing is not enabling the staff below them to take on some of the tasks that they’re doing. And then when they see the results of that, then that’s where you have this continuous improvement. And when they see the continuous improvement, then it becomes, I think, self-fulfilling in many ways.
Darius Teter: If your business is growing, it’s also changing. But too often, founders don’t acknowledge that. They hire the 50th employee into a company that’s really designed for 15 people. That’s a recipe for redundancy, inefficiency, and turnover, things that will drag on the growth that kicked off your hiring spree in the first place. This is a common feature of rapidly growing companies that started with a small team sharing many functions. But if you can be intentional about the way your business is built, you can save so much time and energy. Design an organization that reflects your goals, identify key gaps, and hire purposefully. Find your best people, and commit to their growth. It’ll be essential to your own. And above all, follow through. Your people are one of your most valuable resources. Treat them that way, include them in strategy formulation, and prioritize that strategy to enable their best work. If you do that, you’ll build a company you can be very proud of.
Sachin Dhanani: I’d say the thing that I’m most proud of is the team we’ve built. And in particular, seeing a lot of people that didn’t necessarily have the opportunities that I have had really take on the opportunities and grow and actually want to be much more than they ever thought they were, in a sense. If you talk to my sales manager, I don’t think she ever dreamt of what she’s doing right now. If you talk to my production manager, the same thing, and that is one of the best things that I’d say I’ve created with Suraj. I feel like they’ve got the opportunity and they’re taking it, and I’m creating an environment where I can deliver that for them.
Darius Teter: I want to thank Sachin Dhanani and Claudia Salvischiani, but we’re not ready to say goodbye to them just yet. Tune into our next episode to hear Sachin and Claudia one last time in the final chapter of our trilogy on human resources.
This has been Grit & Growth with the Stanford Graduate School of Business, and I’m your host, Darius Teter. If you like this episode, leave us a review on your podcast app. It really helps us to share the stories of these incredible entrepreneurs with as many people as possible. To learn how Stanford Graduate School of Business is partnering with entrepreneurs in Africa and Asia, head over to the Stanford Seed website at seed.stanford.edu/podcast. Grit & Growth is a podcast by Stanford Seed. Erika Amoako-Agyei and VeAnne Virgin researched and developed content for this episode. Kendra Gladych is our production coordinator and our executive producer is Tiffany Steeves, with writing and production from Andrew Ganem and sound design and mixing by Alex Bennett at Lower Street Media. Thanks for joining us. We’ll see you next time.
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