You started or work in an amazing company or startup. Your growth trajectory has been like a hockey stick. The business was started in an apartment, then had employee meetings at the local coffee shop; with rising revenue, you moved into a co-location facility. But the growth kept coming. You raised money and moved into your own 15,000 square foot offices. You added about 10 employees per month and soon you were over a 100 employees. Initially everyone bought into the mission, embraced the company values and loved the culture. But a funny thing happened once you grew to between 100 and 150 employees in one location. Little things started to change. More process and bureaucracy crept in and people seemed to question company tactics or strategy. People started to disagree. What happened? Tribalism. How?
Researchers and people who study communications in company settings conclude that when employees in any one location exceed 100-150 employees, the company or location culture is going to change. In the beginning of a startup, it was easy to communicate with employees directly and on a daily basis. Everyone understood the mission and the values. But when you get to 100-150 people, you start to add layers of management which could lead the following issues:
– Layers of management leads to a slow down in decision making
– Key leaders begin to find themselves removed from key employees
– Mission, values and culture becomes more interpreted than believed
– New employees on boarded receive conflicting messages
– Tribalism and “politics” starts to creep in as employees compete
In retrospect, it’s easy to see why a flat management structure, with limited hierarchical levels and leader-led decision-making, is successful in the early days of the startup. At a startup, once the staff exceeds 150 people, employees are no longer the single, cohesive, culture-reinforcing unit they were during the company’s earliest days. Staffers become more specialized and entrenched within their own “team tribes,” which are probably sprawled across an office, perhaps on multiple floors or in several locations.
Oxford University evolutionary psychology professor Robin Dunbar has theorized that humans can only really maintain personalized relationships with 150 people. He found this seemingly magic number “in the typical community size of hunter-gatherer societies,” in the average village size in county after county in the Domesday book, as well as in 18th-century England. The so-called Dunbar’s number also is found in the size of military companies, and was the basis for social network research to limit any member’s sharing to 150 people.
Two companies who addressed this in different ways were Netflix and W. L. Gore (makers of Gore-tex, waterproofing fabric). Patty McCord was chief talent officer at Netflix from 1998 to 2012, having joined when the video-streaming company was just about 30 people. McCord advises that once a company grows beyond the 150-employee mark, it’s all the more crucial that leaders “be able to articulate on a pretty regular basis where we’re going, what we’re doing, what we’re not doing.” For employees, she says, this is when company culture and identity become less about being part of a single tribe of co-workers and, ideally, more about the customers they serve. Netflix has managed to make the employees feel they own the mission of serving customers and have the responsibility to do the right thing.
W.L. Gore & Associates, the maker of Gore-Tex fabric, has an unconventional approach to managing the changing dynamics that come with growth. The privately held manufacturer, which has more than 10,000 employees, generally doesn’t allow the staff at any of its factories to exceed 150 people before building another, self-contained factory next to it. That’s because founder Bill Gore felt that when a unit of workers got big enough, it actually began to fall apart. Gore understood that workers in a 150-person unit could all know one another, and share a commitment to group goals and values and that any growth beyond that would change those dynamics.
Tribalism itself is not a bad word. As a matter of fact, when you start a company, you want to create an amazing tribe with a common mission, shared values and a culture that fuels the company. Just keep your eye on how the sheer number of employees in any one location can begin to break down the company’s culture and mission.
I was a co-founder of a company that grew to over 3,000 employees and $320 million in revenue in our first five years. We also had 30 separate city offices. We had a common rule: no more than 125 employees in any one location.