Good to Grow: Compliance and Cultural Considerations for Small Businesses

Growing a company looks different for every small business owner but hiring and keeping the right employees are consistent challenges. Each step from a small, like-minded group of collaborators to a diverse workforce with a variety of roles, skills and personalities requires mindfulness. Let’s break the “zero to 60” discussion into four phases. Each stage is unique, and the organizational structures, CEO priorities, staffing challenges and key regulations are different.

Phase 1: 1 to 10 Employees

As the owner begins to add people, hiring carefully is critical. Ideally, you need people who are secure in a smaller company and who can take on more responsibility as the company grows. To get to the next level, all staff must understand and feel like a part of the plans to grow the business. They should know their role but be comfortable with the idea that with growth comes change.

The other complexity that arises with added employees is state and federal legislation. The primary compliance laws that come into play during this phase include:

1. Fair Labor Standards Act (FLSA)
3. Equal Pay Act
4. Immigration Acts
5. Polygraph Protection
6. Other laws protecting jurors, veterans, union activities and health insurance portability
7. Other considerations and state-specific laws including unemployment, worker’s compensation, Wage Payment, Retaliatory Discrimination, New Hire Reporting, etc.

Phase 2: 11 to 19

We see the beginnings of an organizational structure. Not everyone reports directly to the CEO anymore. The CEO may see their “team,” the people that started the company, may no longer be a fit. Letting go of these people or placing them in different roles is painful but getting to the next stage may depend on it.

Here, we add two more regulations:
1. Civil Rights Act (15 employees)
2. Americans with Disabilities Act (15 employees)

Phase 3: 20 to 34

The organization now transitions from being CEO-centric to having its own “identity”. It is time to consider creating a set of values that describes the organization’s expectations. The CEO is required to focus on regular and effective communication more than ever. Employees expect information from their manager rather than directly from the CEO. Messages must cascade efficiently and accurately to ensure unity.

During this phase, add:
1. The Age Discrimination in Employment Act, or “ADEA” (20 employees)
2. Consolidated Omnibus Budget Reconciliation Act, or “COBRA” (20 employees)

Phase 4: 35 to 60

The formal documentation of processes and key systems provides the foundational building blocks to manage here. The company is growing up. Experienced managers must provide employees with tools, guidance and regular feedback. Processes must be formalized, since remembering “what we did last time” is no longer effective.

Your employees feel less frustrated, work fewer hours, and are more productive in Phase 4. If you’ve hired poor managers (“doers” instead of “leaders”), you’ll find good employees leaving.

During this phase, add two regulations:
1. Family Medical Leave Act (50 employees)
2. The Affordable Care Act (50 employees)

Summing Up

The zero to 60 process is exciting and sometimes frustrating, but one thing stands true: good hiring is key to successful growth. Managers shouldn’t just be hired for skill but also for the potential to lead confidently. They should share their vision beyond day-to-day tasks while investing time, developing relationships and coaching teams.

Catapult Members have access to experts skilled in HR and the business of people. From talent recruitment to employee retention and customized professional development, Catapult is your trusted partner. Focus on organizational priorities with confidence knowing your business is compliant, competitive and empowered.

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