Most people talk about growing a firm as if 5, 10, 20 and 50 people are simply larger versions of the same business. In my experience, they are different businesses.

There is nothing magical about any particular headcount, and every firm develops differently. But I have seen enough firms grow, including one I helped lead, to believe there are points where the way the business has been operating stops fitting the business it has become.

That can be surprisingly difficult to recognize, because nothing necessarily looks broken. The firm may still be growing. Clients are still calling, projects are going out the door, and good people are working hard.

Success can actually make the problem harder to see, because people compensate. An experienced principal steps in when a project goes sideways. Someone moves staff around to meet a deadline. A long-standing client calls the owner instead of the project manager. A senior employee knows whom to ask even though the formal process is unclear. The work gets done, so the firm assumes the system worked, when sometimes what actually worked was the people compensating for a system the firm had outgrown.

When you start a firm, none of this is a problem, because you are the firm. You find the work, price it, manage the client, make the design decisions, review the drawings, watch the money and decide what matters most that day. Most of the important context lives in your head, and that can be remarkably efficient. There is no need for a staffing process when you already know what everyone is working on, and culture does not need much explanation because people work beside the person who created it. The owner is not just leading the business. The owner is carrying much of its operating system personally.

The first hire changes the business more than we sometimes acknowledge. Someone else's paycheck now depends on your ability to bring in work, price it correctly, collect the money and make good decisions.

By five or ten people, others are talking with your clients, making decisions when you are not in the room and representing the firm without you beside them. The owner's job starts shifting from doing good work to making it possible for other people to do good work. That requires more than delegation. It requires translating judgment. What makes a client important? When should a PM push back? How much design exploration is enough? When does a fee problem require intervention? What constitutes acceptable quality?

In a very small firm, people absorb much of that through proximity. They hear the conversations, watch how the owner responds and ask questions in real time. That method has limits.

At some point, proximity stops scaling

Somewhere around 15 or 20 people, the owner may still feel close to everything, but staying close starts requiring real effort. There are more projects than anyone can keep in their head, more clients making simultaneous demands, and several project managers who want the same senior person in the same week. Marketing, recruiting, HR, IT and finance start becoming real jobs, and coordination itself becomes work.

Many owners respond to this by simply working harder, which can postpone the problem without solving it. The owner attends more meetings, gets copied on more email and becomes the final stop for more decisions. The firm may add project managers or department leaders, but those people still depend on the owner for decisions that supposedly moved with the role. From the outside, the organization has changed. From the inside, the decision system may not have changed much at all.

This is where I have seen firms become frustrated with people who were actually operating inside a structure leadership had never fully redesigned. A project manager is told to own the project but cannot control staffing. A department leader is expected to manage performance with little influence over compensation. In both cases the title moved, but the authority did not necessarily move with it. That is not always a personnel problem. Sometimes informal arrangements that worked at 10 people are simply being asked to carry a 25-person organization.

I have started thinking about this as leadership design debt. Not because the firm was poorly led; quite often the opposite is true. The firm grew because the owners were good at what they did. The debt appears because the business changes faster than the way it is managed. A firm adds people before it redesigns decision rights, promotes leaders before defining what leadership should mean, and grows revenue before it can clearly see where the profit is coming from. None of those decisions is necessarily wrong by itself. The problem is the accumulation.

Eventually something begins to feel harder than it should. Projects require more principal intervention, staffing becomes a weekly negotiation, and leadership meetings get longer without decisions getting clearer. The natural response is to fix the visible symptom: hire another PM, add a meeting, buy new software. Sometimes those are exactly the right moves. But I would want to understand first what changed about the firm that made the old way stop working.

The habits that built the firm can become its constraint

This may be the hardest part for an owner, because the behaviors that created the firm are often the reason it succeeded. Clients trusted the owner who won every major client. The architect or engineer who reviewed everything protected quality, and the principal who rescued every difficult project solved problems no one else could.

Growth eventually asks those same people to behave differently. Some client relationships need to belong to someone else. The quality standard has to be protected by people other than the person who set it, and some decisions will come out differently than the owner would have made them. That can feel like lowering the standard, but it is really the beginning of an organization that can carry the standard without depending on one person.

I have lived through versions of this myself. One question I wish I had asked more often was not "Why doesn't this work anymore?" but "What is different about the firm now?" The reverse matters too. "We tried that when we had 15 people and it failed" is a reasonable thing to say, but the firm that rejected an idea at 15 may be exactly the firm that needs it at 40.

By 40 or 50 people

A firm approaching 40 or 50 people may still feel small compared with a national AEC company. To the owner who started it, it is an entirely different enterprise. There are people in the company you do not work with every day. Employees may learn what the firm values from another leader rather than from you, and clients may have important relationships with people you barely interact with. Compensation, leadership development, ownership and succession stop being distant questions because the firm now has value beyond the founder's personal production.

At this stage the job is building a firm that can operate beyond you, and nobody gives you six months to make that shift. There is no pause between 20 and 30 people where the projects stop, the clients wait and the leadership team gets to redesign the company in peace. You do it while the firm is running, usually as someone who was trained to be an architect, engineer or builder, not an organizational designer.

I would be more concerned about a firm that keeps growing and assumes nothing needs to change than about one that discovers it has outgrown part of how it operates.

A question worth asking every few years

If I were sitting with an ownership group that had grown substantially over the last several years, I would not begin by asking what new process they need. I would start with a simpler question:

What are we still doing this way mainly because it worked when we were a smaller firm?

Then I would look at:

• Where decisions still collect around a few people

• Which client relationships cannot move

• Which leaders have accountability without enough authority

• Where staff are constantly negotiating priorities

• Which important parts of the business still depend on knowledge that lives in someone's head

Not everything needs to change. Some of the practices that built the firm may still be exactly right. The real work is telling the difference between the practices that are still strengths and the ones the firm has quietly outgrown.

I have come to think that growing a firm is less about adding people than about repeatedly redesigning the business, and your own role in it, while the business is still running. The firms that handle growth well are not necessarily the ones that anticipated every problem. They are the ones willing to recognize when the firm in front of them is no longer the firm they originally designed.

Schemata helps AEC owners and senior leaders examine the organizational conditions behind recurring problems, understand what the firm may have outgrown, and decide what should be strengthened, clarified or redesigned.

Aaron D. Jenks, AIA, NCARB, LEED AP

Founder, Schemata AEC L.L.C.