Tuesday, July 26, 2011

Old Boys Club in Small Companies

Many of the small companies start with a set of folks from a handful of big companies coming together. These folks would generally know each other and would have in all likelihood shared working relationships sometime in their careers.

In certain situations it might be the result of a senior person being forced to move out and deciding to start another venture. The senior person may be forced to move out from an organization due to company ownership changing hands, company board wanting to purse a course of action where the senior person becomes a 'misfit' or the senior person's performance not keeping pace with the others in the senior management team.

How Old Boys Club Get Formed?

So a small company would normally start as an "old boys club" (OBC). For certain roles the OBC may get a senior person from other organization but this can be viewed as an exception rather than as a norm.

For those who decide to pursue career opportunities in small companies it would come as a quick realization within a short span of time that moving up and joining the OBC may be just impossible. Once this realization sets in it may be a wise thought to move out rather than wait for growing upwards in the organization to become a part of the OBC.

What are the Common Organizational Challenges Resulting from Old Boys Club?

In such organizations one might come across strange reporting structures like the Accounting head reporting into the Facilities head or the IT Support head reporting into the Process Excellence head. From a pure role perspective a function head reporting into the other function head may have little logic behind it.

However, from the OBC's angle this is a perfect organizational construct. Having an outsider become a member of the OBC will not be easily acceptable to those in the OBC and especially the person heading the organization (who will invariably be the head boy of the OBC).

Why the Talented Folks who are Outside the Old Boys Club may not Remain with the Organization for Long?

For those who are highly competent it may not be a good idea to stick to such an organizational construct for a long time as it may mean no opportunity to grow into strategic management.

Even if one is the head of a function the role would remain mostly an operational one.The head would be held fully accountable for the function's performance but will have limited influence in terms of budgeting and resource planning.

How Old Boys Club Impedes Organizational Growth?

Attracting talent may be always possible in such organizations as some of those who join a small company might aspire to get fancy titles (VP, etc.) in a shorter time frame, equity options, more freedom as compared to a bigger organization.

Retaining talent, however, might be challenge if the OBC mentality is too prevalent as the smarter ones of those who join will realize in no time that they have no opportunity to grow into strategic management role. Hence for small companies the OBC mentality must be overcome if they dream to grow and become big in the future.

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