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Growth

Mikitani’s Rule of 3 and 10: How to know when hiring new staff will break your business.

Are you in the middle of hiring more staff? If so, then you might want to consider whether your recruits will break your existing business infrastructure because, according to the wisdom of Hiroshi Mikitani, they will.

Mikitani is the CEO of one of the world’s largest retailers and the pioneer of the ‘Rule of 3 and 10’, which states that dramatic changes occur when the number of staff a business employs passes a multiple of, you guessed it, 3 or 10.

In other words, when a company grows from 1 to 3 employees, it will have changed significantly enough that its existing practices and procedures will no longer fit the business. The same will happen again when it reaches ten employees, then 30, then 100, then 300, and so on.

What’s interesting is just how applicable Mikitani’s rule is for mapping the progression and growth of a trade business. Think about your business’s circumstances when you worked for yourself compared to when you finally hired a couple of guys to work under you. An increase in staffing probably meant you had to restructure your processes and create procedures that ensured your new hires worked effectively.

Now think about what happens when you reach ten employees. At this point, you’ll probably have most of your time devoted to managing people rather than completing jobs. You’d also need admin staff, a whole different set of procedures for them, and maybe even a completely new system for managing your guys in the field as you move off the tools and into a permanent business management role.

For trade businesses intent on growing quickly, it can be all too easy to blow right past one of the 3 or 10 milestones without even realising that your hiring tactics have put your internal infrastructure at risk. But the reality is that many trade businesses must grow rapidly to stay competitive. Meaning they simply don’t have the time to constantly reassess their processes and procedures to make sure they are fit to keep the business running smoothly as it expands.

That’s why it’s essential to understand the kinds of challenges you’ll face when you arrive at the first few milestones and what happens as you reach the double digits and beyond.

Think of the 1 to 3 staff milestone as what shapes your business. It’s where you must move away from an ‘I’ll do everything’ mindset to a place where you delegate tasks and explain what needs to be done to your employees before they go and do it.

The jump from 3 to 10 staff and onwards will likely call for more drastic changes to your internal infrastructure. Shifting around job roles, establishing a senior hierarchy, and of course, undergoing the process of delegating parts of your role to others in the business as you get busier can take time and requires large amounts of legwork to get everything squared away.

From here, every new milestone will require more sweeping changes to your company structure and a bigger revamp of the processes you rely on every day.

To make transitions easier, you can always integrate a job management software like AroFlo into your business during a process and procedure change. By digitising your staff management and automating tasks like invoicing, quoting and scheduling, your business will be more resistant to process breakdowns. A digital platform like AroFlo additionally helps futureproof your systems and lets you create workflows that won’t break down as easily if your hiring practices push you past your next threshold.

On that note, if your business has already passed a threshold, don’t stress too much! There’s always time to adapt your processes and get things back on track.

Always remember that the only way to prevent your business from breaking is to know exactly how close you are to the next threshold. Understanding your limits means you’ll be able to bring on new hires without setting off a chain reaction that forces you to spend extra time restructuring your business at the worst possible moment.

Just keep Mikitani’s Rule in the back of your mind when you next start hiring, and always know when your business is approaching a threshold that requires some organisational changes.

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Article details
Updated
June 6, 2022
Author
James Burgess
Category
Growth
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