People Inflection Points: What changes as your company grows

As an HR professional you probably spend a lot of time thinking about the employees at your company. You may wonder about their performance, how team dynamics may change during growth, and how much interpersonal relationships factor into their success.

You may have at some point even thought about Dunbar’s Number, the theory that people can “handle” around 150 meaningful relationships.

Does it apply to the workplace? 

Sure, some companies may reach 150 employees and stop growing, but oftentimes the goal is growth! So, is there a clear correlation between company size (growth) and big changes in company culture or processes? 

We’ll call these moments of significant change in growth, “People Inflection Points.” 

We wondered, do these moments exist? If so, what are they and how can HR leaders and companies prepare for them? 

To answer this question I turned to our internal HR experts, our CEO Joris Luijke who led the People function at Atlassian and Squarespace and Stacey Nordwall, our Head of People who was a founding member of Culture Amp’s People function. We also asked our community via a LinkedIn poll to help inform these answers. 

What is an inflection point?

We like Entrepreneur Alina Okun’s definition of an inflection point: “A dramatic change in the business environment that impacts the operations of an organization, upending the assumptions on which business was built. Sometimes, an inflection point is called a 10X change.”

So a People Inflection Point would be: a dramatic change in the business environment brought about by change in company size that impacts the operations of an organization, upending the assumptions on which business was built.

Before we explore the People Inflection Points we’ve identified from our in-house experts and community input, a few caveats. 

We know that hiring does not always allow for clean rounded numbers like 50 or 800. These bands are approximate and used to form a model that can help you prepare for company changes. You also may find that these things happen or you have to prepare for them sooner, if you are distributed across many countries or locations, or have multiple business units. 

Now, let’s explore!

50 employees 

What changes: “This is when things seem to initially break," says Stacey. "The company’s senior leaders no longer have direct links to or know every employee and that distance starts to grow. This is also at the point when you start to have leveling and a middle management layer. Also, in the United States 50 employees had generally been the number at which certain laws started applying to a business.”

People, Talent and Operations professional Daniel Shneider, commented on our poll that this is the first major inflection point because it’s when: 

• Execs don't know/haven't worked with/won't directly work with everyone who's joined the company
• Employees start to feel distance from leadership
• Existing communication patterns break. Things like weekly team meetings stop having significant relevance to all employees (as jobs get more specialized) and need to be sunset/redesigned
• Culture needs to be articulated and designed for. Culture stops just being the "vibe of the first 20-30 employees" and starts to fractionalize/breakdown. There are different cultures on different teams, different leaders, etc. Not necessarily insidiously/politically, but it's when employees will start having wildly different experiences of their time at the company if you're not intentional about it.

How to prepare: When preparing your company for the 50 employee-mark, Joris’s advice is to focus mostly on hiring for the right roles, building the foundation of your culture, and to Stacey’s point, this is also when you’ll want to have established basic HR policies and procedures like onboarding. 

Three things to have: 

1. An extremely well-oiled talent acquisition process 
2. Written company values 
3. Company handbook

150 employees 

What changes: Oh hey, it’s Dunbar’s number! The BBC reports that Dunbar and his colleagues examined, “...historical, anthropological and contemporary psychological data about group sizes, including how big groups get before they split off or collapse. They found remarkable consistency around the number 150.” The number held true for early hunter-gatherer societies and modern scenarios like, you guessed it, the office. 

So what changes here is that at a fundamental level, relationships among employees get harder to hold. This can mean that culture starts to erode (or at the very least change). 

As Kim Rohrer, Principal People Partner at Oyster said on our LinkedIn poll, “I chose 150, because if you don’t get your shit together by then, you’re screwed when you get to 800!” 

In our poll, 150 people was voted the most important people inflection point (out of the four options we were able to provide) by nearly 200 votes. We guess that many of you share Kim's sentiments!

How to prepare: Joris recommends talent development initiatives, programs for employee performance and a focus on career growth. This is also a time when you may want to revisit those company culture foundations (like your company values) and how they’re going to function within a larger organization. 

Stacey adds that it’s important to have expanded on those basic programs you built at 50 employees, like for onboarding, offboarding, performance reviews, compensation etc. by this point. It’s also a good time to develop a comms strategy for your company. “This way, people continue to feel connected and supported as that tends to get more challenging as your company grows,” Stacey explains.  

Three things to have: 

1. Talent development program 
2. A programmatic way to scale behaviors and values 
3. A compensation philosophy   

500 employees

What changes: This is a critical time for companies to ensure their processes can scale in ways that ensure a consistent and positive experience for employees at all moments that matter. While this number didn’t appear in our LinkedIn Poll (we were limited to just four poll options) it came up in comments and offline conversations as an important milestone. 

How to prepare: Employee journey mapping to organize the employee experience from hire to exit (you can check out Pyn’s free Employee Journey Designer tool here). At this point, (or even back at the 150 mark) Stacey explains that it’s important to start focusing on the metrics you want to be monitoring for your HR team.

Three things to have: 

1. Employee Journey Map 
2. Clear and trackable HR metrics 
3. Comprehensive graduate and internship program

800 employees

What changes: For startups, this company size is generally associated with certain expectations for revenue numbers (and therefore employee performance). “If companies consider an IPO, this is when they’d likely put in place more formalized compliance oriented processes,” says Joris. 

How to prepare: Leading up to the 800 employee mark, Joris suggests focusing on HR Analytics and predictive models around recruiting/growth to support finance in projecting costs. You'll also want to have strong employer Branding (to help you build on/ and facilitate future IPO buzz). Lastly, increasing your focus on compliance and risk management for this stage is a good call.

Three things to have: 

1. A consistent headcount forecasting methodology 
2. A tight HR compliance process
3. Automated support at all employee moments that matter

1500 employees 

What changes: “Most departments have now grown to be 150+ themselves (Dunbar’s number) so communication is becoming more complex,” says Joris. Lexi Clarke, Chief People Officer at Payscale, commented on our poll, “The inflection point between 500 to 1000 can be the most critical to get it right, start to scale really well, maintain employee trust/engagement and think about scaling beyond 1000+ at some point in the future.”

How to prepare: “This is a good time to undertake a review of your systems, policies and processes to update them, make sure they are serving you, and are ready to scale for the company's continued growth,” says Stacey. While Joris adds that scaling can involve setting up shared services for Talent Acquisition, HR Ops, and Comp to increase efficiencies and lower costs.  

Three things to have: 

1. Strategic and programmatic internal comms
2. Internal movements (career paths, internal recruiting strategy, succession planning)
3. Organizational Design Expertise 

Layoff of employees 

What changes: If there’s any point in a company’s history that fits the bill of being a dramatic change in the business environment brought about by change in company size, it’s a layoff. No matter the size of the layoff, losing employees en masse undoubtedly impacts the operations of an organization, and makes employees question the assumptions on which business was built.

How to prepare: It’s never an easy decision to layoff employees. Once you’ve made the choice, it’s time to put the work in to ensure it’s a dignified experience for employees. We’ve put together a guide on how to prepare for and communicate layoffs that includes a communications checklist you can use for free. 

Looking beyond the numbers to prepare for change

There are other models that can help you prepare for change. For example, The Greiner Curve breaks down organizational change into six phases: 

1. Growth Through Creativity – ends in a Leadership Crisis.
2. Growth Through Direction – ends in an Autonomy Crisis.
3. Growth Through Delegation – ends in a Control Crisis.
4. Growth Through Coordination and Monitoring – ends in a Red-Tape Crisis.
5. Growth Through Collaboration – ends in a crisis of Internal Growth.
6. Growth Through Extra-Organizational Solutions.

Once you figure out what stage you’re in, you use the indications of a “crisis” to start preparing for the next stage of growth. 

There are also models from consultants and organizations like Deloitte. Their Organization Design Maturity Model has four levels:

1. Myopic & Reactive
2. Functional & Emerging
3. Systemic & Analytical
4. Expansive & Cocreative

As Stacey shares, “Numbers tend to be less useful than organizational maturity levels, but size ends up being a proxy because it’s easier to talk about.” But, Stacey adds, the numbers end up being different for folks because of things like: 

1. The context of what was happening in the industry at that time 
2. The context of what was happening in the organization itself (timing of funding, product/market dynamics making hiring easier or harder, etc). 
3. Those people’s career paths and how their experiences with the first two things in previous organizations have shaped their understanding of when is the right time

For example, on our LinkedIn poll, Shimrit Paley Markette, People Operations at Second Nature, commented, “Trying to think back to 2016-ish, but I remember a really critical initial turning point in the employee experience and thereby HR processes ~250, when folks just didn't know each other's name anymore at scale. You can still somewhat preserve that through 150 people. 400 folks is around when our small-company HRIS just didn't scale anymore. I'm doing it all again now, so can report back in the next year!”

The People Inflection Points we’ve shared in this article are just another model you can use to help make sense of the changes your company is going through. And in an ideal world, these inflection points will help you prepare for what’s ahead. 

It’s this proactive philosophy that powers Pyn, through free tools like our Employee Journey Designer. With it, you can plan ahead for the moments that matter across the employee journey.