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Dear Startups, Here’s Why Temporary Leaders Are Bad For You

Dear Startups, Here’s Why Temporary Leaders Are Bad For You

Of late, the startup space has faced a lot of instability in terms of talent.

As raising funds gets difficult, companies are under immense pressure to focus on profitability rather than rapid expansion. To cut costs, companies are left with no option but to lay off a part of their employee base. Not only employees, but even C Level Executives have had to face the music due to downsizing.

The recent example is ex-CEO of Flipkart Sachin Bansal, who made a bold admission that the reason for him stepping down was due to ‘performance.’

Pros And Cons Of Having Temporary Leaders

Funds drying up, lack of demand in a particular city or a region, slowdown in growth rate, high attrition are a few reasons why there is instability in the startup environment. Startups are now exercising financial forethought, however, they have a need to create a strong management team in order to streamline their core business divisions.

To keep a check on rising costs, a new trend of hiring temporary C Level Executives is gradually catching up. This trend comes with its set of pros and cons.

On one hand while financial prudence is the need of the hour for startups, companies should have a strong leadership in place in order to build the right culture and bring stability within the organisation. Many startups, during their initial years of scaling uphire C-level executives for a short period in order to build teams, bring structure to a function and deliver quickly on a few key projects.

This has an adverse effect on the middle management teams as there is a regular change in management or immediate reporting structure and with each leadership change, there is a change in the team dynamics.

In every organisation, employees look for stability, which contributes significantly to one’s job satisfaction. Teams want to have set goals and go all out in achieving them. Leadership changes often result in changing goals and strategies, which leads to dissatisfaction& in some cases high attrition.

When Does A Temporary Leader Work

Even some established startups today are facing high levels of attrition since there is no clarity of who will be leading the company in future and how will it affect the company goals, since each leader has a unique way of running a business.

While this trend may not work for many companies, it can be beneficial for some.

Most startups need an experienced leader, with deep understanding of a particular function or business, in order to make the right decisions and to bring about a structure in place. Interim executives can bring an objective view to a company and can provide a much needed holistic assessment.

Temporary leaders are also experienced in handling various situations maturely and solve problems easily.

Every startup faces pressure from investors and stakeholders in terms of growth or business decisions or costs. Hence, startups are now focussing on profitability rather than rapid expansion. With mounting pressure amongst co-founders, a temporary leader can help reduce the pressure and focus on bridging the gaps within the system.

While this trend, of employing a CXO for a fixed term, might work for some companies, it should be well thought of after weighing the pros and cons. Frequent hiring of short-term leaders can make a company highly unstable, whereas selecting a leader at the right time can help the company overcome many obstacles.