Why Growth Companies Lose Their Best HR Directors
Rapid growth changes every part of a business. Revenue increases, headcount expands and founders who once sat alongside every employee find themselves leading organisations with multiple management layers, specialist teams and increasingly demanding investors. Most businesses expect those changes to affect finance, operations and technology. Fewer recognise how profoundly they alter the role of HR.
During the early stages of growth, the priorities are usually straightforward. The business needs to recruit quickly, establish policies that support a growing workforce and help inexperienced managers navigate the challenges that come with building teams for the first time. An experienced HR Director can add enormous value during this period because they bring structure to an organisation that is often evolving faster than its internal processes.
The difficulty is that businesses rarely pause to redefine the role as they continue to grow. Instead, the demands placed on HR simply accumulate. Recruitment volumes remain high, employee relations become more complex and managers naturally look to HR whenever organisational issues arise. At the same time, the business itself is becoming fundamentally different. Leadership capability starts to vary between departments, founders can no longer rely on personal influence to maintain culture and the consequences of poor hiring become considerably more expensive than they were only a few years earlier. The organisation needs someone thinking about succession, leadership development and organisational design, yet the function is often consumed by responding to the operational consequences of growth.
This is one of the reasons experienced HR Directors sometimes leave businesses that, on paper, appear to be thriving. It is rarely a question of salary alone, nor is it usually because they have become disillusioned with the company. More often, they recognise that the organisation has entered a new phase of development while their role has remained rooted in the previous one. They were recruited to build a people function, but increasingly find themselves administering one. The work becomes reactive rather than strategic, despite the commercial importance of people decisions becoming greater with every stage of growth.
Building a leadership team?
That shift matters because the challenges facing leadership teams also become more sophisticated. As businesses approach institutional funding, international expansion or a significant increase in headcount, questions about capability begin to replace questions about capacity. Do we have the leadership team needed for the next phase of growth? Where are the succession risks? Which functions need strengthening before they become constraints? How do we retain the people who have been central to our success while introducing individuals with different experience? These are not HR questions in isolation.
They are commercial questions that happen to involve people.
The businesses that navigate this transition successfully tend to recognise that HR leadership should evolve alongside the organisation itself. Recruitment remains important, although it becomes one part of a much broader agenda that includes executive succession, organisational effectiveness, leadership capability and long-term workforce planning. Experienced HR Directors are well placed to contribute to these discussions because they have visibility across the entire organisation rather than a single department. When given the opportunity, they often become trusted advisers to founders and boards, helping shape the leadership decisions that influence the direction of the business for years to come.
Investor-backed businesses frequently reach this conclusion earlier than others. Venture capital firms and private equity investors understand that growth eventually becomes constrained by leadership rather than market opportunity. They have seen businesses with outstanding products struggle because management teams failed to evolve, just as they have seen relatively ordinary businesses outperform expectations because they consistently strengthened leadership ahead of the next stage of growth. It is no coincidence that discussions around investment increasingly include succession planning, executive capability and organisational structure alongside financial performance.
There is another dimension that receives less attention but has become increasingly important in recent years. The strongest senior candidates are evaluating employers just as carefully as employers evaluate them. An experienced Chief Financial Officer or Chief Operating Officer is unlikely to join a business based solely on its growth projections or remuneration package. They look closely at the quality of the leadership team, the way decisions are made and whether the organisation appears capable of sustaining its success. The people function forms part of that assessment. Businesses with respected HR leadership often present themselves as organisations that invest in managers, develop talent thoughtfully and understand that culture requires active leadership rather than good intentions.
From a recruitment perspective, this has practical implications. Many of the senior searches we undertake begin because a founder or board recognises that a particular leadership role has become essential. Increasingly, however, those conversations involve HR Directors from the outset. They have already identified where capability needs to be strengthened, understand how the executive team should evolve and appreciate that attracting exceptional people requires more than simply producing a competitive offer. The most successful appointments usually reflect months of organisational planning rather than an urgent response to a resignation.
At Fram Professionals, we work with founder-led, VC-backed, AIM listed and PISCES businesses through periods of sustained growth and organisational change. Our experience consistently reinforces the same conclusion. Businesses rarely lose outstanding HR Directors because those individuals stop believing in the organisation. They lose them when the role fails to evolve alongside the business itself. The companies that retain exceptional people leaders are usually those that recognise HR as a strategic leadership function, involve it in the decisions that shape the future of the organisation and understand that commercial performance and people strategy become increasingly difficult to separate as businesses mature.
Successful businesses recognise that hiring well is not simply about experience, but alignment, timing and intent.
Contact Fram Professionals if we can ever assist you with insights on the issues raised.
About Fram Professionals
Fram Professionals supports VC-backed, PE-backed and founder-led businesses as they scale leadership teams. We advise on key hires including Chief Operating Officers, Chief of Staffs, CFOs and commercial leaders, helping growth companies build the capability required for their next stage of development. We are the sister company of Fram Search, with over sixteen years of VC market relationships.
Contact us at [email protected] or call 01525 864 372 to discuss a search.
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