Rapidly growing companies can lead to burnout

Every autumn, the most rapidly growing companies, also known as gazelle companies, in Sweden are recognized for their achievements and significance to the business world. These companies are seen as symbols of innovation and growth, predicted a promising future. However, behind the spotlight lies another reality that is rarely discussed: how are the individuals within these companies affected as they scale up their operations? This is what recent research from Jönköping International Business School (JIBS) at Jönköping University has investigated.

Photo: Marvin Meyer @ Unsplash

In companies expanding at a faster rate, extensive organizational changes usually occur, directly impacting the working environment for employees. This acceleration of growth can result in increased workloads, insufficient information about ongoing changes, increased/speedy recruitment processes, and challenges in adapting to new colleagues. The research indicates that employees in companies undergoing such an intensive growth phase more often report feelings of burnout and reduced job satisfaction.

“It's important to emphasize that it's not the growth itself that has these effects on employee well-being, but it's specifically the scaling up – when changes are exceptional and noticeable,” says Karin Hellerstedt, Senior Associate Professor in Business Administration at JIBS, and one of the researchers behind the study.

Managers are more satisfied

The study differentiates between different types of employees, and the results show that managers experience less burnout and are more satisfied with their jobs during the scaling-up process than other employees. The researchers suggest that this is because managers have greater insight into the company's development and more control over their working environment under such circumstances. The research also shows that previous experience with similar companies can mitigate the negative effects of expansion.

“In rapidly growing companies, personnel management is often less structured than in larger firms, indicating a need to improve HR practices to support employees in all positions,” says Karin Hellerstedt.

“Do what's best for everyone involved”

In summary, the research points out that when companies scale up, it's crucial not only to focus on the numbers and the expansion but also on the people who are the backbone of the business. By understanding how growth affects employee well-being, better working environments can be created, and concrete advice can be given to company leaders. According to the researchers, it's not just about whether growth is good or bad but understanding all its nuances and doing what's best for everyone involved.

"Our goal has not been to cast a shadow over companies awarded as gazelle companies. However, we want to draw attention to the challenges often faced by these companies. By highlighting the challenges employees encounter when companies expand, we can promote a more balanced and sustainable growth for everyone involved. It's time to look beyond just growth and see the whole picture of what it means to be part of a rapidly growing company,” says Lucia Naldi, Professor of Business Administration and one of the researchers in the project.

Link to the study: Growing pains in scale-ups: How scaling affects new venture employee burnout and job satisfaction

The study is conducted by JIBS researchers Karin Hellerstedt and Lucia Naldi, together with JIBS doctoral student Mohamed Genedy and Johan Wiklund, AI Berg Endowed Chair and Professor of Entrepreneurship at the Whitman School of Management, Syracuse University.