Once upon a time, one of the founders of HP, David Packard, suggested that a company is more likely to die from failing to implement too many opportunities than from not having any..
This statement formed the basis of Packard’s law, which is successfully used in all areas of business:
No company can increase profits faster than it is able to attract the necessary number of specialists to ensure this growth and at the same time maintain its market position.
Failure to comply with this principle leads to stagnation, and then to decline in general for the following reasons:
- The number of employees in the company is limited, and the number of competent ones is very limited. Accordingly, if you do not prepare in time, then with rapid growth you will have to place incompetent employees in responsible and key positions.
- In order to bridge the gap between the competencies of employees, rules, procedures, regulations and other bureaucratic mechanisms are introduced that undermine self-organization and self-discipline.
- It’s not hard to guess what’s starting to happen to people Integrity - they begin to leave the company.
- The bureaucracy is strengthening in order to compensate for losses from the “right” employees.
- and so on in a closed cycle....
And now only mediocrity remains in the company, which leads the company to stagnation.
The principle is quite difficult to comply with due to the fact that this process is accompanied by success for some time (easy money almost always eliminates the need for cost control), and it is not surprising that HP itself became a victim of not following its own rule, but managed to stop in time and restore its greatness.
How do you control the presence of the “right” people in key places?