“What was the growth rate of the business last year?”
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One of the best pieces of career advice I received from a mentor a long time ago is “Don’t work for companies that are not growing.” There are two types of organizations in any industry: those that are innovating and growing and those that are not – for there is simply no status in organizational stability. It is also a well-known fact that the larger an organization, the poorer the foundation for innovation becomes and vice versa. There are many differences between large and small organizations, but the chasms between the two are commonly defined best through the lenses of innovation and agility. But don’t just take my word for it. Let history speak for itself: Since the Fortune 500 was established in 1955, only 13 percent of the original members remain.
So, what is it, then, that leads so many larger organizations to initially grow and become dominant players and brands only to decline and fall into irrelevancy? Perhaps Steve Jobs said it best when he stated that, “The [big] company does a great job, innovates, and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important.”2 In business, the number one ingredient to quality is consistency. So, when quality fails, service is diminished, and all you are left to compete with is on price…and these are places you don’t want to work and build a career!
So always remember that in most larger organizations today, it is far easier to control costs than it is to innovate and grow to achieve a bottom-line result. These short-term cost solutions are often led by accountants who create a short-term financial win, often at the expense of long-term innovation and growth. That is why it is so important to know where exactly the organization you are interviewing with is in the life cycle of that business. Unlike a roller coaster, you want to be riding with an organization while they are climbing up the tracks, not coming down.
So therein lies the quintessential paradox of interviewing for a job with larger organizations: Most continue to drive short-term profitability for their shareholders at the expense of their long-term viability and growth. This problem is fundamentally no different than politicians who promise unsustainable future government spending, pensions, and benefits to their supporters for their own personal short-term gains while kicking the liability can down the road for somebody else to deal with. And this is far easier for politicians to do since governments rarely fail, as opposed to companies, which frequently do. And the last thing you want is to be working for a company that is not growing and heading in that direction.
When you ask about an organization’s previous year’s growth rate during your interview, you are trying to determine how well they performed compared to other organizations in that same industry. Although this will not guarantee future performance, it tends to be a good indication, absent any extraneous factors, of trending growth and overall health of the business. Some people may try to excite you instead based on expected future growth projections, but absent a history of performance the year prior, these pie-in-the-sky predictions are unlikely to actually come to fruition.
So, what is a good growth rate? Absent any industry-specific data, a good growth rate typically starts at a number higher than the overall growth of the economy (GDP) or the inflation rate—whichever one is higher. So why are these numbers important? Because smart investors want to invest in organizations that will provide them with the highest rate of return on their investments. And if their investments are only making an average return, they will want to find something better to invest in. So, if they cannot at least outperform inflation, then the real rate of return on their money is actually negative, and they are losing the value of their money. The bottom line is that poor growth (and returns) will eventually impact any organization that needs capital to grow.
At the time of this writing, the real GDP growth rate in the US for 2021 was around 5.7 percent with an inflation rate of around 7.9 percent. So based on this data, when looking for job I would advise that they have a growth rate in excess of 6–7 percent—the higher the better. You can also look up the historical and expected growth rates by industry online by simply searching “average growth rates by industry.” For example, I largely work within the internet technology, advertising, and marketing industries. So as a general rule of thumb, I typically advise professionals in my industry to seek out organizations that are growing in excess of 10 percent year over year.
Question #2: Why is this position now open?
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