Bursts of Color - Beware the I-Formation
As a startup team grows, there's a natural tendency to promote strong individual contributors to "player/coach" roles, meaning they do their day job while also managing teammates. This saves money in the short term and provides an easy reward for strong players. This also leads to "I-Formations" on your org chart, where each manager has only one or two direct reports. For instance: in the sketch below, the VP Marketing hires and manages the Director, who in turn hires and manages the Associate.
What's Wrong with an I-Formation?
The problem is that these semi-managers don't get enough at-bats to get good at anything (e.g., hiring one person per year). This results in a lousy working experience for your typical employee — she relies on an inexperienced semi-manager for support, and has few or no peers in her group. It also leads to an increasingly vertical org chart where communication gets filtered and garbled much more than needed. We've all played Telephone, right?
To Get Good, Managers Need 6+ Direct Reports
Instead of letting the team grow vertically this way, the better move is to selectively promote or hire the most promising leaders into real manager roles with 6-10 direct reports each. Now the manager is getting enough experience every day to learn the job well, and you have a chance of creating a cohesive sub-team. This can feel expensive and risky as you grow, but it should also make your typical employee happier and more productive.
Use "Team Lead" Positions if Needed
Sometimes it helps to make a distinction between the short term responsibilities of a Team Lead (today's deadlines and deliverables) and the longer term responsibilities of Manager (resource allocation, hiring, compensation, performance management, career development). For example: if we restructure the company sketch above, all 9 employees could report directly to the CEO, but the VP Marketing still oversees the day-to-day work as Team Lead.
PS, This 10 person company also has too many VPs and Directors for me, but that's a different topic for a different day...