What leaders usually conclude
The natural conclusion is that growth itself is simply straining the business — more clients and candidates spread across the same or only slightly expanded team, with quality inevitably diluted by volume. This is not wrong as far as it goes, but it treats the strain as a simple capacity problem, when the more precise issue is usually about information, not headcount.
What the evidence suggests
Jay Galbraith’s research on organisation design describes growing organisations as facing rising information-processing demands — more decisions, more coordination points, more context that needs to travel between people — that outstrip what informal, proximity-based coordination can carry. A recruitment firm’s early client and candidate experience is typically excellent because a small team holds a complete, shared, and current picture of every active relationship. As the firm grows, that complete picture fragments across more people, and unless the firm has deliberately built a way to reconstruct it — shared systems, structured handover, explicit context-sharing — both sides of the market experience the fragmentation, just through different symptoms: clients notice inconsistent communication and slower responses; candidates notice being asked to repeat information or receiving conflicting expectations from different points of contact.
This connects to Donald Sull, Rebecca Homkes and Charles Sull’s broader finding that cross-unit coordination, not planning or intent, is the central barrier to good execution in growing organisations. A recruitment firm’s two-sided structure means it effectively runs two coordination challenges simultaneously — coordinating around clients and coordinating around candidates — and growth strains both at once, though not always visibly at the same pace, since whichever side’s coordination happens to depend on fewer shared systems will typically show strain first.
Nelson Repenning and John Sterman’s research on the “capability trap” helps explain why firms so rarely invest in rebuilding this coordination before the strain becomes visible. Building the shared systems and structured handover processes that would reconstruct the small-team picture at scale takes real, sustained time — time that a rapidly growing firm, under pressure to keep placing candidates and servicing new client wins, is under constant pressure to spend on immediate production instead. As their research found, the payoff from working harder within the existing, informal way of doing things is immediate; the payoff from investing in coordination infrastructure is delayed and easy to defer, right up until the fragmentation Galbraith’s research describes has become expensive enough to force the issue.
Competing explanations
A firm might instead conclude that specific individuals are underperforming under increased volume, and address it through additional hiring or individual coaching. Additional capacity can genuinely help, but if the underlying issue is fragmented information rather than insufficient headcount, adding people without addressing how context and knowledge travel between them can, paradoxically, fragment the picture further rather than repairing it — more people each holding a smaller, less complete slice of the same overall relationship.
A further factor specific to recruitment is that client and candidate feedback usually travel through entirely separate channels — client satisfaction surveys or account reviews on one side, candidate feedback forms or informal comments on the other — which means the firm’s leadership may see a clear signal from one side well before the other, creating a false impression that only one half of the market is under strain when, in fact, both are experiencing the same underlying fragmentation at different visible speeds.
The timing lag between the two sides is also worth noting directly. Client dissatisfaction tends to surface relatively quickly, through a direct complaint or a lost account, because clients have an established commercial relationship and a clear channel for raising concerns. Candidate dissatisfaction, by contrast, often surfaces only indirectly — through declining application rates, higher drop-out during process, or reputational effects that take months to become visible in any metric the firm is actively tracking — which means a firm reacting only to the faster, louder signal may address client-side strain while the candidate-side version of the same underlying problem continues to compound, unaddressed, simply because it has not yet become loud enough to notice.
Where this shows up
The pattern described here is most recognisable in recruitment businesses, part of the wider Professional and Knowledge-Based grouping. The same organisational questions appear, under different names, in other sectors.
Questions worth considering
- Does any single person in this firm currently hold a complete, current picture of the firm’s most important client and candidate relationships, or has that picture fragmented across more people than can easily stay coordinated?
- Are client and candidate experience declining at the same rate, or is one eroding faster — and what does that difference reveal about where coordination is weakest?
- Would additional hiring address the actual cause of the decline, or simply distribute the same fragmented information across more people?
- Has the firm ever compared how long it takes a new client or candidate concern to reach someone able to act on it, before and after its recent growth?
Your team is facing similar challenges?
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