24th February 2015
“I remember being slumped in my chair like a broken man thinking, this has to change, I cannot go on like this. I was overworked but I was just not getting anywhere.
“I had never managed people before and I didn’t want to delegate because I thought that no one else could do the job. And I was failing out of love with my business, which for an entrepreneur is very dangerous — because you cannot motivate other people if you have fallen out of love with the business yourself.”
He immediately brought in Nick Shuff, a director and business partner, and between them they developed a management team, including a marketing manager, an HR manager and a finance director.
The impact was dramatic. Turnover went from £1.7 million to £10.1 million in four years and the number of employees jumped from ten to seventy-five. “It turbo-charged growth, it was just phenomenal. All of a sudden we were one of the top 100 fastest-growing companies and I was winning entrepreneur of the year awards. “I don’t think we would have got that level of growth if I had not made those decisions then, to invest in that management team and get that level of expertise in.”
It’s a challenge that many entrepreneurs will recognise. One of the biggest hurdles for owner-managers is learning how to manage, and delegate to, employees. For an entrepreneur with a clear vision of what they want to achieve, it can be particularly hard to learn how to delegate, trust and motivate workers.
Cracking the issue is often the key to success. According to the latest ECI Partners survey of high-growth companies, 54 per cent of respondents said that investment in staff would be a growth driver for their business over the following year. Lara Morgan had to learn on the job about managing employees. Having started her toiletries business, Pacific Direct, on her own with nothing but a fax machine, she eventually built and managed a team of 467 employees before selling the business for £20 million in 2008. She now invests in small companies through her business, Functionality, including activbod, a skincare range, and Gate8, a luggage company.
“Managing people can be emotionally stressful,” she says. “Humans are not infallible and the huge amount of mistakes they make through the poor management of people can be the breaking of any business. In my mind, the greatest and continual challenge of any growing enterprise is that of managing people.” One of the key things Ms Morgan did at Pacific Direct was to make sure that she continually engaged with and rewarded staff. She would come back from work trips with photocopied pages of business books that she had read, to share with them, and occasionally would surprise them by giving them bouquets of flowers and taping £50 notes under their chairs for them to find. She even once took the entire workforce, then 26 people, on an all-expenses paid holiday to Barbados to reward them for hitting a profit target.
“I have made many mistakes along the way, but I still stick to the belief that most people want to do a good job and a great job. When people are treated with respect and given fair rules, and are included in the conversation to deliver the best service, then your chances of successful retention skyrocket.
“Compared with other company growth challenges, the people piece will always be my greatest trial. Nevertheless, the reward of loyalty, laughter and work enjoyment far outweighs the turmoil.”
Tony Walford, a partner at Green Square, says that managing employees in a fast-growing business is particularly tricky because of the speed at which change takes place. “When the business employs five or six people, you are one big happy family, but as it gets bigger, that’s when the problems start because somebody has to become the boss. You can’t have 50 people sitting round the table at lunch having a nice chat; you have to decide who is going to take leadership roles.”
He argues that there are two key challenges to managing employees well in growth companies. First, you need to make sure that you are constantly monitoring the needs of the business. “As the business develops, everything changes — you will find the roles that need filling will change, and new roles that weren’t needed before popping up, and you suddenly find someone sitting there doing a job which they shouldn’t be doing. You need to be constantly on top of that.” Second, you need to make sure you are constantly monitoring the needs of the employees. “If you can give them career progression and training and enhancement, they are more likely to stay with you.”
There has rarely been a better time to get it right, as companies face the prospect of a talent shortage for the most-skilled workers as the economy picks up. According to the same survey from ECI Partners, 82 per cent of growth businesses in Britain said that they were experiencing a skills shortage, with 13 per cent describing it as a “significant issue”. If it’s getting easier for skilled employees to move on, it makes even more sense to find ways to convince them to stay put.
Six keys to success
Lara Morgan’s tips for managing staff in a growing company
1 Set clear “key performance indicators” from a carefully considered role description
2 Work to understand what makes each person tick and how they like to be treated
3 Put communication at the top of your management style. Inclusiveness, limiting hierarchies, fairness, consistency of standards and treating others well all go a long way
4 Look for ways to celebrate progress and outstanding performance. Reward people with the things they want, not what you guess they would like. Do not make the mistake of taking people out for lunch to celebrate great work when they could take their partner out at your expense instead
5 As the business grows, make sure that people find new challenges and are given training and that you continually invest in your team members, including external professional supporting qualifications
6 Be firm but fair, never forceful, bad-mannered, moody or inconsistent. Management must be fair and even-handed or else managers rapidly lose the respect of those they lead