Three Top People Challenges Faced By Businesses Under 500 Employees in 2018



Imagine the excitement that business owners/leaders go through as their SME begins to grow. However, nothing could prepare them for some of the challenges that come with both financial growth and also, growth in terms of headcount. Most of the pain points they will feel will be generated by our good old friend… PEOPLE!

I am sure that many of you will have led teams historically and although it can be one of the most rewarding activities you’ll do in your career, it can also lead you to making tough decisions and causing immense stress.

Here at Rencai we meet organisations every single week who have seen large growth financially due to the business performing well. However, they still have outdated back office processes, meaning they struggle to gain a competitive advantage when trying to attract, retain and develop talent.

Interestingly the challenges we see organisations face are the same across all industries, some worse than others however, generally most businesses have commonalities.

The purpose of this blog is to discuss three common challenges that we see  organisations face during periods of fast growth – particularly focusing on businesses under 500 employees. As always very keen to hear about your experiences/thoughts, so please do like/comment/share this blog.


Challenge 1 – Employee Engagement, Performance Management and Retention

Many of you will be getting bored of hearing the buzz phrase employee engagement however, it is going to be around for a while, as so many businesses do it badly. Intrinsically linked to engagement is performance management and a company’s ability to retain it’s staff.

Many businesses focus to much on developing their sales and marketing strategy, which is certainly important however, they completely ignore their people strategy. This leaves employee’s feeling left without a voice, just a number and in most cases not valued by the organisation.

“Employee Engagement is a fluffy thing anyway, who cares?”

Teams with high employee engagement are 21% more productive (Gallup)

Engaged Employees are 27% more likely to record excellent performance (Gallup)

An engaged workforce can have up to 87% less chance of attrition (inside6q)


As you can see from the handful of statistics above, employee engagement can drive business performance, whilst also reducing costs. It doesn’t always take a large investment either but the return on investment is likely to drive business growth, free up funds for new machinery/technologies and ensure that your business can attract, retain and develop employees effectively.


Challenge 2 – Leadership Capability

I have no doubts that many of you will have smiled when you read challenge two, as I am sure you see this each and every day. Does the following scenario sound familiar…?

Somebody is performing well in their job and is therefore, given a promotion. The promotion means that they now have a number of direct reports and people management responsibility. Many people in this situation have limited leadership training and therefore become managers. They dictate rather than coach and some of the methods you see them use are interesting e.g. the traditional screaming down someone’s neck when they are not performing or another interesting technique is to overwork employees, only thinking about generating revenue and not the wellbeing of that person. I could go on but I am sure you have got the gist.

This is a common issue that small businesses face, as well as larger organisations. This typically leads to high attrition, as the techniques used cause employees to leave. Low performance  is common due to poor morale and in some cases businesses can see an increase in employee relation queries.


Challenge 3 – Culture

Overused buzz word number two in this blog… Culture! For me personally your internal culture is “how things are done around here”. What are the values, norms and behaviours that make up our business? What is our purpose?

This is a particular challenge for businesses who have multiple offices, as trying to define one consistent culture can be difficult. Culture is often over looked as it is not tangible, so why does it matter if I have a toxic/bad internal culture?

  • Lack innovation due to disengaged employees
  • Difficult to implement change due to resistance, as people do not trust the business or leadership team
  • High attrition and conflict between employees AND/OR leadership is the norm

The question you have to ask yourself as a business owner/leader is… which is more important, how much revenue you generate or having a business that you are proud to lead that has great values? For me personally the answer is a bit of both. As you’ll see from the statistics above, a highly engaged business will perform better and being able to proudly talk about your business is great.

Many organisations who focus on the revenue aspect may see the rewards initially however, somewhere down the line costs will increase due to attrition, performance will lower due to engagement and therefore, profits will decrease.


The three challenges discussed may still seem very “fluffy” and “not a priority” however, to me it all comes down to return on investment and thinking commercially. Investing into sales and marketing should be a priority, as should implementing new digital technologies however, your target operating model is made up of people, process and technology, don’t forget your PEOPLE!

Simple initiatives such as: consistent recognition processes, fit for purpose reward stratey’s, good work environments, having a flexible culture (dress code/flexible working), exciting onboarding processes but most of all, empowering your employees and making them feel valued should be a top priority!


As always keen to hear everyone’s thoughts so please do like/comment/share and I’d be happy to answer any questions about the work that Rencai have been doing in this space.


If you are a business between 20-2000 employees and want to learn more about our employee engagment programmes then please visit our website…


Harry Wright

Client Relationship and Delivery Consultant

07341 662232

[email protected]