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Jenny Little, Financial Mail on Sunday, London

Jun. 24--Companies experience many growing pains as they develop from small operations into more sizeable concerns. But keeping staff happy and getting the right management structure are key elements to successful commercial growth. Starbank Panel Products has been manufacturing laminated panels for more than 30 years in Newton-le-Willows, Merseyside, but over the past decade the staff has grown from 15 to more than 100 while turnover increased by 20 per cent each year to £8.2 million.

The company recently recruited two new managers and promoted a number of internal candidates to management and director level.

Mike Durham, 37, from Stoke-on-Trent, Staffordshire, is Starbank's commercial director. "We recruited IT and human resources managers externally to get the necessary expertise, but we also invested time and money in people within the business," he says. "We wanted to bring on existing staff within the business and now have quite a formal management structure."

Owner/managers who are determined to micromanage their business could be putting its future progress in jeopardy, warn experts. Andrew Cooper, an adviser for Government agency Business Link, has often seen owners remain too involved in day-to-day operations. He says: "If the owner/manager is in the trenches, he can lose perspective, from marketing and getting new business to cash flow. He either needs to take a strategic view or employ someone who can."

Lou Macari, head of business consulting for insurer Axa, agrees that a company founder must give up a degree of control, which often means recruiting experienced individual managers.

"A new recruit needs to be sold the vision," he says. "You can't bring in creative people and stifle them.

"They need to have a vested interest, be it in the form of shares or joining in an employee profit-sharing scheme. It is important that everyone has shared objectives."

Vital roles in a management team include finance, sales, marketing, technology and human resources. But finding the right person can be hard.

Macari advises paying for professional help when recruiting. "The cost of getting it wrong is great," he says. "Get someone who understands what you are trying to do with the business not necessarily a recruitment agency, but a professional developer, consultant or person with human resources experience."
It is also important to motivate existing staff while the change is taking place.

Cooper says: "There is always a problem with retaining staff, but the best employers incentivise them. They must be made to feel an essential part of the team."

Failing to address staff concerns is an expensive mistake.

The Chartered Institute of Personnel and Development estimates that staff turnover costs about £8,000 per employee. And business can be jeopardised while new workers are recruited and trained.

Macari adds: "While you are expanding the infrastructure, you must grow the people. But you also have to look at yourself and your role as a leader."

To see more of the Financial Mail on Sunday, or to subscribe to the newspaper, go to http://www.financialmail.co.uk. Copyright (c) 2007, Financial Mail on Sunday, London Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

June 26, 2007