When a business takes off, growth can be exhilarating and relentless. In what can feel like no time at all, you’ve got over 100 people, new offices, and new challenges. In the rush to deliver, people matters often slip down the list – until issues start surfacing that can’t be solved with another quick fix.
I’ve seen this many times, both as part of the founding team at Virgin Mobile and as the third hire, People Director, at Pure Planet, which scaled from a handful of us to more than 200. Growth brings incredible opportunity, but it also exposes cracks if you don’t plan for how to grow your people, your culture, and your leadership.
Rich Roberts, culture specialist and founder of en:Rich, shares the five most common people and culture challenges he sees in SMEs and how a clear strategy can turn them from risks into growth accelerators.
Your purpose, values and culture aren’t clear
You may know what your business stands for – but does everyone else? As teams grow, especially with remote and hybrid working, clarity fades. Culture exists whether you shape it or not; it’s expressed in how people describe working for you. If they can’t see or feel what you stand for, they’ll quietly disengage – or leave.
That’s why your culture shouldn’t be left to chance. Talk about it with your board and with your people. Identify your values together, and make sure they are authentic and lived.
Posters and slogans don’t build belief – leaders and line managers who consistently model the values do. When culture becomes a lived experience, it turns into one of your strongest competitive advantages.
Your people don’t feel enough purpose, connection or trust
As a small business grows, people need to feel they still belong. It’s easy for that sense of connection to erode as structures form and layers appear. Yet research consistently shows that feeling connected is a basic human need – and a vital driver of engagement and performance.
Purpose, connection and trust form the foundation of a great culture. Purpose gives meaning to the work; connection gives belonging; and trust makes autonomy possible. If you want to see innovation and initiative, you have to demonstrate trust in your people to make good decisions.
When trust is high, people go further – because they feel ownership. When it’s absent, performance plateaus. Ask yourself: are you and your managers creating purpose and connection, and actively showing trust?
You’re struggling to recruit and retain the right people
Recruitment and retention are now some of the biggest challenges facing SMEs. According to Startups.co.uk, one in four founders believe retaining key employees is their top growth barrier. Turnover costs money and momentum, but the good news is that it’s often avoidable if you take a different approach to recruitment.
Cultural fit really matters, but we so often have an ideal vision based on past experience. The people you bring in will define your culture as you grow, so recruit for values and mindset as much as capability. Skills can be trained; alignment can’t.
And don’t overlook onboarding. Those first few weeks shape an employee’s perception of whether they’ve made the right decision. Make it engaging, not bewildering. If you promised excitement and purpose during recruitment, deliver it from day one.
Your newly promoted line managers lack leadership skills
Technical expertise doesn’t automatically translate into leadership skills. Good people can struggle when promoted. Some rise to it; others flounder. Many SMEs promote top performers who suddenly find themselves managing others without the interpersonal skills or confidence to lead effectively.
This becomes even more challenging in hybrid environments, where communication and empathy matter more than ever. When line managers can’t connect, morale dips and good people quietly leave.
Investing in leadership coaching and management development is one of the smartest moves a growing business can make. Great managers don’t just deliver results; they multiply them by inspiring others.
You have no HR or people processes in place
Many fast-growing businesses delay formalising HR processes until something goes wrong. That’s a mistake. At Pure Planet, the founders recognised this early and brought me in as their third hire. They understood that building a strong people foundation wasn’t bureaucracy – it was strategy.
You don’t need a full-time HR department from day one, but you do need the essentials: clear policies on employment law, pensions, leave, and flexible working, plus fair and consistent processes for feedback, development, and progression. What’s more, If you are considering external HR and people support, it’s important to find someone who not only understands HR but also the cultural challenges of a fast-growing environment with all the personality dynamics at play.
Get this right early, and you’ll save time, money, and headaches later. More importantly, you’ll create an environment where people feel supported and confident in how things are done.
In conclusion
Sir Richard Branson has a well known quote, “If you look after your staff, they’ll look after your customers. It’s that simple.” I’ve never forgotten that and it’s powerful advice for SMEs. That’s because when your people feel valued, trusted, and connected to your purpose, they’ll give you their best.
A people and culture strategy helps you shape the business you truly want to build: one where people don’t just work for you – they work with you, because they believe in what you’re doing. And that’s when the magic happens