The people problems that sneak up on growing businesses

People problems are any challenge related to an organization’s employees – specifically how they interact with each other and management, behave in the workplace, perform their work and commit to their company.

Interestingly, people problems often intensify during periods of rapid growth. These issues tend to sneak up on businesses as they undergo significant growth-related changes such as:

• Increasing headcount
• Hiring more remote and distributed workers
• Broadening into new markets, products and services
• Expanding into new territories

What causes “people problems?”

People problems can manifest in a variety of ways, from interpersonal conflicts to low engagement and morale, decreased efficiency and productivity, poor work quality and reduced retention. These effects can be loud and obvious or, more likely, they can be so subtle as to go undetected until they boil over and become a major disruption.

All people problems impact the bottom line, because your people influence literally everything about your business. When something’s amiss in your workforce and it’s ignored and left unresolved, it will have a negative cascading effect on your entire business.

Why do people problems emerge as businesses grow?

Growth is exciting. I’s what you, as a business leader, dream of and aim for. It means your business is succeeding.

However, growth comes with some drawbacks. Growth – especially rapid growth in a compressed period of time – can amplify people problems because it puts stress on your organization’s existing structures, systems, processes and workforce. What works in a business of 5 to 20 people doesn’t necessarily translate well for a business of 50 to 100 people – or more.

How, exactly, can growth actually cause problems?

• Growth means change, which can induce feelings of uncertainty, resentment and being threatened among the workforce.
• It increases organizational complexity. For example, there may be more people to manage and communicate with, more regulations to adhere to, processes to scale and more sophisticated systems to implement.
• It can expose weaknesses in areas where you organization is already vulnerable.
• People may have to shift into new roles for which they feel unprepared.
• It can stretch leaders and frontline employees alike thin.

Leaders of growing businesses can often be so laser focused on the things that fuel growth itself – like product development – that they overlook the how the stressors of growth affect their people.

Businesses that aren’t prepared for the impacts of growth on their organization or aren’t paying enough attention to what’s going on with their workforce during growth are at heightened risk for big problems. And these problems can ultimately undermine all the success they’ve enjoyed to date.

What are the most common people problems that businesses encounter? And how can you proactively manage them?

1. Hiring issues

We get it – when your business is growing, you need people on the team and you needed them yesterday.

But don’t sacrifice quality for quantity. You want to make sure you’re hiring the right talent for the right roles, and bringing people into your organization who align with your mission, vision and values. Otherwise, you’ll deal with even more headaches and constant turnover.

DO:

• Use consistent, standardized recruiting and hiring practices.
• Focus on skills qualifications, cultural fit and overall potential.
• Don’t forget to consider internal talent. The right person for a new role may be right in front of you!
• Keep up with different rules across U.S. states for hiring practices, if applicable.
• Leverage vetted technology, such as an applicant tracking system, to streamline processes and automate certain tasks to make recruiting and hiring more efficient.
• Partner with a recruiting service or a professional employer organization (PEO) to assist with hiring. A staffing agency can be helpful with urgent, short-term needs.

2. Overwhelmed leadership

Rapid growth means you probably need more managers quickly. As a result, your leadership bench likely includes inexperienced – if not brand-new – managers. Because your leaders play such a vital role in your organization as it relates to managing people problems, you can’t overlook manager preparedness.

Remember – your managers become the face of the company for their employees. They interact with frontline employees the most and determine how positive or negative the employee experience is. Ultimately, they speak for the company on anything related to HR with their words and behavior, and your company is liable for their actions.

DO:

• Carefully select leaders based on their leadership potential. Performance shouldn’t be the sole consideration. A strong individual contributor isn’t necessarily a good candidate for management.
• Establish a leadership training program. Dedicate time to teaching and showing them what effective management looks like to your company.
• Emphasize the importance of leaders modeling certain behaviors.
• Make sure that your managers, particularly these newbies, have the ongoing support they need to be successful. Keep lines of communication with senior leaders open. Continue offering leadership development.

3. HR-related compliance gaps

It’s a big accomplishment when your business increases in size or expands into new U.S. states. But, if you don’t maintain knowledge of the new rules to which your business may now be susceptible as a result of that growth, you could be in for a lot of trouble – and not just from the government, but your employees as well.

Why would your employees care about legal compliance? Any number of scenarios related to non-compliance could confuse, frustrate or anger them. These may include:

• Inconsistent workplace policies
• Violations of protected leave, such as FMLA
• Benefits errors in which they don’t receive all benefits they’re entitled to
• Insufficient or incorrect documentation at onboarding
• Delayed payouts or payroll errors that impact their personal finances
• Compromised safety practices

Any of these examples can erode trust, result in claims against your company and damage your reputation.

DO:

• Maintain awareness of all laws and regulations in the areas where your business operates or has employees.
• Have an HR infrastructure (expertise and structure) to anticipate these issues and easily scale up to accommodate them. A PEO is a great example of an HR partner that can handle compliance issues and keep up with the complex and continually evolving legal landscape. Make sure any PEO you consider has a presence in your area of operations, if not a national reach.

4. Too big of a workload

When companies are growing and trying to hire more people, often that means existing employees have to do extra work in the meantime. Or perhaps employees have to shift into new roles with greater responsibilities and higher workload. Either way, it can lead to employee burnout – that dreaded feeling of being overwhelmed and drained when the amount of daily work exceeds individual bandwidth.

Burned out employees are stressed, negative about their circumstances and usually planning their exit. Often, burnout is a hidden issue until it’s too late.

DO:

• Encourage managers to talk to employees regularly about their workload and make adjustments as needed.
• Review processes to identify opportunities to operate more efficiently, easing frustrations and roadblocks for employees.
• Re-evaluate time and attendance and paid time off (PTO) policies to make sure your company is promoting work/life balance and incorporating enough flexibility for employees.
• Make recruiting and hiring processes more efficient to shorten periods of high workload and ease burdens on employees.

5. Culture drift

As your business grows, your company culture can become diluted if the new people coming in aren’t trained properly on what the culture is or they aren’t the right cultural fit, period.

Or perhaps growth is putting stress on your company and causing leaders to divert their focus away from culture maintenance.

Over time, this can become a problem and you may realize one day that your business has lost what made it special or has become something you never intended or wanted.

DO:

• Establish a people strategy that clearly outlines your company culture. Make sure your culture is scalable with growth so you can maintain it.
• Reinforce the company culture through frequent communication with employees.
• Hire for cultural fit.
• Train on company culture when onboarding new employees to set expectations from the outset.
• Ask leaders to model the culture.
• Make every business decision in alignment with your culture.
• Part ways with toxic employees who will only undermine your culture – regardless of whether they’re high performers.

6.Pay and promotion inequities

Hiring lots of new employees at once, particularly in a competitive job market, can lead to issues with pay equity. This is the practice of ensuring that employees in similar jobs and at the same level of tenure are paid comparably, excluding individual factors like experience, skills and education.

Pay compression can become an issue when new hires earn essentially the same amount as more tenured, experienced employees to get them in the door.

Or, perhaps in a bid to avoid pay issues with new hires you instead promote existing employees – but there’s a lack of clarity among your workforce about how these promotions are offered. Charges of bias and favoritism can abound.

All these scenarios can lead to resentment between employees and diminished trust in management.

DO:

• Establish a compensation strategy for clarity and to prevent disputes.
• Maintain awareness of pay equity laws in the U.S. states your business operates in.
• Engage in pay transparency. (Note: some states require pay transparency.)
• Engage in regular compensation benchmarking to ensure salaries are fair and competitive.
• Establish a promotion policy that explains the criteria for earning a promotion.
• Standardize performance evaluations.

7. Weak communication

It’s understandable that in a dynamic, fast-paced environment, employees may develop tunnel vision and simply zero in on their own role and responsibilities.

Or maybe having more people around and more office locations to deal with just feels overwhelming and they don’t understand how or when to communicate with different parties.

But when the people inside a company aren’t communicating well with each other, the result is often that:

• Organizational goals aren’t clear.
• Teams and even individuals are off in silos doing their own thing and going in their own direction. There’s no alignment.
• Collaboration and innovation suffer.
• People don’t understand what’s expected of them.
• Employees can feel out of the loop from management and undervalued.
• Conflicts happen due to misunderstandings.

DO:

• Have regular company meetings or a consistent way to share company news and updates. Companies can’t ever get so busy or focused on growth that they stop communicating internally.
• Practice organizational transparency and be upfront about upcoming changes.
• Have leaders maintain an open-door policy.
• Encourage leaders to check in weekly with employees to reinforce organizational and personal goals and expectations.
• Foster collaboration among teams.
• Cross-train employees to understand what other roles do and how they contribute to the business.
• Gather feedback from employees consistently.

8. Training and development gaps

Growth may require employees to move up in the organization, shift into a new role or expand their scope of responsibilities. Not every employee at your company may be ready for what this new reality entails.

DO:

• Demonstrate a commitment to reskilling and upskilling employees by establishing a training and development program that helps employees be successful in their current roles and prepares them for future business needs.
• Make learning a part of the company culture.

9. Change resistance

Some employees may struggle to get onboard with workplace changes associated with growth. Change can be scary for those who are used to the former way of doing things and liked their routine.

DO:

• Understand that change, by its very nature, comes with an acceptable level of turnover. Know this upfront and be OK with it.
• Help employees to adopt a mindset of resilience.
• Work proactively on an exit strategy for employees who can’t or won’t adapt.

Frequently asked questions

• What are the most common people problems in growing companies?
• Why do these issues increase as companies scale?
• How can leaders balance growth with people needs?

Summary

• People problems often emerge quietly as businesses grow, creating hidden risks.
• These issues reveal themselves in morale, engagement, performance and compliance.
• Addressing these issues early builds trust, stability and growth capacity.
• A proactive people strategy also reduces surprises and strengthens resilience.
• Businesses looking to grow must scale with structure – make sure roles are clear, proper accountability is in place and sufficient HR infrastructure is present. Doing so decreases people problems down the line.

For more information on how to successfully navigate people problems in the workplace, download our free e-book: The ultimate people strategy playbook: building a winning workforce.