One of the biggest challenges companies face as they grow is making the smooth transition from a small, intimate office culture to an inevitably less personal working environment where the businesss owner struggles to remember everyones name.

It is at this point where staff management skills become critical. The success of any business depends fundamentally on the quality and performance of its people. If these prize assets are neglected, they may lose motivation, turn in sloppy results, or even leave the company, in search of a new challenge. Which means valuable experience and customer relationships are potentially lost, and that an expensive recruitment and training drive may then become necessary.

To avoid these risks, and to successfully steer a business through these first real growing pains, organisations need to take proactive measures. If the business owner has no real people skills, this is the time to hire managers that have - or undergo some serious training themselves.

One of the skills a company will need to acquire is the art of monitoring and recognising all staff, regardless of their role in the company. While sales people and front-line customer services personnel are clearly vital to the well-being of the business - in winning and keeping the business - it is relatively easy to assess how these people are performing.

Sales peoples success (or not) will show immediately, not least because sales staff are usually the loudest people in a company, especially when it comes to blowing their own trumpet. Meanwhile, a customer that has been treated badly by customer services will soon let the company know about it.

But what of the quieter employees those that work in back-office or administrative functions, for example, or those that support the front-line staff? They too may have accumulated vital experience which they use to the companys direct or indirect benefit every day, but are they being recognised, encouraged, rewarded and developed alongside more prominent team members?

If not, watch out.

Britain still lags behind other countries when it comes to employee productivity, notes Ruth Spellman, chief executive of Investors in People, commenting on its own recent research. Although three quarters of senior managers made the link between effective employee development and increased productivity, they are failing to convert this understanding into action. It seems that senior managers still see productivity as someone elses problem.

Overcoming such apathy is no small feat. Yet, for Dominic Monkhouse, MD of Uxbridge, Middlesex-based Web hosting company Rackspace Managed Hosting, having a comprehensive, open approach to staff management is the only way to secure the long-term success of a business.

In the three years since Monkhouse joined the firm (a UK subsidiary of a US company), the company has grown from four to 57 employees, and has an annual turnover of more than 10 million.

It is growing at a rate of three to four people a month, so staff recruitment and retention is a critical area of focus for the business. Our aim is to be the TNT or First Direct of our marketplace, Monkhouse says, noting that these companies are the leaders in their field for customer service.

That means recruiting people who like helping customers; who are passionate by nature. When candidates are being interviewed for roles at the company, they are quickly dismissed if they cannot show examples of passion in their life outside the office. If they dont have this quality already, they wont be able to transfer it to their work, Monkhouse notes.

Monkhouse himself comes from a background in customer relationship management (CRM) consultancy, where he found himself regularly arguing against the view that good CRM needs technology. Good customer service has nothing to do with technology; technology is just a tool that helps manage the process, he complains. Rather, the discipline is fundamentally about people.

Monkhouses concern with making sure he has the best people working for him starts the moment they join the company. Once the right people have been hired, regardless of the role they will be fulfilling, he takes time out to give each new staff member the welcome speech the history of the company, its aims, and what will be expected of them in their work there.

In addition to monthly, quarterly and yearly goal-setting, which is applied to individuals, teams and the business as a whole, Monkhouse and his managers conduct quarterly appraisals with every member of staff. Until this became impractical, he sat in on each of these himself; now he still makes sure he sits in with each member of staff at least once a year.

The appraisals are 360-degree affairs, incorporating feedback from peers and customers as well as managers. There are also regular opportunities for exceptional performance to be recognised more publicly, and for staff to nominate their colleagues for going the extra mile in their jobs. The company accountant was recently recognised in this way, for saving Rackspace thousands of pounds in over-payments of VAT and bank charges. (This, in turn, was as the result his ongoing development with the company the accountant works for the company four days a week, then spends the fifth day training - at Rackspaces expense.)

Even more innovative than this, however, is the attention Monkhouse lavishes on new staff. Every new employee is given a black book in which they record their comments about how we operate, he says, noting that, as well as making new staff feel involved from day one, this also gives Rackspace a unique, fresh, objective view of practices that work well or badly in the company.

Once a month for the first six months we then have a new employee lunch, where they get chance to give me their comments. They are then given the go-ahead to change whatever it is theyd like to do differently. We have a policy in the company that, if you spot a problem, you must take ownership for the solution. No-one is allowed to pass over the responsibility, in the hope that someone else will sort it out.

In one case, this meant a member of staff taking up spam problems with the internal IT team. In another, someone took charge of organising a monthly company massage day, subsidised by the company. Also being considered are nursery voucher schemes and medical care for all staff, as well as free gym membership.

Staff have a chance to shine in other ways, too. For example, Rackspace has a charity committee to ensure the company has a positive local impact. This includes providing e-mentoring to children at the local schools, and doing white-knuckle sports in support of Cystic Fibrosis research. This provides an opportunity to those who dont otherwise have a chance to be leaders at work, Monkhouse says.

As a result of all of this, Monkhouse says he hasnt lost a single employee he didnt want to lose since he joined the company.

London-based brand marketing and IT consultancy Large Design attributes its own high growth levels to a similar strategy.

The company, which has 12 staff, believes in distributing responsibility evenly throughout the company, so that each member of staff feels equally involved and respected. This meant a quiet, behind-the-scenes designer from Namibia being awarded responsibility for the companys prestigious Agent Provocateur account, with excellent results, and another designer bringing in new business from the BBC without any incentive.

Rather than encouraging such results via financial drivers, the companys co-founder and creative director Lars Jorgensen prefers to give staff individual recognition, whether thats by naming individual designers to the press or introducing high-performing behind-the-scenes staff to clients for direct recognition. The feeling of pride they get from having their achievements publicly acknowledged is much more valuable and enduring than any 500 bonus, he notes.


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What the experts say:

Saville Consulting is a provider of business psychology consultancy and solutions, including psychometric analytic methods. Director Steve O'Dell offers the following pointers to managers of small but growing businesses, on how to keep track of key performers throughout a company:
 
1. The tendency to be influenced by employees who shout about their achievements is great, but if you have a robust performance management system in place, you will be able to accurately assess the relative merits of all staff.

2. Set clear, measurable objectives at performance reviews and track how well each employee matches them, as well as the manner in which they go about achieving them in the context of the wider business process - eg how effectively a marketing executive supports the sales team.

3. Quantify wherever possible. This is the best way to make HR management an objective science rather than a gut feel discipline. While the value of a sales person is easy to assess through measuring his or her revenue generation, back-room staff performance can be more difficult to measure. Think carefully and you should be able to uncover key measurables - e.g. assessing response speeds and satisfaction surveys for customer services staff; setting finance staff a target percentage of sales invoices to be settled per month; or establishing output and accuracy indicators for data processors.