The problem of 'too many employees'
The business news that matters.
Hello and welcome to the latest edition of Off to Lunch…
I don’t need to tell you that scaling a business comes with many challenges: you know all about it, and live and breathe it every day. When we asked property tycoon and former Sheffield United owner Kevin McCabe about the difficulties he faced, the answer was an interesting one.
McCabe, who appeared on our podcast this week, scaled Scarborough Group into one of the most active property developers in the UK. At one point, more than 250 people worked for the firm in the UK, while in Europe it had 200 people across offices in Copenhagen, Stockholm, Berlin, Frankfurt, Paris, Budapest, Amsterdam and Warsaw.
However, the size of the business represented a challenge when recession hit in the early 1990s.
I'd lived through recessions two or three times [already]. In the early 90s, when it was recessionary again, I had a big company that was growing because I couldn't say no.
It's the challenge that always excites me, but on the other hand I was thinking: ‘What you’ve grown here, has got too big… you’re responsible for so many people.’ Don’t misinterpret it, I had good people around me, but when push comes to shove, it’s a family company.
He sold part of his Scarborough empire to Australia’s Valad Property Group for £849m in 2007. While what he describes sounds like a great problem to have, this challenge is not one to be scoffed at. Difficulties scaling processes, stretched resources, lack of management and support systems, complacency and a downturn in innovation are all symptoms associated with this stage in a company’s life.
Another struggle is maintaining company culture. Some 75 per cent of UK employees have experienced a toxic workplace culture, according to a 2023 study from employee engagement platform Oak Engage. The minority of respondents who hadn’t experienced this environment provided insights into what those companies are doing right.
Three-quarters (73 per cent) feel a sense of belonging to their organisation, 67 per cent say their leaders and managers are transparent, 71 per cent say they feel appreciated for their work and, most importantly, 78 per cent said they plan to stay in their job for the foreseeable future. Dragons’ Den star and Diary of A CEO host Steven Bartlett covers how some of the world’s most notable leaders place importance on this exact topic.
You can listen to the podcast episode with Kevin McCabe on Substack here, Spotify here and Apple here
Other stories that matter…
1. UK house prices have fallen for a second month in a row. Data from Nationwide show a 0.2 per cent drop, a swing from the 0.2 increase that economists were expecting. Nationwide’s chief economist Robert Gardner says: "The slowdown likely reflects ongoing affordability pressures, with longer-term interest rates rising in recent months." You can read more here.
2. McDonald’s is reviewing its pricing strategy after falling short of market predictions in the first quarter of this year. While sales and profits increased, price rises in stores across the globe have hit the company’s growth curve. US sales increased 2.5 per cent, considerably less than the 12.6 per cent it experienced in the same period last year. You can read more here.
3. Amazon’s bet on including ads in films and shows on its Prime streaming service is paying off. The company beat forecasts for sales and profit and also achieved its “fastest speeds ever” across its delivery services, with 75% of packages in London, Tokyo and Toronto delivered the same day or the day after. You can read more here.
4. Europeans have more time and Americans more money, according to the head of the Nordic investment fund Norges Bank Investment Management. The FT has done a deep dive into the statement looking into the work-life balancing act. You can read the piece here.
And finally…
The @timecaptales account on X (formerly Twitter) has a fantastic thread on inventions that never caught on. They range from amphibious vehicles and pedestrian catchers, to baby window cages.
However, I am hoping that an invention from 1935, The Fifth Wheel, makes a comeback…
See the full list here.
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