Are your management skills effective? The consequences of NMW breaches and private sector pay growth slows to a five-year low
Today we explore whether your management skills are effective – and just what it takes to manage a small business. There’s a warning for business owners as 500 employers are fined a total of £10.2million for failing to pay the correct National Minimum Wage rates, and bad news for private sector employees as pay growth slows.
Why Management Skills Matter More Than Ever for Business Owners
Many people start a business because they are good at what they do. A great designer sets up on their own. A skilled electrician goes self-employed. A consultant turns expertise into income. What often comes later is realising that running a business and doing the work are two very different jobs.
As a business grows, management skills become just as important as technical ability for the success of the business.
What management really means in a small business
In a smaller business, management is not about hierarchy or job titles. It is about how work gets organised and how people, including you, are supported.
Good management often shows up in quite simple, everyday ways. For instance:
- Setting clear expectations with staff, contractors or clients.
- Deciding between what needs to be done now and what can wait.
- Spotting problems early, before they become expensive.
- Having time to step back and think.
Firefighting, missed deadlines, confused roles, work being redone, or feeling constantly stretched can all be signs of a need to improve how the business is being managed. These kinds of issues do not usually come from a lack of effort; they come from a lack of structure.
Why management skills often get overlooked
Management skills often fall down the priority list because time is tight and client or customer work comes first. Or it may be that managing people feels uncomfortable or unfamiliar.
However, not addressing how the business is managed means you can end up stuck in the day-to-day, with little capacity to focus on growing the business or carrying out long-term planning.
How improving management skills helps your business
Businesses with clearer management tend to:
- Run more predictably, with fewer surprises.
- Retain staff for longer and reduce recruitment costs.
- Have happier customers because they deliver a more consistent service.
- Free up time for the business owner to be able to focus on strategy.
Even small changes, such as regularly checking in with staff or having clearer task planning, can have a noticeable impact.
Practical ways to build management skills
Improving management does not require formal qualifications or years of experience. For many business owners, they make progress by:
- Talking with other business owners about what works.
- Finding a mentor who can challenge their thinking and share experience.
- Undertaking some short, practical training.
- Thinking about what’s not working and making one change at a time to gradually improve it.
Just like with any other part of the business, management can be learned and improved over time.
A final thought
Good management and proper controls are vital for business success. Having the best idea in the world is only half the story. It is management skills that will make the idea work and keep you and your staff happy along the way.
Nearly 500 employers fined over National Minimum Wage breaches
Almost 500 UK employers have been fined a total of £10.2 million for failing to pay the National Minimum Wage (NMW), with £6 million returned to 42,000 workers.
The list of named employers includes well-known high-street brands, indicating that businesses of all sizes can have difficulties in applying the minimum wage rules correctly.
Implications for employers
For businesses, this latest naming round highlights the ongoing scrutiny there is on minimum wage compliance.
The NMW and National Living Wage rates increased earlier this year, with a further rise planned from April 2026. As a reminder, the rates are:
| 2025 rate | 2026 rate | |
| National Living Wage (21+) | £12.21 | £12.71 |
| 18-20 | £10.00 | £10.85 |
| Under 18 | £7.55 | £8.00 |
| Apprentice | £7.55 | £8.00 |
Failing to pay workers correctly can lead not only to fines but also risks harm to the business’s reputation.
With employees being encouraged to obtain advice from Acas or complain to HM Revenue & Customs (HMRC), it is an important area to get right.
Strengthening enforcement
The government plans to expand oversight of labour standards in 2026 with the creation of a Fair Work Agency as part of the new Employment Rights Bill. The agency will have powers to address employers who underpay workers and fail to pay holiday and sick pay.
If you need help with your payroll and ensuring that your staff are paid correctly, please get in touch. We would be happy to help you!
Private sector pay growth slows to five-year low
UK wage growth eased to 4.5% between September and November 2025, according to the Office for National Statistics, reflecting a notable slowdown in private sector pay.
Pay in private businesses rose just 3.6%, the lowest rate in five years. Public sector wages increased 7.9%, however, the ONS has said that this was likely due to pay awards being brought forward when compared with the previous year.
The labour market showed further signs of cooling. The number of people on company payrolls fell by 135,000, with the decline concentrated in retail and hospitality.
Youth unemployment for 16-24-year-olds remained elevated at 15.9%, while overall unemployment held at 5.1%, the highest since early 2021.
Are there any takeaways for businesses?
Economists have interpreted slower private sector pay growth as something that will ease inflationary pressures, which may help in further cuts to interest rates.
Slower private sector pay growth suggests that there could be some relief to wage pressures over the next few months, although with an increase to national minimum wage rates coming in April, hiring is unlikely to get cheaper.
The weaker hiring activity by retail and hospitality businesses suggests that consumers are feeling the pinch, which could have implications for sales income for many businesses.