5 Human Resource Challenges Small Businesses Face Today
May 30, 2021
5 min read
Opinions expressed by Contractor the contributors are theirs.
Unfortunately, there are no shortcuts to effective human resource management. So if you are an entrepreneur who is considering hiring employees, do yourself a favor. Consider these five HR challenges to make sure you’re compliant in all aspects of your business.
1. Keep abreast of all applicable laws and regulations
The legal landscape of the workforce is constantly changing. If your small business doesn’t follow laws around wages, taxes, medical leave, and safety rules, you could find yourself in a world of trouble. Not only would governing authorities have reason to impose fines, employees could sue.
Unfortunately, small business owners often find themselves non-compliant because they don’t understand the difference between an “employee” and an “independent contractor”. The Ministry of Labor provides facts about misclassification employees and independent contractors to help clarify this. Make sure you understand this important distinction as well.
To ensure you stay in compliance, regularly check local, state, and federal regulations for any changes that may affect your business. Consult with a lawyer who can give you advice on areas where you need to improve. They will help you avoid costly fees and reduce your risk of employee lawsuits.
2. Have a solid plan for hiring and retaining employees.
Hiring and retaining employees is a vital part of any business. However, with limited funds, small business owners (literally) cannot afford to bleed their employees. When we look at the cost of hiring vs training, it would cost $ 4,000 to hire an employee and nearly $ 1,000 for training. To keep employees, it not only means finding the right talent, but also giving them a reason to stay.
Before interviewing, make sure you know what you are looking for. What kind of experience should the candidate have? Ask questions to find out about his personality and character. Getting along with your colleagues is just as important as their expertise. Competitive salaries and benefits will also go a long way.
Related: 9 ways to turn Human resources as a driver of profit
3. Have a vision of the culture of your company
You probably have a specific vision for your business. But what thought have you given to the culture of your company? When they join a business, people want to know what to expect. What are the values, standards and expectations of the company? Is it a place where new ideas and cultural diversity are welcome? Even if you set clear expectations for your employees, chances are you will still occasionally meet someone who refuses to conform to the corporate culture. Whether they let intolerance or their own personal beliefs get in the way, it’s important that you have a plan in place to handle these situations appropriately and professionally.
Keeping an employee manual up to date is a great place to start. This provides a tangible benchmark for everyone to have access to the same set of standards. By updating the manual annually with the most recent labor and wage laws, you will also ensure that your business remains transparent and compliant.
4. Neglecting conflict resolution
At some point, the people in your business won’t get along. To protect your employees and your business, you need to know how to deal with conflict. Without proper conflict resolution, employees will not feel supported and the results could be disastrous. Not only is this another area that could lead to lawsuits, but countless small businesses fall victim to defamation from disgruntled employees. To protect your reputation as a business, consider an online reputation management service. If your reputation takes a hit online because of a deceptive negative review, they will help you get back what was lost.
Neglecting this essential part of your business can be costly. As part of further development, consider a management training program for all members of management on conflict resolution. This will help you acquire the skills to develop communication guidelines and deal with problems as they arise.
Related: Is it time to outsource human resources?
5. Have a clear understanding of the cost of benefits
Benefits are an important deciding factor when people are looking for a job. This is an essential part of employee retention that you don’t want to overlook. However, it can be one of the costliest aspects of your business. Most people will expect to receive your basic medical, dental and visual package. But many also want retirement and vacation options. Fortunately, there are options for small business owners.
Businesses with 50 employees (or less) can see if they are eligible to participate in the Small Business Health Options (SHOP) program. This program was created as a result of the Affordable Care Act, allowing eligible businesses to benefit from price reductions on health insurance. Participating companies team up to pool risk, which gives them the purchasing power of a larger company. It is highly recommended that you speak with a financial advisor to help you make the best decision for your business and your employees.
As a business owner, you already have a high demand for your attention. Making sure you tackle these HR challenges properly could be one of the best decisions you’ll ever make for your business.
Related: How to know when it’s time to add an HR department