Small Businesses Face Numerous HR Challenges

Friday, April 04, 2014

 

Human Resource issues are difficult and challenging for all organizations, large and small.  However, small organizations face these challenges with limited resources, i.e., money, time, and expertise.  While the classification of a business as “small” is determined by Federal regulations and the U.S. Small Business Administration, their challenges are often large.

 

As a small business, most lack the financial wherewithal to spend tens of thousands of dollars on hired consultants and often must rely on insurance brokers, vendors, and agents for advice.  Time is in short supply for small business owners who often play many parts, business owner, marketer, HR manager, customer service leader, production and engineering manager, facility manager, and the list goes on.  Trained in business, marketing or engineering, many small business owners simply lack the knowledge or desire to become HR, compensation, insurance, and benefits experts.

 

As an integral function of the operations of even a small business, Human Resources require the attention of the organization’s managers.  Errors in hiring, firing, the payment of wages, even the mundane activities such as record keeping and reporting can lead to time consuming and expensive repercussions.  It is a common misbelief that as a small business, there are few if any Human Resource issues which require the attention of organization leaders.  The U.S. Small Business Administration points out Human Resource compliance is on par with financial management, marketing, and manufacturing.

 

Talent recruitment and retention is of unique concern for small businesses.  Limited in their ability to compensate, reward, and provide a clear career path, small businesses must compete with larger well established employers.  Since a small business must rely on a small number of very knowledgeable employees, they often suffer from a lack of a deep talent bench.  The loss of even one or two of these key talent members can place significant strain on operations, production, and product delivery.  While customers may be sympathetic, they too face their own schedules and deadlines.  Missed deadlines can quickly lead to lost orders and a reputation for not being able to delivery services and products when needed.

 

Small businesses can make lemonade out of lemons.  One advantage to small businesses is its ability to offer employees a close working relationship with the top management of the organization.  Unlike a large organization where senior managers may rarely be seen and only heard via e-mails, the top managers of small business are often working in close proximity with employees.  Likewise, small business employees deal with customers and clients at a very inmate level allowing them to gain a detailed understanding of their customer’s business needs.  Often this allows a new employee to gain rapid access to decision makers and witness firsthand how the organization operates.  Due to their vary size, small businesses often allow employees to exercise a greater depth and breadth of job responsibilities than would be found in a large business.  Small business permits owners to wittiness firsthand the efforts of their employees which can lead to rapid advancement for the truly talented.  Likewise, employees deal with customers and clients at a very inmate level allowing them to gain an understanding of their customer’s businesses.