The business world is constantly changing, giving rise to a number of
human resource management (HRM) challenges. HR professionals have to perform tasks such as workforce planning, training and development, compensation and benefits, while handling legal issues, among other responsibilities. HRM can be a challenge for small businesses because most don’t have in-house HR departments to rely on.
Here are eight HRM challenges that startup owners have to face. .
1. Attracting Top Talent: Attracting the best talent takes time, sound judgment and a whole lot of work. This is why this human resource task tops the list of challenges faced by HR professionals. To attract the right people for a position, they must know the demands of the job and the company. But as job descriptions and expectations keep evolving, this task becomes even more challenging.
2. Employee Compensation and Benefits: Many small businesses struggle with how to best structure employee compensation and other benefits. They have to compete not only with other small businesses, but also with corporations that have huge payroll budgets. They must factor in the cost of benefits, taxes, training and other expenses, which can range from 1.5 to three times an employee’s salary. According to a report by PricewaterhouseCoopers, small- and medium-sized companies spend an average of $2,000 per employee each year to handle payroll.
Then they also have to think about benefits such as paid vacation time, flexible work options, food, wellness programs and other benefits. And since a good employee benefits package can be a significant factor for potential recruits, understanding them is essential.
3. Retaining Hired Talent: Since most small businesses and startups don’t have massive budgets for expensive insurance plans, retirement plans and other costly items, employee turnover can be costly and can negatively impact business growth. And when HRM issues aren’t handled efficiently, it can be even more difficult for small businesses to retain quality employees.
4. Workplace Diversity: Thanks to globalization, the make-up of the workforce has become diverse. Diversity can be seen not just in terms of gender, age, religion and educational background, but also in terms of the personality, nature and background of employees. However, with more workforce diversification, issues related to harassment, bullying, discrimination and the like have also gone up, and this calls for businesses to reexamine their policies, practices and values, in order to protect the interests of all employees.
5. Compliance with Laws and Regulations: Small businesses, just like large corporations, are required to adhere to such federal regulations as the Equal Pay Act, Fair Labor Standards Act (FLSA), Americans with Disabilities Act (ADA) and others. And keeping up with changing employment laws can be a struggle for many startup owners. While the consequences may vary for non-compliance errors, these can be costly and may even lead to lawsuits.
6. Training and Development: Every organization needs skilled workers, so HR personnel must know how to manage on-site as well as off-site job trainings for employees. This can be tough because many small businesses simply don’t have the time or resources to properly train their staff members. For example, training an employee on foreign procedures and cultures before they take up an assignment in another country can be time-consuming and often out of scope of the regular training protocols that might be in place.
7. Leadership Development: This is a critical aspect in keeping the management motivated and engaged, and eventually preparing them to take on more responsibilities in the future. HR professionals are required to provide the essential structures, tools, processes and points of view to develop the future leaders of the organization. However, according to Brandon Hall Group’s 2015 State of Leadership Development Study, 36 percent of organizations don’t have a formal leadership development strategy in place.
8. Keeping Up with Technological Innovations: Technology is constantly changing, and companies must be quick to adapt, or risk being left behind. The challenge small business owners often face is getting their staff members to embrace innovation and learn new technology.
If you find that your HR department is stretched thin handling these issues, consider outsourcing HR department as a way to have professionals take care of these responsibilities while you have the time and resources to grow and scale your business.