A small business’s HR challenges are felt not only by the HR team. They can include compliance management, workforce training and development, compensation management, and recruitment.
And, addressing these challenges can involve IT, legal, all managers and employees, and external stakeholders (clients, investors, contractors, etc.).
Some of the most common HR challenges U.S.-based small businesses face today are:
- Fifty percent of small businesses view hiring a new employee in a specific time frame as a daunting task.
- Staying compliant with changing federal and state laws is especially tough for small businesses given limited resources and HR staff.
- Seventy-three percent of the U.S. workforce is actively disengaged at work and wants a job change.
It’s not breaking news that employees often face challenges in the workplace: We’ve all heard stories about toxic workplaces from our friends and family members. And we all enter the workplace with certain expectations.
Let’s look at an example of what a bad workplace does to employees.
Martina joins a small business and discovers:
- A toxic workplace with unethical management practices and rampant gender inequality.
- Lack of bottom-up communication; employees are discouraged from discussing their ideas with senior leaders.
- Most senior positions are held by male employees.
- Managers don’t provide objectives or clearly define employee goals.
- Most employees work long hours and late nights.
Uncomfortable with all of these factors, Martina quits the company within a month.
If your small business is using performance appraisal software alone, you’re not necessarily working toward improving employee performance—you’d need to use performance management software for that.
Today’s tech-savvy HR managers need to understand the difference between performance appraisal and performance management software and understand how to use these two tools in the way that is most beneficial for their business.
Here are the primary differences between these two software types:
- Performance management software helps managers provide regular (weekly, monthly, or annual) feedback to employees. It automates time-consuming tasks such as creating feedback questionnaires, deriving feedback results, and building employee performance analytics. It also helps managers identify the top talent and provide employees training on how to manage their goals.
- Performance appraisal software helps managers review employees’ individual performance and contributions. This process is usually carried out once or twice a year, depending on the business. The software streamlines this process by collecting employee goals, appraisal histories, development plans, etc.
In today’s tech-driven business world, before investing in any software tool, small-business owners do intensive research, including evaluating service level agreements (SLAs), cloud computing capabilities, integrations, and the price of the software.
But, the challenges don’t end once you’ve selected a tool; IT professionals face specific challenges when implementing new software. Some common challenges faced while implementing new HR software include:
Small businesses have a tough time finding the right candidate—and the data backs that up.
According to a survey from Monster
- Seventy percent of small to midsize businesses (SMBs) find the process to be quite expensive
- Eighty-nine percent of SMBs find it to be time-consuming
The term “agile HR” refers to a way of organizing HR functions in small steps, which allows businesses to be flexible and adaptable as workforce demands change.
Small business HR managers that follow traditional HR practices face the following challenges:
- Inability to hire candidates with diverse skills. A traditional one-size-fits-all recruitment approach won’t yield a wide mixture of candidates.
- Ineffective employee feedback. The traditional practice of delivering employees annual feedback to employees doesn’t allow for continuous development.
- Failure to attract and retain top talent. A lack of transparency and flexibility in the recruitment process is all too common in traditional methods.
Following agile HR practices will help businesses to shift their focus from long-term strategic plans to quick feedback-driven, iterative learning loops.
Finding the right talent is no easy task, especially for small businesses with limited HR resources and budgets. According to our survey on top technology trends among small and midsize businesses (SMBs), 42 percent of small businesses still face challenges when it comes to hiring the right candidates.
Here are few reasons why small businesses find it difficult to hire high-quality candidates:
- Sixty-three percent of hiring managers say they can’t find suitable candidates who fit the job requirements.
- Fifty-four percent of employers say that an offer was rejected within one to four weeks of the first interview, implying that the top candidates are fielding multiple opportunities at any given time.
Let’s face it, most employees dread receiving performance reviews. This is mainly due to the following factors:
- A lack of real-time feedback; performance reviews are usually conducted annually, while 42 percent of millennials prefer to receive feedback weekly.
- A lack of diverse feedback; performance feedback can be biased when it comes from a single stakeholder, and 57 percent of companies do not have a strategy for addressing biased performance reviews.
Businesses can use 360-degree performance evaluations to overcome these challenges and gather feedback from multiple stakeholders, including managers and peers. Feedback can be based on parameters such as communication, teamwork, self-management, technical skill sets, and more.