Human Resource Challenges Facing Small Businesses

Human Resource Challenges Facing Small Businesses

Human resource plays a key role in reinforcing, developing, and changing the culture of an organization. It is important to note that several organizations, if not all, grapple with human resources (HR) challenges. However, for small businesses, the obstacles may pose serious challenges since the organizations are small with limited resources and a small pool of human capital (Newell & Scarbrough, 2017). With the challenges, the human resource management should deal with the challenges since HR is extremely significant in the ever-more-competitive business environment. This discussion, therefore, focuses on the HR challenges small business face and how such issues is important focus of study.

One of the human resources management challenges faced by small businesses is legal and regulatory compliance.  It is important to note that staying up-to-date with employment laws is increasingly becoming difficult for small businesses since these laws keep on changing and in most cases become very complex.  Keeping abreast with such changes and ensure full compliance can be a full-time job that small businesses cannot manage. The second challenge that human resource in small business face is finding and retaining the right employees. Finding the right employee calls for money and time, two major things that small businesses do not have.  For example, a study conducted by Lai et al. (2017) reveals that it takes an average US employer about 52 days and $4000 to hire the right employee, something that majority of small businesses cannot afford. Additionally, HR in small businesses also faces challenge of training their employees.  In the ever changing society, new knowledge and skills are gained and several models of business are invented which requires the managements to train their employees to acquire the recent or up-to-date knowledge. However, this presents with extra cost which most small businesses do not have.  Lastly, HR is small businesses faces lack of work place diversity. According to the study conducted by Carnevale and Hatak (2020), diversity in the workplace increases employee morale and instill a desire to be more effective and work more efficiently. However, small businesses have few employees, who in most cases come from one ethnic group or region.

The challenges that human resource in small businesses face is an important focus of study based on the significance and function of HR in any organization. According to Lai et al. (2017), once the HR management has challenges, several functions and duties may not move as planned which may hinder production within an organization. Some of the important duties that can be hindered include recruitment and selection, performance management, training and development, employee relations, compensation and benefits and administration, and employment law and compliance. Therefore, failure to address the issues is likely o affect the key duties of HR.

Some of the best practices for HR that the business should use include recruitment and selection, performance management, training and development, employee relations, compensation and benefits and administration, and employment law and compliance. However, small businesses can use these practices by availing enough funds as well time. However, of importance, it is find the right individuals to perform certain task. For example, the company should higher individuals with knowledge about government laws and regulation in order to remain relevant with issues like tax and employees’ compensation.

References

Carnevale, J. B., & Hatak, I. (2020). Employee adjustment and well-being in the era of COVID-19: Implications for human resource management. Journal of Business Research, 116, 183-187.

Newell, H., & Scarbrough, H. (2017). Human resource management in context: a case study approach. Macmillan International Higher Education.

Lai, Y., Saridakis, G., & Johnstone, S. (2017). Human resource practices, employee attitudes and small firm performance. International Small Business Journal, 35(4), 470-494.