5 Common HR Issues for Small Businesses and How to Solve Them

Quick look: The role of human resources (HR) departments continues to expand, especially for small businesses, which look to their HR professionals to manage the full employee lifecycle and wear multiple hats each day. If you’re encountering HR issues, you’re not alone. According to Gartner research, these are the five most common HR pain points and potential resolutions for each.

HR teams are the engines that keep businesses moving. From hiring new talent to upskilling tenured staff, HR professionals wear many mission-critical hats.

Some HR department duties include:

• Job description and advertisement creation
• Establishing a staffing plan and budget
• Payroll and tax administration
• Employee benefits planning and administration
• Crafting employee handbooks and safety procedures
• Maintaining employment posters
• Handling employee relations
• Managing the performance evaluation process
• And more

Not surprisingly, these tasks require ample resources—running a compliant, well-organized organization demands plenty of time and skill. Additionally, HR is constantly in flux: employment laws, top talent’s expectations, and workforce demographics change rapidly.

The strain on departmental resources and the need to pay attention to ever-evolving details inevitably causes some hurdles for HR teams. Keep reading to explore some of the most common human resource issues in small business, and strategies to overcome them.

Top HR issues and possible solutions

If your HR employees feel busier than usual, it’s probably because they are.

In a recent report, Gartner surveyed over 500 HR leaders across 40 countries to discover their top five HR issues. From reducing managers’ stress to grappling with the latest artificial intelligence (AI) tools, these are the current most common HR problems, and the solutions small business leaders can take to mitigate them.

Issue #1: Leader and management development

Many managers are feeling burned out.

Gartner’s survey found that managers have 51% more responsibilities than they feel they can handle, and HR notices this: 76% of HR leaders think their managers are overwhelmed by their growing obligations. Meanwhile, over 75% of employees say they have placed increased importance on manager support, and 73% of HR leaders believe their leadership and managers are unequipped to lead change.

Potential solutions:

• Modify managerial roles: Consider adjusting expectations for managers, strengthening your manager pipeline, and removing process hurdles to save them time and reduce their stress levels.
• Learning and development: Coach up-and-coming managers to build a pipeline of support, provide training on soft skills like time management, leverage technology to streamline processes, or consider outsourcing some tasks to lighten managers’ workloads.

Issue #2: Organizational culture

A hybrid work schedule offers many benefits, including improved work-life balance and higher productivity. However, Gartner’s report found that less time in the office and fewer in-person interactions has taken a toll on their company culture—41% of HR leaders say their staff’s connection to the organization’s culture is compromised by hybrid work.

Potential solutions:

• Align physical and virtual operations: It is critical to create a streamlined experience for employees, no matter where they work. Consider hosting virtual meetings so everyone is included, ensuring all remote new hires are introduced to leadership, and purposefully providing regular feedback to remote workers.
• Operate a virtual or hybrid mentorship program: Regularly communicating with a mentor or mentee can help hybrid and virtual workers feel a sense of belonging (and can contribute to your institutional knowledge!).
• Support home office setups: Offering a home office stipend can boost employee satisfaction and set you apart as an employer.
• Focus on work-life balance: Encourage leadership to communicate to their teams the importance of taking regular, frequent breaks to refresh their minds and maintain productivity.
• Host company events: Hybrid employees can gather and celebrate together on in-office days, or if a team is remote, they can enjoy virtual events like happy hours, cooking classes, game nights, and more.

Issue #3: HR technology

AI has evolved from a “someday” solution to a “today” tool. While most agree AI is helpful (68% of executives agree its benefits outweigh its risks), identifying which HR functions are best suited for these up-and-coming tools can be tricky. In fact, only 22% of HR leaders are highly engaged in technology-related organizational discussions.

Potential solutions:

• Evaluate and decide: Examine your organization’s HR functions and potential tools, then create an evaluation framework outlining each technology’s capabilities, governance, workforce readiness, risks, ethics, customer support, etc.
• Leverage outside help: If you aren’t sure your team has the bandwidth to manage the above suggestion, consider an HR outsourcing partner that can provide access to a range of vetted tools.

Issue #4: Change management

The world is changing quickly, and businesses must adapt just as swiftly if they want to achieve maximum success. Gartner found that these changes can overwhelm staff and deteriorate trust in their employers, with only about half of employees reporting that they trust their organizations.

Potential solutions:

• Fatigue management: Identifying top priorities, clearly communicating the value associated with each change, and increasing bandwidth (either through new hires or outsourcing) can ease the strain on employees.
• Learning and development: Reskilling and upskilling staff can equip them with the skills needed to meet the organization’s changing needs and help them feel less overwhelmed.
• Mental wellness resources: Providing workers access to an employee assistance program (EAP), telehealth coverage, in-office wellness spaces, and a flexible work-life balance can maintain their energy levels and safeguard their mental health.

Issue #5: Career management and internal mobility

“Climbing the ladder” doesn’t happen as much as it used to. According to Gartner, 86% of HR leaders feel their organizations’ career paths are unclear for many workers, and 66% believe the paths are not compelling. Further, less than one-third of employees understand how to progress their careers over the next five years, and just 25% are confident about their current at their current company.

Potential solutions:

• Design adaptive career paths: Career lattices—which involve slight, lateral moves that may not be upward but can enhance one’s career—are beginning to replace career ladders. A career lattice offers many benefits, like increased employee engagement, diversified experience, reduced turnover, and more.
• Mentorship programs: A mentorship program allows workers to learn from more senior staff in their same field or develop skills for a new role they may want to pursue.

Helpful resources to overcome HR pain points

Thankfully, many resources are available to help you mitigate the above issues, whether you resolve them internally or leverage the expertise of an outsourcing partner.

Education/training

Staying educated on the latest industry trends and best practices is key to remaining one step ahead of HR issues. Many organizations, trade media, and news outlets are available to provide this knowledge, including:

• The Society for Human Resource Management (SHRM): A professional HR membership association that “promotes the role of HR as a profession and provides education, certification, and networking to its members.”
• Gartner: A research and consulting firm with approximately 2,500 research and advisory experts.
• McKinsey: A “multinational strategy and management consulting firm that offers professional services to corporations, governments, and other organizations.”
• Fisher Phillips: A law firm specializing in labor, employment, corporate compliance and governance, data security, employee benefits, and more.
• Korn Ferry: A global consulting firm that helps businesses design optimal organization structures, roles, and responsibilities.”
• Gallup: A multinational analytics and advisory firm that conducts global research and provides workplace consulting.

Note: This is not an exhaustive list of HR resources.

Outsourcing

Remaining well-informed on HR developments and maintaining the bandwidth and skill levels to solve your company’s HR problems (on top of completing daily tasks) can be time-consuming, which is why many employers choose to partner with an outsourcing provider.

When it comes to HR outsourcing, several different kinds of solutions exist:

• Professional employer organization (PEO): A PEO relieves small- and medium-sized businesses (SMBs) from HR management responsibilities, including payroll, recruiting, and risk management. PEOs feature a co-employment relationship and also offer SMB employers access to competitive benefits through the PEO’s purchasing power and economies of scale.
• Human resources outsourcing (HRO): A flexible solution giving larger companies, including those who have graduated from a PEO model, access to the same support and expertise as a PEO, while enabling them to remain on their current group health insurance plan. Note: HRO partnerships do not involve a co-employment relationship.
• Administrative services organization (ASO): ASOs oversee day-to-day HR administration but do not sponsor employee benefit programs or workers’ compensation coverage. Additionally, employees remain on the company’s FEIN number, and the company assumes all associated risk.
• Human resources information system (HRIS): These systems offer self-service and control and include HR management functions for recruiting, performance management, time and labor tracking, and more. However, an HRIS is not a standalone solution for HR management.
• Payroll services company: These organizations primarily process payroll and associated tax reporting, though some full-service payroll partners integrate time and attendance and benefits administration. Payroll companies may also prioritize self-service platforms over personalized attention.

To learn more about the different kinds of HR outsourcing solution providers (and ideal use cases each), download our free eBook today: “HR Solutions: A Guide to Decoding the Differences.”