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Cash flow, competition and revenue growth issues are at the forefront of small business owners' and their teams' minds. Along with these challenges comes another area where many businesses struggle: human resource management.

Human resource management (HRM) includes:
  • Job design and analysis
  • Workforce planning
  • Training and development
  • Performance management
  • Compensation and benefits
  • Legal issues

HRM can be a challenge, especially for smaller companies, which typically do not have an HR department to draw on. They may have only one HR person, or the responsibility may still rest with the CEO. Either way, small business owners need to understand the challenges they face so they can be prepared to deal with HR issues as their business and staff grow.

Here are 10 of the most common HR challenges, along with solutions you can quickly implement in your business:

Keeping up with employment laws is a struggle for business owners. Many choose to ignore employment laws, believing they don't apply to their business. But this attitude can lead to audits, lawsuits, or even the demise of your business.


Regardless of the size of your business, it's important to make sure you're in compliance with local, state and federal employment laws. There are regulations on everything from hiring practices to wage payments to workplace safety. Take a few minutes to read the U.S. Department of Labor's guide to labor law.


As a company grows, its strategies, structure and internal processes grow with it. Some employees find it difficult to cope with these changes. Many companies experience decreased productivity and morale during times of change.


Business owners should focus on communicating the benefits of change for everyone. Regular staff meetings are a good place to start. If your team understands the why, how and when of change, they will be more likely to embrace it.


A recent study found that more than one-third of companies do an average job, at best, in implementing leadership development programs. Thirty-six percent of companies surveyed in the Brandon Hall Group's State of Leadership Development Study admitted that their leadership development practices were below average.


Leadership development is critical to keeping your executive team engaged and motivated and prepared to take on more responsibility in the future. Make it part of the company culture. Create opportunities for them to use their strengths every day. Achieving goals will motivate them and give them the opportunity to develop their skills.


Investing in training and development for lower-level employees is another common HR issue. Some companies struggle to find the resources to do so. Frontline employees are some of your hardest workers and may not have the time to take a training course.


Training and development doesn't have to take a lot of time or money. Recruit managers and executives to mentor their junior employees. You can also offer online training courses so people can take the training at their own pace. Invest in your staff and you'll have a loyal and productive team.


Technology is constantly changing. Companies must adapt quickly or risk being left behind by their competitors. The challenge for small business owners is to get employees to embrace innovation and learn new technologies.


Communication is key. For any change, make sure your team understands the why, when and how. Set clear goals for adoption of initiatives and provide employees with the training they need to feel comfortable.


Many companies are struggling with how best to structure employee compensation. Small businesses face competition not only from similarly sized companies, but also from companies with large payroll budgets. In addition, there are the costs of benefits, training, taxes and other expenses to consider, which can be 1.5 to 3 times the employee's salary.


While salary is important, it is not always the most important factor for job candidates. Creating a system to reward employees for excellent performance is one way to offset a lower salary. In addition, consider offering incentive programs such as profit sharing or bonuses, which can be beneficial to both the employee and the company.


The Affordable Care Act has been a sore point for many small businesses in recent years. Rising health care costs are forcing companies to pass those costs on to employees or suffer the consequences on their bottom line. Since good benefits can be a deciding factor for potential hires, understanding them is critical.


For small businesses with fewer than 50 employees, there are many options for providing health care benefits. One is to purchase a plan through the Small Business Health Options Program (SHOP) marketplace. This gives you the opportunity to receive a tax credit, which can help offset costs.

Also, don't forget the following benefits:

  • Unlimited vacation time
  • Flexible time
  • Free snacks
  • Wellness programs
  • Commuter Benefits

These perks are affordable ways to provide additional benefits and are extremely popular with today's workforce!


Attracting talent is a huge investment of time and money. It's difficult for entrepreneurs to balance running the business with hiring the right people at the right time. Plus, it's impossible to know if a candidate will really fit your expectations until they've been working for you for a while.


One of the best ways to find the right people for your company is to use a staffing company. These companies offer interim solutions that allow you to try out new employees with little to no risk. You'll save time, money and frustration, and you may even find a future executive or business partner.


The competition for talented employees is fierce. Startups and small businesses don't have big budgets for retirement plans, expensive insurance plans and other costly items that their larger competitors do - at least not yet. Employee turnover is costly and can negatively impact business growth.


Onboarding is very effective for employees. Studies show that with a structured onboarding process, employees are 58% more likely to stay with a company for three years or more. Read our article on the 5 employee onboarding technology solutions your company should use to learn about your options.


Multiple generations, Ethnic and cultural differences. These are just a few of the many factors that make diversity in the workplace an ongoing challenge for small businesses. The risk of lawsuits for failing to protect employees from harassment is real.


Creating a culture of teamwork and respect will maintain a positive and productive work environment. In addition, implementing a diversity training program is essential. Employers have a responsibility to set standards of behavior in the workplace. Standards and a system of accountability must be in place from the beginning.


Employees are a company's greatest asset. Small businesses that invest in their people will grow faster and outpace their competitors.

Here are a few more reasons to focus on effective HRM:

  • Creates a unique company culture
  • Focuses on workplace rules, expectations and norms
  • Helps everyone understand diversity in the workplace
  • Facilitates communication between HR and employees
  • Reinforces the importance of training and development
  • Eliminates employee uncertainty

It's important to know the common HR issues so you can put the right policies and procedures in place now. Understanding the complexities of benefits, labor laws, leadership development and other areas will help you stay ahead of the competition and meet your business goals this year and in the years to come.

Many companies face human resource challenges, but IceHrm is here to help. We coach and consult with business owners, management teams, executive staff, and human resource managers in small and medium-sized businesses looking to reach their maximum potential. If you are ready to take your business and your management team to the next level, contact us today.

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