Running a small business presents many unique challenges, and chief among them are the many ins and outs of hiring and managing people.
There are employee relations issues, compliance concerns, and policy questions, all of which can become more even complicated if you don’t have the right HR support to help you.
However, whether you have one employee or one hundred, you can get the HR support and expertise you need to overcome any HR challenge and manage your workforce effectively. In this post, discover the critical HR issues (and possible solutions) you should have on your radar for your small business.
Key HR Concerns for Small Business Owners
Hiring and managing talent not only represents one of your largest business expenses; it can also be among your most significant business challenges. According to a June 2024 report from the National Federation of Independent Business (NFIB), 85% of small business owners said they had too few or no qualified applicants for their open positions. In addition to finding qualified talent, it can also be difficult to navigate all the operational and administrative requirements that come with hiring people and keeping them engaged.
The US Department of Labor enforces a whopping 180 labor laws, making HR management a complex and sometimes confusing undertaking. Developing HR policies and practices that align with your business strategy, budget, and culture can also be challenging. Therefore, as you operate your business and continue to hire, you may be uncertain of how to proceed in any of the following areas:
- Hiring and terminating employees
- Managing employee complaints and difficult conversations
- Addressing performance issues
- Complying with changing federal and state labor laws
- Establishing fair and sensible time off and leave policies
- Hiring in different geographies
- Onboarding employees and setting them up for future success
- Creating pay bands and crafting compensation packages
- Establishing an employer brand to attract top talent
- Developing a competitive benefits plan
- Identifying the right systems for managing recruitment, payroll, benefits, and other functions
- How to submit payroll tax and other filings
5 HR Strategies to Support Your Business Success
In our years of working with small business owners and helping them overcome their HR and people operations challenges, we’ve identified several HR areas that small business owners should focus on to avoid issues like rising turnover, compliance errors, and inefficient HR processes.
Here are five strategies to help you overcome critical areas of concern and ensure smooth HR operations in your business:
1: Recognize the signs an HR problem is brewing
Given all the employment laws and HR dos and don’ts, it’s not uncommon to experience problems like payroll errors, tax filing missteps, and conflicting policies. However, by recognizing the signs of an impending issue and proactively addressing it, you can avoid the costly repercussions of inaction, such as regulatory penalties, employee relations issues, and reputational damage.
Here are some of the signs there’s an HR issue requiring investigation and resolution:
- An employee files a discrimination or other employment claim
- You receive a notice from a federal or state agency regarding a violation or filing error, even if it seems trivial
- The company rumor mill is more active than before
- Employees are complaining about pay stub errors
- Employees seem less engaged
- Turnover is beginning to rise
These issues can occur in any organization, but what you do about it matters more. In each of these scenarios, you should work with HR before things get worse. A skilled HR professional has experience in each of these areas and can create a path to smooth resolution.
2: Avoid common HR pitfalls
HR recordkeeping, payroll, and compliance errors can occur in any business, but you can avoid many of them by identifying and addressing the root cause. To limit mistakes and avoid common HR pitfalls, take the following actions:
- Recognize knowledge gaps: Not being aware of even the smallest details and requirements can lead to errors that cost you time and money.
- Don’t underestimate the intricacies of state and local laws: Laws vary from one municipality to another, adding another layer of complexity to managing a distributed workforce.
- Address problems before they get worse: The more you disregard signs of an issue, whether related to employee relations or an administrative error, the more expensive and difficult it may be to resolve.
- Involve HR at any stage: Many issues won’t resolve themselves. Even if you’re uncertain there’s a problem, it’s essential to partner with a skilled HR professional to ensure you’re on the right path.
3: Address HR issues proactively with help from experienced professionals
You don’t have to wait until a problem arises to get HR help. As the saying goes, “An ounce of prevention is worth a pound of cure.” HR support can help you avoid common HR pitfalls before they become an issue and cost you time, money, and people management headaches.
Full-service HR support isn’t just for fixing problems, and it’s well within reach for small businesses. NorthstarPMO offers fractional HR services for small and medium-sized businesses, covering the full range of strategic and tactical HR activities across the entire employee lifecycle. If you’re planning for growth or you just want to level up your existing HR practices, our fractional HR professionals can help you in any of the following areas:
- Recruitment/talent acquisition
- HR compliance
- Performance management
- HR policies and procedures
- Payroll administration
- Benefits management
- HR technology and infrastructure
NorthstarPMO’s fractional HR services help you take a more proactive approach to HR and people operations, so you can avert HR crises and avoid being in panic mode over an employee complaint or compliance notice. NorthstarPMO can support your business at the level you desire, whether you need everyday HR support or assistance with special projects. Each HR expert on our team understands HR best practices and which processes and tools will be the optimal fit for your budget and culture.
4: Consider employee needs and expectations
Managing HR is much easier when you commit to building a relationship of mutual trust, respect, and appreciation with employees. Since the impact of losing even one key employee can be massive for a small business, it’s critical to have HR policies and practices that help you retain your best people and keep them engaged. To accomplish this, you should rely on a trusted HR partner who can listen objectively and help resolve concerns raised by company leaders and employees. Your HR partner can support you and your employees in all of the following areas:
- Honest and transparent communication
- Policy development and implementation
- Inclusion and belonging
- Fair resolution of employee and manager disputes
- Aligning employees with the company mission and purpose
5: Select HR tools that fit your unique business needs
Some HR tools, such as payroll platforms and employee file storage systems, are relatively standard. However, you can enhance your HR activities with additional tools and resources that align with your specific business goals. For example, if you need to improve your company culture, you may want to invest in employee engagement and pulse surveys. Or, if you’re struggling to attract and hire quality talent, it makes sense to invest in employer branding tools that boost your company's reputation, or review the competitive positioning of your pay and benefits. Expert HR support can help you evaluate your options and determine which solutions align with your business goals. Your HR partner can help you:
- Evaluate your tech stack for suitability and efficiency
- Identify gaps as well as the tools and integrations you can use to address these areas
- Determine which HR tools are redundant and can be replaced with existing systems
- Develop a long-range plan for the HR systems you’ll need as you grow
Elevate HR and People Operations in Your Small Business
Though HR management can be challenging, you can do it well without taking time and attention away from other parts of your business. Fractional HR services are an ideal solution to help you achieve smooth HR operations, with minimal disruption and maximum cost-effectiveness.
To learn more about how NorthstarPMO can help, schedule a discovery call with one of our business experts today.