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Top 7 Human Resources Challenges for Small Organisations in 2024

Written by Stephanie Fortune

Hi, My name is Stephanie! I am passionate about helping small and medium-sized businesses empower themselves and their employees while working to achieve their strategic goals! By reviewing your unique business needs, we implement Payroll, Insurance, and HR solutions that are right for you!

March 20, 2024

Are you facing challenges in executing HR strategy in your organisation? Human resources are one of the most crucial components of any business. However, as small-scale business, you may not always have the capacity for the HR department due to limited resources, financial strength, etc.

 As a result, the HR responsibilities often come under the shoulders of the owner or the manager. Without a proper human resource team, your organisation may face various deficiencies like non-compliance fines, lack of skilled employees, poor production, and so on. Here, we listed the top human resource challenges faced by small businesses.

Top 7 Human Resource Challenges for Small Organisations

Following are the seven major human resource challenges for small organisations:

Attracting and Retaining Best Talent

This is one of the most important HR challenges faced by small businesses is attracting and retaining talented workers. Compared to large corporations that strive due to their brand and reputation, small businesses struggle to offer a similar quality of service. 

To overcome this problem, SMEs can build a robust employer brand, put emphasis on their unique selling points, and provide competitive compensation packages. In addition, by providing growth opportunities and forming an excellent work culture, talented individuals can be retained. 

Limited HR Resources

SMEs recurrently struggle due to the scarcity of HR resources including HR software, HR departments, HR personnel, and so on. 

Under such circumstances, it is sensible to invest in various HR automation tools, hire an HR consultant, etc., and ensure smooth human resource operations without hampering the prevailing workforce.

Compliance with Labour Laws

Often, small businesses operate with lean HR teams, making it hard to conform to labour laws and execute essential compliance measures. This may cause the SMEs to face the jeopardy of penalties, fines, or lawsuits. 

To solve this problem, they can conduct proper record-keeping and monitor the legal resources.

Developing Sound HR Policies

Most of the time, SMEs struggle to formulate robust HR policies which can cause a large impact on a company’s reputation.

As a solution, they can formulate an all-inclusive employee handbook having all policies and procedures mentioned in detail. These include leave and attendance, performance management, code of conduct, and so on. 

Employee Engagement and Morale

SMEs often fail to maintain a positive work atmosphere to retain skilled individuals and enhance productivity. This is due to their limited resources and engagement initiatives. Even though SMEs may not compete with the salary structures of MNCs or larger establishments, they can offer some unique perks and benefits that can attract and retain employees. Doing so can also boost employee engagement and morale.

Managing Workplace Diversity 

Managing workplace diversity is a major challenge that not only disturbs small-scale businesses but also bigger corporations. Executing diversity and inclusion initiatives needs a cultural change within the company, which tends to face confrontation from management or employees. One best solutions to handle workplace diversity and inclusion for SMEs is to establish employee resource groups (ERGs). 

Technological Advancements Awareness 

With the advancement of technologies, SMEs often struggle to cope with the current human resource tools and trends. As a solution, small business entrepreneurs can focus on investing in user-friendly HR software, which promotes a tech-savvy outlook among everyone and helps businesses to get familiar with the latest technological advancements. 

Final Words

Small businesses tend to experience various challenges while recruiting and retaining workers to balance employee performance and human resource responsibilities is one such factor. To overcome such problems, small businesses can adopt professional employer organisation (PEO) which can help them save substantial time, effort, and money so that they can focus more on fostering their business growth. 

Does your organisation lack sound human resource management? Then simply visit our official website and read our blogs for a better understanding.  Also, if you have any doubts or queries, feel free to contact us

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