HR resources

A good HR team is vital for the organization’s growth and development, irrespective of the company’s size. Human resource is an essential component even for small businesses. However, the executive or manager often carries the responsibilities as many small businesses don’t have the capacity for a designated HR department or having full-time employees. Therefore, managing these HR functions in-house often creates many challenges. 

Small businesses may be impacted by HR-related challenges more than larger businesses due to limited resources, including staff and money. In the current competitive business environment, it is critical for small businesses and startups to effectively manage HR functions, including knowledge of the HR challenges, small business challenges, and strategies to address these challenges.

Many HR obstacles that are commonly faced by small businesses include compliance and hiring issues, employee recruitment and retention and salary and benefits management.

Common Human Resource Management Challenges Faced By Small Businesses

In order to keep your small business running smoothly, you must be capable of identifying the potential HR challenges that are most likely to arise and handling these challenges carefully.

The following are few common Human Resource Management challenges faced by small businesses and ways to overcome these small businesses challenges:

Hiring Process 

One of the major commitments for small businesses is the process of hiring new employees. When the job interviews are not handled properly, then the recruitment process tends to become time-consuming. The employee recruitment process requires time and money. 

Therefore, small businesses must establish a set of criteria for the hiring process and ensure to ask behaviour-oriented questions to understand if the candidate is the right fit for your company. Small businesses can also consider getting assistance from a staffing company to make the process quick and efficient.

Resisting Technology Adoption 

Today technology is constantly evolving, and companies that refrain from adopting and integrating these technologies into their operations are more likely to become obsolete. Another common problem faced by small businesses is the resistance of employees to change.

One way to manage this problem is by explaining to employees the importance of technology and emphasizing its benefits and how technology plays a crucial role in making jobs more manageable.

 Creating Workplace Diversity 

Any organization comprises a workforce including individuals from different cultures and backgrounds, and it is the same in the case of small businesses. Having employees from diverse backgrounds can yield businesses with fresh and creative ideas and broader perspectives, but still, few companies will struggle with intolerant employees.

To correct such situation and protect the company from damaging reputation, small businesses need to foster a company culture by prioritizing mutual respect and teamwork. Creating workplace diversity is crucial to managing a healthy working environment.

 Employee Training 

Once employees are hired, Providing proper employee training is crucial. This step will increase your organization’s efficiency and play a key role in fostering employee engagement and loyalty. In the case of small businesses, money and time may be a barrier to providing employee training.

However, having HR resources that can provide assistance during training that help prevent costly errors is crucial. Even small businesses need to consider getting HR resources that enable them to train their employees properly.

 Payroll Management 

For small businesses, payroll management and filing taxes can be challenging and time-consuming tasks. This results in getting organizations a competitive disadvantage with retaining employees. 

However, organizations can address these challenges by coming up with various benefit plans to compensate for lower pay scales and offer additional rewards that enhance work-life balance, such as flexible working hours and extra paid time. A good benefits package is the top criteria for a candidate to accept a job.

 Managing HR Without A Dedicated HR Team 

Small business owners can often not afford to hire a team of HR professionals or have dedicated HR services. They either manage HR functions themselves or appoint someone else, such as an office manager, to handle such functions. However, this may not work in the long term as human resource management require a level of expertise. 

Therefore, small businesses need to consider consulting Professional HR outsourcing firms that offer access to HR support on a subscription basis. External HR consulting firms can assist your small business with all your HR requirements and prepare payroll, thereby managing your HR functions more efficiently.

Human Resource Management encompasses many roles, from ensuring compliance with employment laws to overseeing and executing recruitment, training and managing employee benefits programs.


Although Human resource management is challenging for small businesses, Investing in the right HR system can provide the required assistance. In addition, business organizations should also have to digitize their HR activities and work with an intelligent approach to hire the right talent set for their company.

Many HR software tools are available in the market that helps streamline all the human resource management activities and help companies accomplish these tasks while enhancing employee satisfaction and retention rates.