Overcoming the 7 most common HR challenges for small businesses

Growing your business, keeping on top of cash flow and keeping your existing customers happy are all part of the day the day life of running a small business. I've spent the past 15 years running my own small businesses and I’ve put together a list of the most common HR challenges I’ve experienced and what I did to overcome them.

Training and retention

Keeping the best people in your small business can be hard. Most people are looking to grow and develop their skills, so it is critical that you can offer them a route to doing this. In the end, it is your business that benefits, so I have always found it well worth investing in our staff and giving them the training they need to meet their personal goals and the business' needs.

Holiday & Sickness

If you employ 10,000 people and someone is off sick today, there are plenty of people to take on the additional workload. A small business can have a much tougher time. One person away on holiday or off sick can mean your entire finance function is missing.

It’s critical that you know exactly when everyone will be away on holiday. Do you have crunch points in the year when you really need ‘all hands on deck’? Perhaps you have to be sure that both people in your customer support team aren’t away at the same time.

Using tools like Team Absence helps ensure that everyone can know when the rest of their team is away. Booking and approving time off can be done quickly, with all the information you need, right at your fingertips. Suddenly it’s really simple to avoid clashes and keep everyone informed.

Woman Hand Desk Office


Finding the right people to grow your business is critical, but like it or not, it takes time and a whole lot of effort to get right.

I always start with what I call ‘cultural fit’. Will this person fit in? Will they get on with the rest of the team? Are they excited about the business and what it stands for? Get this wrong, and no matter how good they are, they’ll never quite feel like a part of your business.

Only when a candidate gets past this hurdle can we start to assess their suitability for the role in question. Work out a set of questions that will reveal the candidate's suitability for the role, and ask the same questions of all your candidates. This helps ensure your evaluation is fair and always covers the areas that are important to you.

Finding candidates is another challenge. Using a recruiter can be expensive, but can also save a lot of time, but there are other ways of finding good candidates. An employee referral scheme has worked well for me in the past, where we pay our existing staff a reward if they suggest a candidate that we ultimately hire. This can work well if you are looking for hard to find skills.

Rewards and bonuses

The key to an effective reward scheme in your business is that it has to reward the behaviours that you want. Make sure your bonus or incentive scheme is relevant to the business and your staff, is achievable and actually motivates everyone. Asking your staff what rewards they would be looking for is really effective and may surprise you - not everyone is looking for a massive cash bonus at the end of the year!

Not really having HR function at all

Smaller businesses often don’t have a dedicated HR department and make it through the early years by ‘muddling on by’. Until you are at a size where you can justify a full-time HR person, you’ll need to find ways to reduce the administrative burden. Using smart tools like Team Absence can help. Outsourcing some of your HR functions to specialist companies can also save you a lot of expensive mistakes.

Conflict resolution

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There is a lot you can do to avoid serious legal issues in the first place. Robust systems and processes, finding the right people and taking care of your company's culture can all contribute to protecting your business. If you find yourself with a serious issue, seeking professional advice is the best thing you can do.

Complying with the law

Employment law is complex and ever-changing. Staying on top of all the regulations can be a full-time job. You’ll need to ensure your staff handbooks, contracts, health and safety policies and job descriptions keep up with the rules. Your solicitors should be able to help, but there are also cheaper options, like simply-docs.co.uk that can be useful. It’s best to get professional advice in this area, as getting it wrong can mean the end of your business, or worse.

What Next?

If you're worried about your company's HR policies, start a trial of Team Absence today for free, and get your holiday and sickness policies under control. It's one step on the way to HR awesome!

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