Human Resources Challenges for Small Businesses

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Human Resources Challenges for Small Businesses

There are countless articles with documented research regarding how people best perform in the workplace. This becomes a little more specific in small business.

Our job at ISBDC is to equip small business owners every day with resources that will better help them fill the role as small business owner. The unique twist is that many owners ‘get it’ and know what they should be doing, but some very sound advice is often ignored in one specific area: human resources.

From my experience, I believe it is because it is much easier to take firm action with a vendor who doesn’t deliver what was expected; to be firm with a customer who simply doesn’t want to pay his bill; to renegotiate the terms of a loan with your lender or handle advertising issues with your print media company as opposed to dealing with employee issues. The varying factor is relationships.

In small businesses, relationships are built, as the owner is often present during operating hours and interacts frequently with the employees.  Information is often exchanged within the course of a work day about families, schedules, hobbies, interests, issues and daily personal information. Through interaction and communication, you develop relationships with the people who are working for you. Any small business owner that has any normal amount of decency is going to know who their employees are not just what their job description entails.

Sometimes the blurred lines are formed when you want to maximize their worth by exhibiting your genuine concern, but in turn that often means you put  your business in jeopardy by turning the other cheek when tasks aren’t performed, when simple rules aren’t followed or you choose to ignore a certain problem because you don’t want to ‘upset them.’

Reality televisions shows even reveal the significant amount of business owners who truly do not know what their employees are doing, until a hidden camera catches them in the act of doing something that clearly sabotages the vision of the business. Even if it is just a show for entertainment on TV, these types of programs should send a red flag up to most business owners, that a certain amount of checks and balances need to be implemented.

  • Balance is the key. You cannot be naïve but you can’t be paranoid.  Do not think that employees always have the best interest of your business at heart. But do not always go out looking that every mistake or rule that they break means that they are personally out to get you.
  • Relationships: You do not want to become close personal friends with your employees, this makes it twice as hard and twice as awkward if disciplinary steps ever need to be taken. Maintain professional relationships in which empathy, kindness and respect are given. A solid rule is to not hire family or friends. This complicates every human resource principal.
  • Decision making: You have to allow employees to have a say in how the company is run, but you cannot let them make critical decisions.  It truly gives an employee a sense of pride and ownership to not be micromanaged and is given the responsibility to make daily decisions. However, when it comes to making major decisions regarding the business, it is best to keep employees as far removed from the situation as possible. After all, these decisions may have a major impact on their specific job, it is best to allow them to do their job unimpeded by worries of daily operation.
  • Communication:  Have frequent employee meetings, even if your staff consists of two people. Make sure that you make it a priority on your schedule to have a one hour meeting each week to find out what their concerns are and follow up on the things you say you will do. Welcome their feedback and input. Make sure they are comfortable telling you all that goes on, even if it is something you may not want to hear as an owner. Have an open door policy and make sure they know that you will do your best to solve any issue they may bring to you.
  • Employee Handbook: A very real tool needed for a business of any size is that of an employee handbook. This is a tool that minimizes miscommunication and maximizes that everyone is on the same page. Go through it often, revise it as needed. Make sure employees are current on any changes. Discuss the policies that you see are being challenged. Make sure employees know what corrective will be taken if rules are not followed.

As with all things in life, there are three things that assist great leaders, good bosses and decent human beings. Be firm. Be fair. Be consistent. These three things go hand in hand in handling human resource issues, whether it is for a bakery with two employees or a small manufacturing firm with twenty employees. Make sure employees know that you are the owner (firm), that you will always be willing to listen and help find solutions (fair), and allow employees to know what is expected (consistent).

Human resource, is one of the most challenging aspects of small business because the people you employee hold a very significant factor in determining your success in their hands. Make people a priority and they will view their jobs as valuable team work as opposed to a menial task.

Troy Phelps

Troy Phelps is the State Director for the ISBDC. Previously, he was the Regional Director for the South Central ISBDC and worked out of our Bloomington office located at the Ivy Tech Gayle and Bill Cook Center for Entrepreneurship. Prior to that, he worked for the West Central ISBDC and, in total, has counseled with over 350 clients. Troy specializes in accounting and has significant experience in the banking, medical, and insurance industries. Having started two businesses of his own in the past, he also understands firsthand the challenges of owning a business. In addition, he is an adjunct professor at Ivy Tech Community College teaching Quickbooks and Entrepreneurial Finance classes and is a certified QuickBooks Pro Advisor. Troy holds a Bachelor’s degree in Business Administration from Anderson University.
Troy Phelps can be reached through our Contact Page.
Posted in: Human Resources

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