New Study Reveals Key HR Challenges and Solutions for Small and Mid-Sized Businesses

A new research report titled "HR Decision-Making in Small to Mid-Sized Businesses" has shed light on the significant human resources challenges faced by small and mid-sized businesses (SMBs) and provides actionable strategies to address these issues. The study, conducted by HR.com's HR Research Institute in collaboration with UKG, a global HR technology company, focuses on businesses with fewer than 500 employees and examines how HR professionals in these organizations manage their strategic processes, practices, and responsibilities.

The report reveals that more than half of SMBs are grappling with major challenges in hiring, retention, and maintaining a positive company culture. Specifically, 60% of HR professionals cited retaining top talent as their biggest concern, followed closely by creating a supportive employee culture (58%) and hiring qualified employees (56%). These findings underscore the critical need for SMBs to adopt more strategic HR approaches to thrive in today's competitive business landscape.

Interestingly, only 35% of SMBs identified employee reskilling and upskilling as a concern, despite the growing importance of workforce learning and development (L&D) in recent years. This suggests a potential area for improvement, as L&D initiatives can be an effective strategy for filling open positions and retaining employees.

The study also highlights a notable difference between SMBs with more mature HR-related operations and those with less developed HR functions. Organizations with more advanced HR practices tend to prioritize manager skills and quality hiring, while those with less mature HR operations focus more on fundamental aspects such as compliance with employment laws. This insight suggests that as SMB HR functions develop and mature, there may be a shift towards more strategic initiatives like manager training and effective hiring practices.

Technology adoption emerges as a key differentiator in the study. HR leader organizations with more mature human capital management are significantly more likely to be at the strategic and advanced levels of HR technology usage. This finding emphasizes the importance of aligning HR tech investments with leadership business goals to drive better decision-making and organizational success.

Julie Develin, senior partner, HCM advisory at UKG, stresses the crucial role of HR technology for businesses with leaner teams: "Having the right HR technology in place at businesses with leaner teams is crucial, so HR professionals can think strategically while helping the company scale. By building on the right foundational areas, HR technology improves workflows, streamlines roadblocks, and enhances the overall employee experience."

Debbie McGrath, chief instigator and CEO of HR.com, echoes this sentiment, stating, "Strategic investment in HR technology may be a game-changer for SMBs. By adopting intentional strategies in HR processes and investing in effective tech, SMBs can better navigate their HR challenges and thrive in an increasingly competitive environment."

The research report offers valuable insights and potential best practices for SMBs looking to improve their HR performance. HR professionals and managers from SMBs can access additional expert insights through a recorded session titled "The Art of Finding and Keeping Top Talent: Expert Insights for Lean HR Teams," featuring Teresa Smith, director of UKG human insights and HCM advocacy, and Mark Vickers, HR.com chief research analyst.

As SMBs continue to face challenges in attracting and retaining top talent, creating positive workplace cultures, and competing with larger organizations, the findings from this study provide a roadmap for developing more strategic and effective HR practices. By leveraging technology, focusing on employee development, and aligning HR initiatives with business goals, SMBs can position themselves to overcome these challenges and foster growth in an increasingly competitive business landscape.