Biggest Human Resource Challenges in SMEs and How to Avoid Them

By Gideon Olukotun | 2 min read
22nd November 2018
Biggest Human Resource Challenges in SMEs and How to Avoid Them

In any small business, human resources are one of the most important assets of the business. However, as it is common among Small and Medium-scale Enterprises,  many do not have a designated Human Resource department leaving the job entrusted to the owners and/or founders of the business. But when it comes to success, SMEs face more than their fair share of challenges.

In most cases, they often lack the infrastructure and manpower to deal with those lingering challenges that bigger companies can easily overcome. In the absence of a dedicated staff, the founders and CEOs in addition to their own job responsibilities also include those sudden on-demand issues that stem from HR issues in relation to hiring strategy, performance management, employee training and relationship between employees and/or management. In this article, you're about to find out a few of the biggest Human Resource challenges faced by small and medium scale businesses and how to avoid them.

Poor Hiring Process

The majority of problems in any HR department arises from a poor hiring process and many young entrepreneurs are not mindful of this, and this common mistake can be very detrimental to the growth and success of your business. In fact, from a survey carried out by CareerBuilder in 2013, it was revealed that more than half of the companies in the top ten world economies have been affected by a bad hire. For SMEs, as a result of the poor job description which often attracts less-qualified applicants with a hasty interview process, the result is usually average or low-class employees.

To avoid these hiring faux pas, you can create a well detailed and concise job description to attract your desired talent for the roles needed.

To avoid problems associated with the hiring process, ensure that your job descriptions are detailed and concise. Also, interviews should be consistent and performed in a way that attracts quality talents. In addition to that is to ensure that a candidate will be a good addition to the company value and culture. This is equally important to the individual's competence for the job and try as much as possible to work with a team in the hiring process. The best decisions are made as a team.

Inadequate Documentation

From my experience working with a couple of startups and SMEs, I have witnessed many employers lacking proper documentation like company policies and employee benefits known by their small-sized staff and as a result, lead to many questions and violations from the same employees.

To avoid this, ensure you document everything in a clear, easy-to-read, and regularly updated employee handbook. It is important for all businesses irrespective of size, to have some form of policy handbook to avoid future troubles.

Informal Communication

Small businesses are known to do things more informally compared to their larger counterparts, but even though this can be a positive thing, it also has its disadvantages. In a small work environment, it is common for employees to become informal with their employers.

However, as much as it is important to maintain a  friendly and relaxed environment, it is very important for employers to maintain a professional relationship with employees. This helps to maintain focus in engagement and performance. When your employees see you as a friend first before seeing you as a boss, it blurs the lines between what is right and what is not in the workplace.

Insufficient Employee Training

It is important to hire the right people for every role but if you don't have an adequate on-boarding system for your new recruits, they fail to maximize their potentials on the job or at worse, they quit and leave the job. You must understand that a small budget doesn't mean you can't train people properly. There are effective ways you can train your employees at free or minimal cost.

It was revealed from a study that 40% of employees leave a job within the first year if they receive poor job training. As an employer, you must understand that there is a return on every penny invested in an employee training. You can learn more on how to make a good employee training plan for your small business here.

Gideon Olukotun
Gideon Olukotun is a certified Life & Personal Development Coach and NLP Practitioner. He is the Lead Coach at Take The Lead Coaching Consult, an organisation that teaches people to lead through self-discovery and personal development programs and methodologies. He is also a member of the Life Coaches Association of Nigeria.
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