A new study conducted by HR.com's HR Research Institute in collaboration with UKG reveals that small and mid-sized businesses face significant human resources challenges that threaten their competitiveness. The research, titled "HR Decision-Making in Small to Mid-Sized Businesses," provides valuable insights into the unique challenges and potential solutions for organizations with fewer than 500 employees. More than half of SMBs are grappling with major HR issues, including talent retention, maintaining a positive company culture, and hiring qualified employees. These challenges are particularly pressing in today's competitive business environment where SMBs often struggle to compete with larger companies that have more resources at their disposal.
According to the research, 60% of HR professionals in SMBs cite retaining top talent as their biggest concern, followed closely by creating a supportive employee culture at 58% and hiring qualified employees at 56%. Surprisingly, only 35% of SMBs consider employee reskilling and upskilling as a major concern, despite the growing importance of workforce learning and development in recent years. The study highlights significant differences between SMBs with more mature HR 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 issues such as compliance with employment laws.
One key finding of the research is the critical role of technology in addressing HR challenges. SMBs with more mature human capital management practices are considerably more likely to be at strategic and advanced levels of HR technology usage. This suggests that aligning HR tech investments with leadership business goals can significantly improve decision-making and organizational success. Julie Develin, senior partner of HCM advisory at UKG, emphasizes the importance of HR technology for SMBs, stating that 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. Develin notes that by building on the right foundational areas, HR technology improves workflows, streamlines roadblocks, and enhances the overall employee experience.
The research report, available for free download at https://web.hr.com/9lxj, offers actionable strategies for SMBs to tackle their HR challenges. These strategies include adopting more strategic HR approaches, investing in effective HR technology, and focusing on employee development and retention. Debbie McGrath, chief instigator and CEO of HR.com, underscores the potential impact of strategic HR investments for SMBs, stating that strategic investment in HR technology may be a game-changer for SMBs. McGrath explains that 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.
For HR vendors serving the SMB market, this research provides critical insights into the pain points and technology needs of their target customers. The findings suggest that vendors who can offer solutions addressing talent retention, company culture enhancement, and streamlined hiring processes will be well-positioned to serve this market segment. The emphasis on strategic HR technology adoption indicates growing opportunities for vendors offering integrated HCM platforms that align with business objectives. As SMBs continue to face intense competition for talent and resources, the insights provided by this research offer a roadmap for improving HR performance and driving organizational success. By focusing on key areas such as talent retention, company culture, and strategic use of HR technology, SMBs can position themselves to overcome their HR challenges and thrive in today's dynamic business landscape.
