The 5 top HR challenges for small businesses in 2022
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Small business employers have enough to worry about without the raft of challenges that can come with HR.

There has been a considerable amount of HR challenges to contend with over the past couple of years, meaning that many employers’ and business owners’ attentions have been diverted elsewhere to make sure everything can tick over and that your employees can work safely.

And just as we’re all enjoying coming out of the Covid-19 cloud, the news headlines aren’t painting the best picture – with inflation suddenly far higher than it has been for decades. While there is no denying we still have challenges to consider this year, knowing what they are now can help you prepare as much as possible and put measures in place to minimise impact for both your business and your employees.

Here’s a look at five key challenges to keep on your radar this year:

Recruiting is harder than ever 

Unemployment is at its lowest level for decades – and the number of job vacancies is now higher than the number of unemployed for the first time in nearly 50 years.

So what? This means that lots of small companies are struggling to hire people.

We suggest that you allow more time than you would normally if you need to recruit —evidence we’ve seen is that it is taking at least a month more than normal to hire the right candidates.

It is more important than ever to make your company attractive to the people you want to come and work for you, which is increasingly about more than just money. It could also be time to explore different ways to recruit—and if your role can be done remotely, perhaps consider taking people on in other regions. Could you perhaps even hire abroad?

Financial hardship and how to support your employees

Back in April we discussed how to manage the pay rise pressure during the cost-of-living crisis. And while some employers have been able to provide pay rises for their employees, others haven’t, leaving some of their employees now facing in-work poverty. This is understandably leading to employees seeking pay rises. Yet small businesses often find it really hard to give those pay rises.

Considering that, in the UK, in-work poverty affected one in eight employees even before the current cost of living crisis emerged from Covid-19, it is clear why many of your team may be concerned about offsetting the rising cost of living.

While it may not be possible to meet the 6.6% advised pay rise, is flexible working possible to help reduce childcare or commuting costs? Are you able to offer enhanced levels of sick pay over the statutory rates?

Of course, many small businesses will also face other cost increases, too. Restaurants and travel companies have perhaps the worst of all worlds, with substantial cost rises (fuel and food) at the same time as the risk of a drop in sales if consumers cut back on eating out and travelling abroad. Could you adapt your offer to help your company through this period? Is ecommerce a possibility for your business? Or could you branch out into a new product or service offering? 

The Great Resignation

The last couple of years have been tough on our employees and a lot of people have found this as a career-turning point. A time to reflect and think “Am I actually happy in this job?

Subsequently, lots of people decided to change jobs, with some surveys showing 24% moving roles in the UK last year – though, thankfully, the data suggests that the Great Resignation has not actually happened, with many fewer people resigning this year than had been predicted.

But what does this mean for employee retention going forward? The Undercover Recruiter suggests the average cost per hire can be as much as £3000, which doesn’t include training or “learning curve time” while a new employee gets up to speed on your role. The total cost of hiring a new starter and getting them working productively for you is likely to be over £10,000 including all the extras, which is budget most small businesses don’t have spare.

So, it’s well worth employers taking time to better understand what drives and sustains career satisfaction amongst their people. You can easily start discussions with your team on professional development and advancement opportunities; how to reinforce your workplace culture; and your employee benefits and “well-being” offering. Learning what your current team value most is a crucial first step to understanding the best way you can help them.

This can be a great way your small company can retain your existing staff, meaning you can save having to fork out all that cash on recruitment and training costs. Investing a small amount in your current team might feel hard for your organisation, we get that… but it is probably much cheaper than having people leave and having to replace them. If you are looking for some advice check out our other blogs for support on how you can reduce employee churn as the job market takes off again or how your company culture can improve your retention strategy and reduce staff turnover.

The gap between employer and employee expectations over continued flexible working

Flexible working opportunities can benefit everyone: employers, employees and their families. And a lot of small businesses now recognise that providing flexible working for their people can be great for staff engagement and loyalty.

However, employees increasingly feel that flexible work is a right, not a privilege, and this has resulted in a gap between the expectations from both sides. A Gartner survey found 75% of business leaders think they are already operating within a working culture of flexibility, yet only 57% of employees said their workplace embraces flexible work.

Listening to your team can help with staff retention. If you can help them shape their working time and strike the perfect work-life balance you are likely to reap the benefits. You can get feedback from your team by using strategies like pulse surveys or focus groups and can help you gather a stronger understanding of where there are contrasting expectations.

This feedback can help to navigate to an improved working strategy that suits different needs, helping you retain your highly skilled teams and help you become a small business employer of choice.

Expectations of Gen Z

Having an inclusive mindset, a willingness to learn, and a continuous search for challenges are some of the main characteristics of a Gen Z employee. For this reason, they have higher expectations compared to the former generations when it comes to their career.

Typically, they may be looking for work flexibility, a transparent and inclusive, tolerant work culture and scope to learn, especially with access to the latest technologies. This generation place a far greater focus on commitment to “EDI” – Equality, Diversity and Inclusion – issues than any previous generation. Therefore, as an employer, if you can understand and meet their expectations, you can get the best out of this tech-savvy generation for your business.

This isn’t without its challenges, however, and means that more training opportunities and introducing new systems may be the ticket to acquiring the best talent for your teams or help with your retention strategy.

Our HR Support service and software can help you to manage performance management, flexible working and much more, supporting you and business with staff retention and how to navigate a new working normal.

Get in touch on or give us a call on 0333 014 3888 to find out more about our easy-to-use HR Software or discuss how our HR consultants can support you.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Terms of Website Use.

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