The workplace has become a much more sophisticated and dynamic arena for many small-business owners.
Aside from simply running the business, small-business owners and managers increasingly have to deal with complex human resources (HR) issues.
Like larger companies, small businesses need to look at the different legislative bodies that govern employment relationships and understand such legislation as employment standards, privacy regulations, human rights and workers’ compensation, which are all continually being changed and updated.
Often in a small business, an owner or manager acts as the company’s HR person, and while there are many small-business owners who are empathetic and capable of dealing with some employee issues, Glen Grant, partner at HRfx Consulting Inc., says sometimes that isn’t enough.
Because of the complexity of provincial legislation, potential employee liability and the simple fact that many small businesses can’t afford to hire a full-time HR person, small businesses outsourcing their HR needs has become a growing trend, says Grant.
“For us, Glen’s helped in hiring, creating job description, managed online postings, screened applications, created interview questions for us and even participated in the final interview and reviewed our contract offer,” said Darren Millard, shareholder and chartered account with UHY LDMB Advisors Inc.
Grant said integrating new people into the business is challenging, “so, we’re trying to help small businesses get people in the right position at the right time.”
With small businesses, new hires are often a friend or relative of an employee. “So there’s a good personal connection,” Grant said. “But they might have the wrong skill set.”
This personal connection can make terminations harder in small businesses.
“That can be a pretty traumatic time for the person that’s being laid off,” Millard said. “And it’s no fun for the person laying them off, either. You can run into some problems if you’re not careful.”
For example, Grant spoke of a client who owns a successful small business but during the economic downturn had to lay off some people. He made a comment to an individual that would generally come across as being caring and empathetic. But that individual misinterpreted it and lodged a human rights complaint. Grant said his client spent $60,000 in legal fees.
Finding talent is always one of the biggest issues that small companies face, according to Laura Reid, partner and senior HR adviser at Arlyn Reid.
“Lots of owners have a problem or challenge trying to find somebody who’s really committed to their business and who’s interested in working in that business,” she said.
But after finding talent, Reid said keeping it is the next big issue for small businesses. After a few years, people often start thinking, “I’ve done as much as I can here, I have to move on,” she said.
Reid believes HR consultants help provide ways for small-business owners to get their talent invested in and loyal to the company. Building company loyalty has become increasingly more difficult, too, because of changing worker attitudes.
“In 2010, things are much more about lifestyle. So when people are looking for work they’re trying to find lifestyle balance and a fun work environment.”
Grant did personality assessments of everyone in Millard’s firm so they would know what everyone’s strengths and weaknesses were.
With this knowledge, the firm was able to structure teams to maximize employee potential and create a better work environment, thus building staff loyalty.
“It’s becoming more important that owners recognize the value an employee can be or the liability that employee can be,” Grant said.
Reid agrees, adding that without an HR structure in place, a small business is neglecting one of its most important assets – people.
She believes that HR professionals can bridge the gap between owner-managers and employees looking at both the legal and human side of challenges that small businesses face and give them creative solutions. While Grant believes the HR outsourcing trend will continue to grow, one of the biggest challenges for his profession is letting people know HR has about employee relations and developing the culture of the business: the unwritten attitudes of an organization.