Some of the biggest hiring challenges of SMBs and how to overcome

Hiring the right candidate is no easy job, and small businesses have their share of challenges. Let’s look at some of the most common challenges and understand how you can overcome them.

The number one challenge for small businesses regarding hiring is finding the right candidate and building a pipeline of future candidates. To keep the future job pipeline ready, small businesses can leverage a mix of hiring resources like online job sites, social networking platforms like LinkedIn, and referrals from your existing employees. You can even tap your former colleagues, employees, and peers to keep your referral pipeline flowing. Finally, you can always leverage the non-digital and traditional approaches like newspaper ads to keep your hiring pipeline ready. A LinkedIn survey found that 43% of small businesses in the retail and wholesale industry have relied on newspapers for hiring in the last 12 months. In contrast, the manufacturing industry used newspapers only 21%. Thus, it is also essential to understand where your potential candidates are spending their maximum time before making your move.

Small businesses are sprouting like never before, which means you have to face tremendous market competition to acquire customers and hire the top talents. In such a scenario, when everyone finds new ways to entice the candidates, try to build a rapport with the prospective candidates by telling your story. Don’t hesitate to emphasize the benefits of working in your company. An excellent place to start is interviewing your existing employees and finding out what they like about working in your company. Highlight these points when you approach your potential candidates.

The wrong hire is another challenge that small businesses face often. How do you ensure you are hiring the right candidate? To ensure you are not making a hiring mistake, have a compelling and detailed job description handy. Set up a standardised interview process so that your hiring process is uniform.

Sharing Equity

Sharing ownership or equity/stock in the business can be a key factor in recruiting and retaining key team players. Many start-ups and small businesses use it to retain employees and make them stay for longer. When senior team members see that their shares are growing as the company expands, they feel a sense of contentment and have a greater attachment for the company too. If done successfully, this will encourage staff recruitment and retention significantly. Stock options are typically issued by companies to encourage loyalty in the company. It is mostly done to reward hard-working employees who stick with the company over time. The longer employees stay, the more of their stock options they vest. Equity compensation is non-cash pay that is offered to employees and it may include options, restricted stock, and/ or performance shares. When employees are given away equity, the employer is not just incentivizing them but is giving them real power and leverage. This is something that employees appreciate and aspire for. Having equity, in short, also means an employee is directly invested in the company’s future. That can make a huge difference in how they perceive their work.

Allow Individuality to Prosper

One of the ways smaller companies differentiate themselves is by allowing individuals to craft their own jobs. This is also the reason why young employees join small businesses or start-ups. It provides them an opportunity to be their own boss and carve their own path. Obviously, primary responsibilities need to be determined by the organization, but rest should be left to the employees and they should be allowed to finish the job at hand the way they want to.

The key is to let their individuality come out and not let them rot like they would in a stereotypical 9-5 job. Allowing a person to tweak their role to use their talents and creativity increases employee engagement and productivity.

Company Culture Is Important, No Debate on It

Corporate culture has always been there in every company, whether knowingly or unknowingly, whether be good or bad, like any culture at any level in the society but was not consciously looked at and given its due importance until recently. The times have changed and all those stakeholders who deal with a company accord high weightage to it. It is not any more the buzz words inserted in mission and vision statements which many founders don’t even remember after some time.

Corporate culture is more visible and deliberate now. The company brand has its culture inherent in it in a larger proportion. However, I’d argue that corporate culture was never really overblown, and is actually becoming even more important as the modern workplace continues to evolve.

There are clear benefits to having a strong, unified company culture underlying your business’s operations. Some of them:

Identity of the company

Corporate culture contributes to the identity and values of your company. Employees, customers, suppliers and other stakeholders identify the culture of the company and deal with them accordingly. It’s a good way to set and maintain the direction of your employees, and without it, it’s hard to keep your company’s values coherent. The founders or promoters or management set the tone for the culture in the company and it cannot be revisited and changed as and when needed.

Attracting good talent

Good corporate culture attracts best talent to a company. The high salary and perks themselves are not enough to attract best talents, particularly from the new generation. They look to the culture of the company along with or even over the CTC and perks. This is also true for customers, vendors and even investors. There many ways candidates can get to know about the culture and environment of prospective employers through search engines, and company review platforms like Glassdoor, Indeed etc.

Retention of employees

Attracting best talents is not enough, retaining them is more challenging. A strong company culture attracts better talent and, more importantly, retains them for long. When people feel like they belong to an organization, they’re more likely to stick around for the long term. That means lower turnover, fewer new hires to deal with, and better chemistry among your team. ESOP or Equity compensation, for example, are some ways to make employees feel inclusive and be part of the company.

Image of the company

We all have a tendency to identify certain ethos with the company brand. Company brand reflects not just its market share, quality of product and service, market cap, and other business metrics but its culture too to a great extent. Corporate culture also adds to your brand identity. If you treat your employees well and have a fun-loving corporate atmosphere, your customers will see you as a fun-loving, generous brand. Depending on your target demographics, that could be a major boon for sales and customer loyalty.

Loyalty of stakeholders

This is one important benefit often overlooked in the discussion of corporate culture. A company having good culture keeps its vendors, customers, investors and other stakeholders loyal to the company. They will extend a helping hand to such companies in their need of the hour. Culture helps enhance the image and loyalty of all stakeholders of a company.

Culture is very, if not more, important for small and new businesses, many entrepreneurs of start-ups quite naturally tend to take on a great deal of responsibility themselves. However, when the company grows and adds employees, the authoritarian, concentrated management style that the business owner practiced successfully in a very small company can become detrimental.

Millennials are the generation driving the workplace changes of the near future. If you cannot attract millennial talent, the growth of your company may stagnate, and you could eventually hit a talent shortage. That said, millennials desire a strong company culture more than anything else when deciding who to work for. If you don’t have a strong or appealing company culture, you’re going to start losing the game.

Work-life balance is of paramount importance to the new generation workers. I will mention one example of how companies address this expectation; Amazon India Head have recently asked all its employees not to reply or respond to any emails or calls from 6 pm to 8 am.

It’s also worth noting that the modern start-up economy has added some interesting variables to the entrepreneurial community. They have virtually unlimited digital resources to build companies-and those companies have the potential to take off or fail relatively quickly. This increases the need for differentiation in the market, especially in competitive industries, and forces entrepreneurs to find a sticking point for workers who may otherwise leave you after a short-term assignment.

Some facts and statistics to support why corporate culture is important

A Columbia University study shows that the likelihood of job turnover at an organization with high company culture is a mere 13.9 percent, whereas the probability of job turnover in low company cultures is 48.4 percent.

Likewise, the Department of Economics at the University of Warwick found that happy workers are 12 percent more productive than the average worker, and unhappy workers are 10 percent less productive.

Statistics from New Century Financial Corporation indicate that companies with happy employees outperform the competition by 20 percent, earn 1.2-1.7 percent more than their peer firms, and are 2.1 percent above industry benchmarks. Happy workers are also more likely to solve difficult problems faster.

A 142-country Gallup report on the “State of the Global Workplace” shows that 63 percent of employees are not engaged at work and 24 percent are actively disengaged, leaving a mere 13 percent of workers who are engaged in the work that they do.

An often-cited example of good company culture is Google. Though very large in size, people who work there describe it as having a small-company feel where no one hesitates to “spike a volleyball across the net at a corporate officer.”

But the culture of a company is not just about whether you’re allowed to chuck balls at your boss – it’s also determined by what the company stands for and how it treats others. Google gives back to the community as well as to countries around the world in the form of financial aid, restoring public parks, and Googlers volunteering their time.

Taking its cue from 3M, Google started its own “20% Time” program which resulted in the creations of Gmail, Google Earth, and Google Talk, to name a few. Similarly, Hewlett-Packard Labs gives its employees personal creative time during which new products have been created, such as clear bandages and optical films that reflect light which are both on the market.

Employee’s emotions quotient matters

During his working hours, if an employee is bogged down by concerns related to home, family, relationships, EMIs, etc, it will obviously hamper his/her morale and confidence. Companies are starting to invest in mental health programmes. This is a good way to ensure that employees are valued and recognised. Also, the HR should understand and take into consideration that employee satisfaction and attrition are not always connected to pay hikes and promotions.

There are many values that go beyond them. It has been noted that emotional and personal wellbeing can also affect attrition levels. It is also advisable for the HR to prepare a data analytics report based on departments. This will help recognise better insights on which department has more attrition, and if at all any patterns can be spotted in those particular departments. This can make the job of the company easier in recognising problems and addressing it faster. Breaking down these crucial insights will help you come up with distinct results that will be a step forward in taking predictive and preventive measures for every department.

HR Innovation: A Long-term Investment 

HR innovation can be seen both as a process and as an outcome. This is why it is the need of the hour for human resource management. There can be numerous other ways over and above the ones discussed here in which innovation in HR can take place in present-day organisations. Companies should consider that investing in innovation will bear fruitful results going forward. It is imperative that HR leaders understand the importance of innovation in industries today. Innovating will also enable organizations to differentiate themselves and look at innovation as a part of the new role of the HR. In the beginning, it may seem like a bit of an overhaul in the organisational practices but in the long-term this will only help streamline the entire process. 

Google’s 20% Project is a great example. This project allowed their engineers to work on their pet projects 20% of their paid working time (that is one day a week). It seemed like a radical innovation in Google’s work design but it turned out to be a great enabler in improving motivation and performance, retaining current employees and attracting new talent. The first step for HR innovation is to identify a requirement or an opportunity for innovation by HR professionals and not just do anything for the sake of it. It should be clear why they want to do it. It is important to note that every HR change comes with risks such as the risk of investment, implementation failure, and failure to deliver desired outcomes. There has to be a good reason why organisations feel the need to invest in innovative HR practices. Hey need to have a good understanding of associated risks and investments. 

From digitising HR activities like job adverts, chatbots, selective hiring, inclusive culture, gamification, mental health awareness and personalisation, one needs to understand that it’s a long-term investment and has to be patient with it. The bottom line is, benefits from a diverse, engaged and a mentally, physically, and financially motivated workforce are immense. As more and more companies are adopting innovative HR practices, it will provide a greater choice for employees. It will also help eliminate unhealthy workplace cultures which is never beneficial for neither the employer nor the employees. 

Thus, HR solutions that benefit employees are obviously on the rise. The growing market is abound with solutions that promote employee engagement, diversify companies, rethink sexual harassment training, expand corporate wellness solutions, and employ AI to improve HR operations. This will go a long way in ensuring that employees feel at home even while they’re at work. This will go a long way in creating a thriving, productive and motivated workplace culture. It is the need of the hour for companies and HR executives to recruit, hire and retain top talent and that can only happen if their policies are innovative, unbiased, and employee-friendly. In order to attract and retain such a diverse and competitive talent, they will have to increase their spending on innovative HR solutions and therefore push for state-of-the art human resource management programs to ensure better productivity at a much cheaper investment. There’s no better time for human resources to be more digital-savvy than it is today.