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The Top 5 HR Challenges for SMEs and How to Solve Them

All small and medium-sized business are under pressure. Margins and business conditions are tight, and attracting and retaining top-quality staff remains difficult. But finding and holding onto great employees can be key to meeting your business goals.

These common human resources problems can arise no matter what kind of business you're in so use this advice from employee management solution, HR AdvanceOpens external site, as a handy guide with how to deal with challenging situations next time they arise.

5 HR Challenges

1. Confusing performance management with bullying

Discussing performance improvement with employees is critical for all employers – but there's a fear that raising poor performance with an employee will be seen as bullyingOpens external site.

As one employer complained: "We had an employee whose performance was below par. His manager counselled him during his performance review on how he could improve, only for the employee to claim he was being bullied, threaten to resign and to lodge a complaint with the Fair Work Commission."

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While it's understandably distressing to be accused of bullying, a manager in this situation can stand their ground.

The Fair Work Commission's (FWC's) anti-bullying charter makes it clear that bullying does not include genuine and reasonable disciplinary procedures and performance management, such as constructively delivered feedback or counselling or directing and controlling how work is done.

To make a bullying claim to the FWC, the person must be a "worker". In this case, if the employee did resign he couldn't make a complaint.

How to solve the challenge: A one-off negative performance appraisal may not be regarded as bullying but repeated and unreasonable behaviour towards an employee can.

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2. Understanding the right wages and conditions

With underpayment scandals regularly making news – consider the infamous cases of 7-Eleven, Muffin Break, KFC and more – the Fair Work Ombudsman has been given new investigative powers.

Franchisors and holding companies are now responsible if their franchisees or subsidiaries underpay their staff if they knew – or ought to have reasonably known – that this was happening and failed to take reasonable steps to prevent it.

It's not just franchisors and franchisees – all employers must pay their workers correctly and must keep records of all payments they make. The fines if you fail to do so are seriously big numbers: up to $126,000 for individuals and up to $630,000 for corporations.

Accountants, HR consultants or anyone who is a third-party to a serious flouting of the Fair Work Act, are also in the frame.

How to solve the challenge:

  1. Check you comply with the pay and employee entitlements under your Award or enterprise agreement, if you have one. Minimum wage rates increased by 3.5% from 1 July 2018.
  2. You must not obstruct a Fair Work inspector who is investigating you, nor must you give them false or misleading information or documents.

3. Flexible work

Businesses need to be agile and adaptive to survive – and your workers need to be the same. But employers should be doing more to encourage flexible workplaces to improve the success of their businesses, according to the Diversity Council Australia.

The Council released a ‘Myth Busting Flexibility' report this year which notes that while the most common reason for flexible working arrangements is caring for children, it can be just as relevant for personal development, community involvement and lifestyle reasons.

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"Many employees want access to flexible work but are discouraged by a workplace culture that views anything other than full-time ‘face-time' work as second-rate," says Diversity Council Australia CEO Lisa Annese.

How to solve the challenge:

  1. Understand certain employees have a legal right to request flexible work. These include parents who are caring for school-aged or younger children, carers, employees with a legally recognised disability, those who are aged 55 or older, and employees experiencing family or domestic violence or supporting a family or household member because of family or domestic violence.
  2. Collaborate with your staff to help them work flexibly. For example, changing start and finish times, creating split shifts, job sharing, providing access to unplanned leave, compressing the work week, part-time work and working from home.

HR Advance subscriptions give subscribers access to a library of more than 2000 customisable documents to help you better manage your employees and their documentation.

4. Social media

Facebook, LinkedIn and Twitter continue to present legal issues. The main issue in the workplace context is the blurred distinction between work and "private" activities.

In a 2016 case, a frontline Centrelink officer posted comments on social media referring to the department's clients as being "junkies", among other terms. He criticised the department's processing times as "utterly disgraceful" and also said he was "embarrassed to work there".

Centrelink sacked him, accusing him of "a significant breach of trust" but the FWC gave him his job back because it considered his dismissal harsh.

That Centrelink felt it had good reasons to dismiss the man but were required to reinstate him indicates how difficult this area can be for employers, particularly when it concerns activities in a worker's private time.

How to solve the challenge:

  1. Have a clear policy on social media use/misuse by employees. You can also specify whether employees are allowed to list their place of work on social media, as this is a major factor in whether posts can be linked to the person's employer.
  2. Emphasise the importance of employees using appropriate privacy settings on social media and the potential consequences if content reaches the wrong hands.

5. Hiring and firing

Hiring and firing continues to be a problem for many small-business owners – hiring because the costs of replacing a poor hire can be as much as 21% of their annual salary, according to ForbesOpens external site, and employers are still reporting difficulties sourcing quality candidatesOpens external site; and firing because many business owners have become so paralysed by the threat of an unfair dismissal claimOpens external site that they're often reluctant to take action.

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How to solve the challenge:

  1. Evaluate your recruitment strategiesOpens external site regularly to make sure you remain responsive to your business needs and employment market fluctuations. Maintain a strong employment brand and promote your business as one that people are keen to work for.
  2. Maintain a strong employment brand and promote your business as one that people are keen to work for.
  3. Consider termination issues before an employee starts work by carefully drafting the employment contract.
  4. Understand the basics of terminationOpens external site – such as what is a valid reason, how much notice must be given and what must be documented.

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