New Study Reveals Critical HR Challenges Facing Small and Mid-Sized Businesses

Small and mid-sized businesses are confronting substantial human resources obstacles according to recent research conducted by HR.com's HR Research Institute in partnership with UKG. The study titled "HR Decision-Making in Small to Mid-Sized Businesses" examines the specific difficulties faced by organizations with fewer than 500 employees, revealing that more than half of these companies struggle with critical HR issues including talent retention, maintaining positive company culture, and hiring qualified staff. These challenges become particularly acute in the current competitive business environment where SMBs must compete against larger corporations with significantly greater resources.

The research identifies that 60% of HR professionals in small and mid-sized businesses consider retaining top talent their primary concern, closely followed by creating supportive employee culture at 58% and hiring qualified employees at 56%. Surprisingly, only 35% of SMBs view employee reskilling and upskilling as major concerns despite the increasing emphasis on workforce development in recent years. The study also uncovers notable differences between organizations with more mature HR operations and those with less developed HR functions, with advanced HR practices focusing on manager skills and quality hiring while less mature operations prioritize fundamental compliance issues.

Technology emerges as a crucial factor in addressing HR challenges, with SMBs possessing more sophisticated human capital management practices demonstrating significantly higher levels of HR technology adoption. This correlation suggests that aligning HR technology investments with leadership business objectives can substantially enhance decision-making and organizational performance. Julie Develin, senior partner of HCM advisory at UKG, emphasizes the critical nature of HR technology for smaller businesses, noting that appropriate technology enables HR professionals to think strategically while supporting company growth by improving workflows, eliminating obstacles, and enhancing the overall employee experience.

The complete research report available at https://web.hr.com/9lxj provides practical strategies for small and mid-sized businesses to address their HR challenges, including adopting more strategic HR approaches, investing in effective HR technology, and concentrating on employee development and retention. Debbie McGrath, chief executive officer of HR.com, highlights the transformative potential of strategic HR investments for SMBs, suggesting that intentional strategies in HR processes combined with effective technology implementation can help smaller businesses successfully navigate HR challenges and prosper in increasingly competitive markets. As small and mid-sized businesses continue facing intense competition for talent and resources, these research insights offer a clear pathway for improving HR performance and driving organizational success through focused attention on talent retention, company culture development, and strategic utilization of HR technology.