More than half of small and mid-sized businesses (SMBs) are grappling with substantial challenges in hiring, retention, and maintaining a positive company culture, according to a new study conducted by HR.com's HR Research Institute in collaboration with global HR technology company UKG. The study, titled "HR Decision-Making in Small to Mid-Sized Businesses", is now available for download and offers valuable insights into how HR professionals in businesses with fewer than 500 employees manage their strategic processes, HR practices, and responsibilities.
Key concerns identified by HR professionals in the study include retaining top talent (60%), creating a supportive employee culture (58%), and hiring qualified employees (56%). These issues are particularly pressing in the current tight labor market where SMBs face stiff competition from larger companies with greater resources. Interestingly, only 35% of SMBs cited employee reskilling and upskilling as a concern, despite the growing importance of workforce learning and development (L&D) as a strategy for filling open positions and retaining employees.
The study also reveals a correlation between the maturity of HR operations and the prioritization of manager skills and quality hiring. SMBs with more developed HR functions tend to focus on these areas, whereas those with less mature HR operations are more concerned with basic compliance with employment laws. This suggests that as HR functions within SMBs evolve, there may be a greater emphasis on manager training and strategic hiring practices.
Another significant finding is the varying levels of technology adoption among SMBs. Organizations with more advanced human capital management are more likely to use HR technology strategically. Aligning HR tech investments with leadership business goals can enhance efficiency, compliance, and overall decision-making, driving organizational success.
HR professionals and managers from SMBs can further benefit from expert insights by viewing the recorded session “The Art of Finding and Keeping Top Talent: Expert Insights for Lean HR Teams”, featuring Teresa Smith, director of human insights and HCM advocacy at UKG, and Mark Vickers, chief research analyst at HR.com.
Julie Develin, senior partner at UKG, emphasizes the importance of having the right HR technology in place, especially for businesses with leaner teams. “By building on the right foundational areas, HR technology improves workflows, streamlines roadblocks, and enhances the overall employee experience,” she noted.
Debbie McGrath, CEO of HR.com, echoed this sentiment, stating, “Strategic investment in HR technology may be a game-changer for SMBs. By adopting intentional strategies in HR processes and investing in effective tech, SMBs can better navigate their HR challenges and thrive in an increasingly competitive environment.”
