Why Employee Management for Small Businesses Can Be Surprisingly Challenging

Why Employee Management for Small Businesses Can Be Surprisingly Challenging

Small businesses are a gift to society. Depending on the field, they often provide opportunities for younger people and those with limited experience to earn a living. They help stimulate the local economy and are relatively resilient during economic crises. That said, running a small business isn’t as straightforward as it may seem. Employee management, in particular, can be a major source of stress. Hiring, retaining, and ensuring productivity can be difficult tasks for business owners.

Minor setbacks for bigger businesses can be devastating for smaller companies.  According to the Work Institute, 38% of employees leave within the first year of their employment. While that may not be as much of an issue for large companies, it can seriously impact a small one.

Thus, understanding the challenges is key to adapting and improving. In this article, we will look at three challenges that business owners are often not prepared for.

1. Limited HR Infrastructure

Small businesses may not feel the need for dedicated HR departments for employee management during the early stages of their operations. Owners may not see the point in paying more salaries than they need to. They might even believe that HR is only a requirement for larger operations.

On the contrary, HR departments can be beneficial to any company. In fact, small businesses have a number of areas where HR personnel can be critical. Their typical expertise in onboarding, performance management, and conflict resolution is incredibly helpful, even in small companies. However, business owners will need to evaluate the resources they can offer their HR departments. If there isn’t any budget for it, key benefits like employee training programs through HR become difficult.

That said, there is one major advantage HR can provide small businesses regardless of resources- an organizational structure.

This will require experienced personnel though. In this context, outsourcing your HR needs can be a sensible option. Hiring HR for small businesses from TriNet is a common route that many growing companies go.

Outsourcing your HR needs will provide you with access to far more experienced HR personnel. Moreover, TriNet states that it can help you focus on your main goal of business growth.

2. A Lack of Career Growth Opportunities and Poor Succession Planning

Career advancement is a big priority for a lot of employees. No one wants to spend years working at a place to remain stagnant. It isn’t good for one’s career, and such companies have a high turnover rate.

Even if an employee doesn’t mind a lack of career advancement, it can be demoralizing to see no succession plan in place. High-level positions can sometimes be locked down by a few executives for long periods with no clear succession plan.

As a result, senior employees don’t see a point anymore in mentoring their junior colleagues. What’s the use if everyone is just going to stagnate anyway, right?

Small businesses can run into serious issues with retaining talent if they don’t give enough thought to growth opportunities. If the situation isn’t addressed, employees are likely to lose morale and experience lower levels of job satisfaction. Small businesses really can’t afford to chew through good talent, so taking preventive measures is a must.

3. High Expectations Without Fair Compensation

Employee burnout is a very real threat that companies face. Small businesses often delegate too many responsibilities among their few employees.

When small businesses start to make a profit, they rarely use said profits to hire more workers or provide raises. Instead, it usually gets reinvested for the growth of the company. This can make for a toxic work environment where people don’t feel appreciated and valued for their hard work.

Can anyone blame the employee? They go out of their way to put in the hard work, committing long hours, only for their efforts to go unrecognized. This has led many employees in small businesses to reevaluate how much effort they put in.

Quiet-quitting and passive work are two consequences that result from high expectations without adequate compensation.


Employee management is something that even big companies struggle with. Small businesses have a number of unique challenges to face. What’s more, they have to deal with them while lacking in financial resources. This can be a tough time for employers who are likely as stressed out as their employees.

On another note, most owners hope to expand their businesses and grow. However, some prefer to keep things simple and easy to manage. If you choose the latter, you will want to particularly focus on the biggest challenges that make small business management tough.

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