Full-Service HR

5 Common HR Concerns (and Solutions) for SMBs

Ella Baker
5 Common HR Concerns (and Solutions) for SMBs
Reading time 8 Mins
Published on Aug 26

For many small and medium-sized business (SMB) owners, the dream of being an entrepreneur quickly gets overshadowed by the daily struggles of running and growing a small business – and managing all of the human resources concerns of that business. As an SMB owner, you have many responsibilities and people counting on you to get this aspect of your job done right. When you wear so many hats and have so many worries about your business, it can be easy to become overwhelmed by all of those HR concerns. You don’t have to do it alone. Here are five of the most common HR concerns for SMBs and how a PEO partner can provide the solutions you’ve been looking for.

Not sending clear signals about positions

Unfortunately, many problems in the workplace begin as a result of inadequate screening and hiring processes. The hiring process involves far more than posting a job, waiting for candidates to apply, and selecting someone to fill the role. When looking to fill a new or vacant position, many employers and HR managers fail to do something critical – craft an exact and well-written job description.

Your job descriptions should be written in such a way that the applicant will have very few questions about the nature of the position and the duties required. At a minimum, a quality job description should include:

  • Position title
  • Supervisor or manager title
  • A complete list of responsibilities and tasks required for the position
  • Required education and/or experience
  • Required skills
  • Description of the job conditions (office, manufacturing, field, etc.)

Since many SMB HR departments are staffed with one or just a few people who wear many hats, taking the time to write or edit high-quality job descriptions may seem like a luxury. By working with a PEO and Human Resources Outsourcing partner like Sheakley, who you can trust to deal with many of your most time-consuming day-to-day HR functions, your HR manager will have more free time to help you develop job postings and descriptions that attract the attention of top-tier applicants.

Well-written job descriptions not only help you attract and identify the right candidates for the position, but they can also be an important tool in performance evaluations. To avoid many common problems associated with the hiring process, ensure that your job descriptions are detailed and concise. Check out Impact of Poorly Written Job Descriptions to learn more about how job descriptions can affect your company during the hiring process and beyond.

Misclassified workers

The IRS has strict rules that govern how businesses must classify their workers. While it may be tempting to classify workers as 1099s to avoid payroll taxes and other expenses associated with employment, most workers actually qualify as employees under the regulations set forth by the IRS. In fact, of the 10.3 million independent contractors working with companies across the US, the DOL estimates that up to 30% of them are actually misclassified. What may seem like a short-term solution to help your company save money could end up leading to thousands of dollars in penalties down the road if the IRS finds that you’ve misclassified an employee.

Independent contractors are a popular choice for SMB’s who need additional short-term help to complete a project or ongoing expertise outside the company’s normal scope, but ensuring that they are properly classified is critical. A business’s responsibilities toward its independent contractors vary greatly from those of their employees, so proper classification goes beyond just thinking about the financial impact of the classification. In Ohio, many agencies are responsible for the various aspects of employment law and those agencies use different tests to determine a worker’s classification – and each agency can levy its own penalties for misclassification. This, combined with potential penalties from the IRS, make proper classification essential.

Determining the status of your workers can be a confusing and difficult task that can be costly if errors occur. Don’t put your company’s financial future at stake by leaving employee designation in the hands of unqualified individuals making inaccurate assumptions. Sheakley’s HR and PEO professionals can provide you with the assistance you need to ensure that your workers are properly classified and that you remain compliant with federal and state employment laws. To learn more read Independent Contractors: Correctly Classifying 1099s.

Payroll mistakes

With employers spending an average of six to ten hours per week on payroll processing, the task is one of the single greatest drains on time for business owners. In fact, according to PricewaterhouseCoopers, the average SMB spends an average of $2,000 per employee each year in payroll administration fees. Payroll processing and payroll tax can also prove costly to businesses in other ways. Frequent changes in the tax code can result in stiff penalties and fines as the result of incorrect reporting or withholding.

When you work with a PEO, you enter into a co-employment relationship in which the PEO becomes the employee of record for your employees. You remain in control of your team, while sharing employment related costs and obligations with the PEO, shielding your business from potential liabilities.

Sheakley’s Human Capital Management application comes complete with Payroll Processing Services, Time and Labor Management, Employee Onboarding tools, ACA Management and online Benefits Enrollment. This complete administration solution offers everything from basic payroll processing to electronic tax filing, while helping you manage costs and stay compliant. The Human Capital Management system allows employers and employees to access and update employee information anytime, anywhere. W-2s are automatically available to employees at the end of the year and they can access up-to-date PTO accruals at any time. Read Simplify Year End Payroll and W-2 Processing to learn more about our unique payroll solutions.

Not recognizing you need backup in HR

For many SMB’s, the HR department is small and busy juggling the many needs and priorities of employees and management, while trying to meet deadlines and fulfill reporting requirements. At some companies, the owner and the HR person may even be one and the same – taking valuable time and attention away from the day-to-day running and growing of the business. While going it alone or using an HR generalist may seem like a good idea at first, keeping up with all of the responsibilities of compensation, benefits, management, labor relations, legal issues, staffing, training, and more can quickly become overwhelming.

Knowing when to ask for help is critical to keeping your HR functions running smoothly. As your company continues to grow, a larger staff means greater HR responsibilities and tasks. If you are on the cusp of or have recently undergone an expansion, it may be time to start thinking about how you are going to manage all those new employees.

The HR support of a PEO can help you manage your growing staff and quickly scale your HR functions for rapid growth in the future. They can help you save a lot of time and reduce your growing pains, helping you reach your expansion goals more quickly. Check out Is It Time to Outsource Your HR for more on the benefits of seeking outside assistance for your human resources functions.

Compliance issues

Does your company operate without a dedicated HR manager or is your HR manager more of an HR generalist? Your frontline HR staff may be able to handle some of your basic daily HR tasks, but without strong leadership these same individuals could be leaving your business open to liabilities. Understanding hiring regulations, EEOC requirements, collective bargaining agreements, recruiting, training, payroll processing, and benefits administration can be overwhelming – and those are just some of the areas where an HR professional helps to limit your liability.

With all the new and updated HR-related legislation that has come out in the last few years – at the local, state and federal levels – SMBs without adequately trained, dedicated HR staff may find that keeping up with compliance regulations is only going to get more difficult.

Failing to remain compliant with employment-related regulations at every level can lead to serious and compounding fines and penalties for employers. Shifting some of your human resource functions to a PEO or HR Outsourcing partner like Sheakley allows your managers and in-house HR staff to focus on leading their teams and growing your business, while simultaneously keeping you compliant. For a glimpse at some of what it takes to get and stay HR compliant, check out our Human Resources Compliance Checklist.

HR assistance you can rely on

Accredited by Employer Services Assurance Corporation (ESAC), Certification Institute, and backed by a $3 million Employment Practices Liability Insurance policy, Sheakley’s 120 years of combined PEO experience and expertise are unrivaled in the industry. As your company continues to grow and become subject to more stringent labor laws, Sheakley’s PEO services allow you to remain compliant and focused on the daily demands of your business.

Schedule your free consultation with a Sheakley PEO professional today. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.

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