HR Challenges for Small Businesses in 2023

working SMB employees
Joanie Turmel
February 23 2022

It goes without saying that in 2022, companies had to be resilient and creative. In an unstable health and economic context, small business owners have had to roll up their sleeves and be particularly resourceful to face the numerous HR challenges they encountered.

Will the new year be filled with a similar raft of challenges? What are the main human resources challenges that small businesses will face in 2023?

HR Challenge #1: Mental Health Awareness

The first challenge you will have to overcome will certainly be mental health prevention within your organization. While the past two years of the pandemic have raised awareness of the importance of mental health in the workplace, there is still so much to do in this department.

Like Tracey Beveridge, Head of HR at Personnel Checks, mentions: “Companies should be holding an improved focus on mental health and promoting physical activity to encourage happier staff – the end result not only fulfilling their responsibility as an employer, driving employee productivity, increasing staff retention and becoming more appealing for prospective applicants.”

Therefore, in 2022, the implementation of a mental health prevention strategy will indubitably be at the forefront.

An essential part of these programs involves surveys. By surveying your workforce regularly, you ensure that you are on the lookout for potential changes in work dynamics to identify signs of burnout and/or psychological distress among your employees.

In this regard, many resources are offered to allow you and your HR managers to be adequately qualified to deal with this ongoing issue.

If an occupational employee health and safety program is now an industry standard, so should mental health prevention programs!

HR Challenge #2: The Talent War

The labour shortage will continue to intensify throughout Canada, much to the dismay of all employers. According to the Conjoncture 2022, it will remain the primary concern of business owners for the coming year.

Besides attracting talented employees, it will also be essential to focus on employee retention in your company.

According to Team Building’s CEO, Michael Alexis:

“One of the leading challenges [in staff retention] for SMBs in 2022 is going to be staying competitive with payroll. US inflation was 7% in 2021, the highest it has been in 40 years. The data and reality are clear — life is getting more expensive, quickly. Your employees are going to be seeking pay increases to help cover those costs. Large enterprise organizations may have the margins to cover these increases, but they can be more challenging for SMBs.”

Therefore, to successfully tackle the costly and time-consuming challenge of employee turnover, you will need to get creative with employee benefits packages and amenities.

Focus on what sets you apart from larger companies and improve your employer brand. Assets such as increased flexibility in work-life balance will make job opportunities within your organization even more appealing.

HR Challenge #3: The Era of Continuous Employee Training

Another challenge that will most likely consume your HR department this year is ongoing staff training.

The rise of remote working and the shift towards digital is encouraging SMBs to create, implement and develop a culture of continuous learning.

Providing incentives such as training, development, and advancement opportunities has become mandatory to retain key talent.

Upgrading skills is not only a workplace wellness factor for many millennials; it also allows you to match the expertise of your troops to your current and upcoming business goals.

As for training methods, there are numerous. Online training platforms (often called Learning Management Systems or LMS) that manage skills development have gained popularity over the last few years.

HR Challenge #4: Hybrid Work Environment

The last few months have put many small and medium-sized enterprises in a bind by forcing them to rethink their entire work model. While the pandemic has everyone all fired up on a hybrid work environment, it can, however, be quite costly for smaller businesses.

In light of the above, the Empact Partners HR team adds: “small businesses face enough challenges as is, and with the possibility of only half the staff or less being present in the office space, the question will still be: Is it worth keeping a physical workspace? Can we afford it?

In the short term, a hybrid work environment can work well, but it will be crucial to decide on the direction your company wants to take in the long run. The challenge will be to find common ground that suits all parties. Successful hybrid work environments are possible when using HR software adapted to the reality of small and medium-sized businesses.

To take the pulse of your team regarding these upcoming business HR challenges, employee engagement surveys remain your best allies.

The watchword for the coming year will be to consult your workforce! Your employees are, and always will be, the right people to help you face the HR challenges that await you in 2022.

Overcome your HR challenges by involving your employees:

Try out Folks’ confidential and customized surveys!


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