Employers have always faced a lot of business challenges. But if it seems like it’s harder to run an organization now than in the past, your perceptions are correct.
Factors that contribute to the complexity employers face:
- Increasing business regulations at all levels of government,
- A patchwork of rules for operating in different states and regions
- New expectations from employees and customers
Here’s an overview of those key issues – compliance, risk mitigation, retention, workplace culture and customer relationships – plus a few tips on how employers can successfully navigate them.
Compliance and risk management
Among the top business challenges for employers are those related to managing compliance and employment risk. The requirements are complex, and there can be strict penalties for failing to comply.
All too often, while employers are focused on growing their businesses, the laws and regulations that apply to their companies get set aside, remaining overlooked until a problem arises.
More people, more rules
Compliance requirements change as a company grows.
For example, once a company hits 50 full-time (or full-time equivalent) employees, it becomes subject to the employer shared responsibility provisions of the Affordable Care Act (ACA).
That adds another layer of information to monitor and actions to take, including tracking hours worked by part-time employees to determine benefits eligibility.
Faced with many layers of rules, employers can get mired down trying to keep track of it all, especially if they don’t have internal or outside HR expertise.
That’s why growth typically means a business will need to scale HR functions internally.
Must-haves for managing risk
Risk mitigation also often gets overlooked while leaders are focused on growing their businesses. Alas, this common oversight can put a company in a vulnerable position, perhaps one that can result in a costly lawsuit or legal fees.
Meanwhile, many employers raise their risk further by not having a company handbook or written best practices and procedures. That can work against the employer when (not if) an employee someday files a grievance or claim.
The basic steps to mitigating employee risk are simple:
- Create an employee handbook. It should include best practices, processes, procedures and company policies.
- Create a system to deliver anti-harassment and anti-discrimination training to all your employees as part of your company’s code of conduct.
Yet, even with a hardworking HR staff member or two, creating a handbook, delivering training and keeping risk-mitigation documents up to date can be challenging, especially as the number of employees grows.
Location-specific regulations
Employment regulations have increased in recent years, and compliance now involves more than federal rules.
Every state has its own employment laws that businesses need to follow. In fact, California has its own separate certifications for HR professionals because of the complexity of operating in the state.
Cities, such as San Francisco and New York, are passing their own regulations with which employers must comply.
Thus, as businesses expand into other cities and states, they often discover they need HR expertise for every region in which they operate — and someone to continuously monitor the existing rules for updates and make process changes accordingly.
Hiring and retention
Employers continuously encounter challenges to finding and keeping talent that’s a good fit for their company culture.
Long gone are the days when someone made a whole career with one employer. In fact, younger employees now tend to join new organizations eager to build skills quickly and then seek out new opportunities.
This creates a problem for employers, because it costs a lot of money and time to find talented people.
To hire and retain the talent you want, your company must build a great employee value proposition. To craft a persuasive one, begin by clearly identifying the things in your business that will encourage top talent to sign on and stay, including:
- Good health benefits
- Competitive compensation
- Competitive leave options, including paid time off (PTO)
- Workplace perks (flexible schedules, free lunches, snacks, etc.)
Once you’ve identified what makes your company a great place to work, write and share your employee value proposition with potential hires by integrating it into job listings and other recruiting materials.
Company culture
The overarching theme of your employee value proposition should be that your company has a good culture. A healthy culture – one that makes talent want to join and stay – takes planning and work.
Organizations that let their culture develop on its own run the risk of losing control of it. Your employees may establish a great culture, or they may not.
The more effective approach is for leadership to manage the culture from the top down. That means clearly, consistently communicating your organization’s mission, vision and values to your people.
This may sound straightforward, but it can be difficult sometimes, especially when:
- You have remote employees
- Your company is rapidly hiring new people
- Your company is going through a merger or acquisition
In these situations, you want all your employees to experience the same culture. To accomplish that, consider:
- How do you communicate your culture to workers in distant locations?
- Are you ensuring that new hires are a good fit for your culture?
- In a merger, how will your mission, vision and values evolve to reflect the two identities of the individual companies?
Navigating these business challenges requires work and a long-term commitment. The effort is worth it, because it creates a culture that keeps employees engaged.
Good engagement leads to good morale, which is a hallmark of a great culture. That can make your people more likely to stay. Yet engagement isn’t the only cultural element that can increase retention.
Sometimes those elements are unique to a specific business. But how do you assess cultural strengths and weaknesses?
A good starting place is to have meaningful conversations with key employees. Many companies do exit interviews but not enough conduct stay interviews. In these discussions, employers sit down with their most engaged employees to find out:
- Why do they stay with the company?
- What is your company doing right from the employee’s perspective?
- Are there gaps you can close to make the employee experience better?
A strong culture helps companies master another important business challenge: customer relationships.
Customer relationships
Customer relationship management has evolved from “the customer is always right” to “the customer is always right and online.”
Any touchpoint can become the subject of a social media post, for better or worse. And customers are more willing than ever to take their business elsewhere after a single negative experience with an organization.
Good customer relationships stem from the company culture, because engaged employees represent the company well. When employees are passionate about their work and feel that it makes a difference, every touchpoint they have with customers reflects the company’s values.
In the long run, a positive, upbeat culture not only makes employees happy but also customers.
And happier customers positively impact the bottom line.
The ultimate business challenge: finding time to handle it all
Compliance, risk mitigation, retention, workplace culture and customer relationships are critical to business success. The complexities and ongoing work involved can pull a leader’s focus away from other business activities.
If you want your business to succeed in the long run, however, ignoring these business challenges is not an option. That’s why many organizations turn to a professional employer organization (PEO) to handle some or all these burdensome tasks.
With professional HR help, organizations can focus on their business goals and handle the many challenges that face today’s employers.
Want to learn more about how PEOs can help businesses? Download our free e-book: HR outsourcing: A step-by-step guide to professional employer organizations (PEOs).