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The Top 4 Hiring Challenges Small Businesses are Facing

Updated: Jul 11, 2018

May 2018

This article originally appeared on Inc

Small businesses face a number of challenges related to inexperience, size, and lack of resources. However, few responsibilities stretch these businesses as thin as hiring. While it may seem simple on the surface, hiring the right employees can be overwhelming and taxing on many different levels. Understanding what these challenges are can help business owners and entrepreneurs, like yourself, get a better grip on how to proceed with minimal interference.


According to Wasp Barcode’s annual State of Small Business Report, 50 percent of small businesses say hiring new employees is the top challenge they face. That makes it the number one challenge businesses with less than 499 employees encounter – coming in just above increasing profits, employee healthcare, growing revenue, and cash flow. When you consider that 52 percent of small businesses plan to hire at least one new employee this calendar year, it’s clear that something needs to be done sooner rather than later. Let’s check out some of the biggest hiring challenges impacting small businesses and how they can be alleviated and/or overcome.

1. Competing With Bigger Companies

By far, one of the biggest hiring challenges small businesses face is competing with large organizations for top talent. Big name brands typically offer better benefits packages, higher salaries, and other advantages. But, small businesses have advantages, too. The sooner you recognize what these are, the better you’ll be able to confront this challenge.

The first benefit to understand is that your company is much less bureaucratic than those large organizations with thousands of employees. This allows you to work quicker and more efficiently. It’s also likely that you offer more growth potential, which is exactly what many candidates desire.

2. Finding Qualified Applicants

There’s nothing more frustrating than publicizing a job opening and getting dozens of unqualified applicants who waste your time. If you don’t have the financial means to hire a recruiter, this presents a very real challenge. The best solution is to work within your network when hiring. “Networking can solve a lot of your recruiting problems. If one of your contacts refers a candidate to you, chances are good that they’ve done some of the selling work already,” The Wall Street Journal explains.

“For the same reason, offer rewards for employee referrals. Candidates who come in through these referrals usually have a more accurate picture of the company than those who come in through ads, and in most cases employees recommend only people they think will be a good match.”

3. The Warm Body Syndrome

Many small businesses – startups in particular – deal with “the warm body syndrome.” Instead of hiring people who are fit and qualified for certain positions, people are brought in simply because they’re convenient and cost-effective. At first, this may not seem like a problem. But, down the road, most of these warm bodies end up dragging down your business more than providing a return.

“Like any bad habit, the warm body syndrome is hard to break,” entrepreneur Danielle Gal explains. “The key is creating a new pattern for hiring that is focused on value rather than time constraints. Creating a detailed job description through a job analysis is crucial.”  It’s also smart to hire people with experience handling responsibilities and tasks that you’ll be assigning them. As Gal says, “The position should not be molded to fit the candidate’s competencies.”

4. No Experience With Talent Management

While not exclusively a hiring problem, many small businesses suffer from inexperience related to talent management. As a result, they end up squandering good hires and making bad hires seem worse. The key is to recognize when business leaders have little expertise in talent management. Hiring based on a gut feeling or out of necessity is never a good idea. While you should ultimately bring someone on board who has experience in talent management, you can overcome some of your deficiencies by hiring the right people.

Your staff should have a mix of levels of experience. With your more experienced employees, you’ll discover people who don’t need to be micro-managed in order to be successful. This benefits everyone and allows the company to maximize its resources.

Smarter Hiring Means Better Business

It’s easy for small business owners to get so caught up in running the daily business operations and closing sales that they forget about the significance of implementing smart hiring practices. If you want to build a successful business that thrives on the backs of talented and disciplined people, then you better evaluate where things currently stand and how you can make deficiencies into strengths.



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