Insights from a survey of 400 small business owners on HR practices, challenges & opportunities on the road to growth

A Pulse on the State of

HR for Growing Companies

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Small is a big deal

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Finding talent is a top challenge

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Prioritizing what will drive growth

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Culture matters early

Up FrontPrior to COVID-19 Asure conducted a survey of small business owners to understand current HR practices, as well as challenges and opportunities that are top of mind for small business owners competing to grow their business.

Nearly 400 owners in a variety of industries — from food and beverage, accounting firms, daycares, hair salons, consultants, etc. — in 26 states across the nation responded to the survey. More than half of these owners have been operating their small businesses for more than seven years, while others are just a few years in and thinking of better ways to scale to take their business to the next level.

More than half of the respondents said they have 0-5 employees. A lot of the respondents play HR very close to the chest — both because they are doing things themselves, and because they don’t work in closed-door offices but are sharing the day-to-day with their employees.

It is through this lens that we analyzed their answers to questions about how they approach HR, what they find most challenging, and what they prioritize.

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Overall, here’s what we found: Small is a big deal Approximately 40 percent of

respondents said they expect

their revenue to grow in the

next year and another 10 per-

cent said they expect it to grow

significantly.

Prioritizing what will drive growth

Half of the owners and small

business executives we sur-

veyed are managing HR by

themselves and are spending

most of their time on admin-

istrative tasks that could be

simplified, streamlined, and

automated with HR software.

Finding talent is a top challenge

Finding the right people to hire

is a top challenge for busi-

nesses. Those who see their

revenue decreasing in the next

also worry about their hiring

process, and those who see

their revenue increasing next

year worry also worry about re-

cruiting talent away from other

companies.

Culture matters early on

Although most of the small busi-

ness owners surveyed employ

0-5 employees, those who see

revenue growing in the next

year are thinking about things

related to culture, and devel-

oping an employee experience

that attracts and retains talent

from early on.

A Pulse on the State of HR for Growing Companies Survey of 400 Small Business Owners

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SMALL IS A BIG DEAL

Nearly 50 percent said they expect their revenue to increase in the next year and nearly 40 percent of respondents expect their revenue to stay the same this year. We know that this doesn’t mean they are complacent and have chosen to remain stagnant. Sustaining a level of revenue is hard work and involves strict forecasting in order to ensure that none of your revenue drivers are negatively impacted by seasonal trends or market shifts. However, this screams opportunity — opportunity to adopt practices and implement tools that create space for these owners to build in growth goals into the forecast.

Approximately 40 percent of respondents said they expect their revenue to grow in the next year and another 10 percent said they expect it to grow significantly.

How do small business owners feel about revenue growth as they rebound from the COVID-19 crisis?

57% of small business owners felt positive about the overall health of their businesses

SOURCE: THE US CHAMBER OF COMMERCE AND METLIFE

68% of small business decision makers believe their companies’ can recoup COVID-19 related losses

SOURCE: VERIZON SURVEY CONDUCTED IN MAY

IMPROVEMENTS TO COME

Despite business leaders having concerns about cash flow and anticipating the economy will weaken in the near-term, many expect to see improvement in their businesses over the next six months.

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A Pulse on the State of HR for Growing Companies Survey of 400 Small Business Owners

Your hiring process needs attention

More than half of the businesses expecting revenue to decrease next year are also concerned with having a hiring process that is cumbersome and not automated. Could one be driving the other? If finding talent is a problem, it seems that the process involved with hiring the right people to achieve productivity and growth for your business could be a first step toward a solution.

Competition is looming for your talent

On average, approximately 40 percent of the businesses that expect revenue to increase next year are also concerned about competing against other employers that might scoop up the little talent that is available. Here, it seems that owners understand that human capital is a key to business growth, and finding best-fit talent often involves attracting who may already be employed.

- Continued

Are small business owners facing the same hiring challenges during the COVID-19 crisis?

NO. IT'S THE BALANCE

For the past decade, we have witnessed a serious talent shortage. Now, with the current state of the economy amid the COVID-19 pandemic, it’s no surprise unemployment is on the rise. As small and medium-sized businesses emerge from the coronavirus shutdowns, finding enough people to hire will no longer be the challenge. Rather, when it comes to hiring and recruiting, their biggest challenge will be balancing the need to right-size labor costs against the strategic importance of retaining the right people and skill sets to weather the oncoming financial storm. For SMBs in a position to hire or bring valuable employees back that had been furloughed or laid off, here are Five CEO Considerations for Right-Sizing Labor Costs

40% of the businesses

expect revenue to

increase next year

FINDING TALENT IS A TOP CHALLENGE

When it comes to hiring employees, respondents seem to have the time available to look for candidates, but they are challenged with finding skilled, quality talent in their area. Challenges related to hiring were interesting to look at from the lens of what worries owners who expect to grow vs. those who don’t.

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PRIORITIZING WHAT WILL DRIVE GROWTH

Small business owners shared a few of the ways in which they are spending their time and, across the board, we saw that administrative tasks are still taking up most of their day-to-day. We also learned that half of the respondents — with titles that range from owner to other executive titles — are managing HR themselves. This illuminates a big opportunity to remove a perhaps obvious, but critical barrier to growth: Having time to focus on what drives your business. Interestingly, 53 percent of the businesses that said they expect their revenue to decrease in the next year said they have a dedicated HR manager or team.

Where are business owners spending their time?

Across the board, the things small businesses spend the MOST time on turn out to be tasks that could be automated: 30% HR Managment More than 30 percent of respondents spend most of their time managing HR forms (w-2, 1099, W-4, I-9) 30% Record Keeping More than 30 percent said they spend time keeping employee records organized and up to date 40% Employee Time Tracking More than 40 percent of owners spend most of their time tracking employee time and attendance

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A Pulse on the State of HR for Growing Companies Survey of 400 Small Business Owners

In general, businesses are not spending time doing things that relate to formalizing employee processes, and to HR reporting to grow their business. Across the board, the things small business owners are spending the LEAST time include:

1. Documenting the employee- employer relationship 2. Updating your employee handbook 3. HR reporting and analysis to grow your business (productivity, retention, etc.) This spells opportunity for businesses to think about ways to invest in tools and technology that could help turn this reality on its head — where business owners are actually spending the MOST time on the things that are driving the business vs. things that are running the business.

What would business owners spend their time on? In fact, when we asked owners about the things they wish they could spend more time on, they all shared a list of things that have to do with culture and professional development, which are key to retention. This signals that, in general, these businesses have a growth mindset — they know culture is critical for productivity.

1. Employee recognition 2. Improving employee culture 3. Providing professional development, training, coaching for employees

PRIORITIZING WHAT WILL DRIVE GROWTH

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A Pulse on the State of HR for Growing Companies Survey of 400 Small Business Owners

The top 5 things businesses that expect revenue to increase this year would want to spend more time on include: 1. Employee performance reviews 2. Employee recognition 3. Improving employee culture 4. Providing professional development 5. Handling employee issues

The top 5 things businesses that expect revenue to de-crease this year spend most of their time on are all relat-ed to process that could be simplified, streamlined, and improved with automation:

1. Writing and posting job descriptions 2. Managing paperwork involved in hiring and termination 3. Managing HR forms 4. Onboarding and verifying employees 5. Tracking time and attendance

The top 5 things businesses that ex-pect revenue to decrease this year would want to spend more time on include: 1. Employee recognition 2. HR reporting & analysis to grow the business 3. Handling employee issues 4. Writing and posting job descriptions 5. Onboarding/verifying employees

The top 5 things businesses that expect revenue to increase this year spend most of their time on include administrative tasks that could ben-efit from automation, though we do start to see these businesses are thinking about things that help develop employee relationships and build a culture that will drive retention and could increase the kind of produc-tivity that drives growth:

1. Tracking time and attendance 2. Managing HR forms 3. Keeping employees records organized and up to date 4. Handling employee issues 5. Improving employee culture

Breaking it down by growth expectations in the next year:

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A Pulse on the State of HR for Growing Companies Survey of 400 Small Business Owners PRIORITIZING WHAT WILL DRIVE GROWTH

Prioritizing People over Profits: 5 Considerations Before Returning Employees to the Workplace?

Cheryl Trbula, VP of HR at Asure says, “As small businesses get back on track from the COVID-19 disruption, CEOs and leaders must also focus on these five important issues with implications for the health, happiness, and productivity of their workforce:

Number 1 Keep your Virtual Doors Open when Physical Doors Aren’t If your business was able to

continue operations by working

remotely, you’ll need to consider

your path forward in terms of

keeping workers remote or

bringing them back to the office.

Number 2 Be Transparent in Virtual Recruiting, Hiring, & Rehiring

One of your first considerations

will be making sure you have

the right people to restart your

business operations. Will you

need to rehire workers you

laid off, recruit new people,

or bring back furloughed

employees? If you’re rehiring

workers or recalling them from

furlough, you’ll need transparent

communication to help them

understand their terms of

employment, any changes to old

policies after furlough or separation,

and new policies regarding leave

and workplace safety.

Number 3 Make Real Connections through Virtual Onboarding Virtual onboarding will be

another important experience

for employers to create. Getting

this right will help new employees

feel like part of the team quickly,

even if they work predominantly

from home. To develop a remote

onboarding program, you

can create recorded videos,

interactive online sessions, or

conduct one-on-one training

using a web conferencing

platform. Ideally, your program

would be a mix of these. Don’t

forget to include some social

activities like virtual coffee

breaks to help new employees

get to know coworkers and feel

connected.

Number 4 Put Workers First by Implementing Flexible & Supportive Policies when Possible When employees return to the

workplace, keeping them safe

and healthy is your first duty as

an employer. If employees feel

unsafe or scared, they will be

less engaged and productive.

Some employees may care

for elderly parents or have

medically vulnerable family

members. Remain flexible and

accommodative wherever

you can. Let employees know

they can talk to you about their

concerns and communicate

frequently about the steps your

business takes to keep them safe

and healthy. Doing right by your

people today will foster long-

term good will and loyalty.

Number 5 Ensure the Physical Safety of your Workplace

When you call employees

back to the workplace, it’s your

responsibility to create a safe

work environment. Follow current

CDC and OSHA guidelines to

keep your physical workplace

sanitary and safe. Business

owners and HR staff should

communicate with landlords

and other facilities management

personnel to implement better

building ventilation and cleaning

standards. It will be critical

to communicate new safety

measures and provide ongoing

education and reinforcement of

good hygiene to ensure workers

stay safe.

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A Pulse on the State of HR for Growing Companies Survey of 400 Small Business Owners

4 Practical Steps to Build a Small Business Culture

1. Assess what your culture looks like now 2. Reinforce values you want to keep and make appropriate changes to shape the culture you desire 3. Optimize recruiting practices 4. Build programs that reinforce your values Visit here for leadership skills small business owners need to effectively manage mixed remote/onsite teams as they rebound from COVID.

CULTURE MATTERS EARLY

The top 3 trends We asked small businesses about the top trends they think will impact their ability to compete for talent and they all have to do with building cultures that employees will want to join — and perhaps even leave their current employers for: The top three trends indicate that culture matters early on for small businesses, where having 0-5 employees might assume that culture is built in because of the closeness of a team:

1. Competing for talent against big companies 2. Work-Life Balance 3. Perks and amenities at work We know millennials make up 31.5 percent of the world’s population, while Gen Z now comprises 32 percent, according to Bloomberg. For small business owners that want to attract employers away from big companies, and that are focused on trends related to work-life balance and perks… understanding these generations within the workforce is crucial. After all, these are the generations they are building a company culture for. So we asked owners what things they wished to understand about millennials in particular, who will comprise 75 percent of the workforce by 2025: However, additional commentary provided by respondents seems to indicate that employers assume things about the millennials workforce that may not be productive to their hiring strategy for individuals in this generation. What things do you seek to understand about millennials in the workforce? “They fact that they are clueless to real life situations and they have a complete lack of experience in all fields.” “How to keep them focused and off their phones.” “Their sense of entitlement — Expecting to start at the top, demanding special treatment, demanding to be coddled.” “Their work ethic and interest in making money.”

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We’re the best at Human Capital development.

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