Common challenges

Small Business, Big Issues – The Top 4 HR Concerns for Small Business Owners

August 04, 2016

At last count, over 98% of all registered businesses in Canada were small businesses with less than 100 employees. Small businesses are an essential component of the Canadian economy, and continue to provide employment for millions of Canadians. In fact, Statistics Canada found that from 2002 to 2012, small businesses were responsible for creating nearly 78% of the new private sector jobs in Canada. In light of these statistics, it’s not hard to see why it is in everyone’s best interest to see small businesses succeed in Canada. Unfortunately, according to the same study, more than one in four small and medium sized businesses in Canada don’t stay open past the end of their second year in business. So what can small business owners do in terms of human resource management to increase their chances of success? Read on to find out about small business owners’ top four HR concerns. 

1. Am I legally compliant?

The potentially crippling cost of monetary penalties, compliance orders, legal fees, and other expenses means that maintaining legal compliance with regards to HR can be a make or break issue for many small businesses. This is increasingly becoming a concern as employment standards, health and safety, human rights, and privacy legislation expand in scope. Regardless of the province or territory your business operates out of, legal compliance is a very real and serious concern. You should stay one step ahead of the game by being proactive with learning about new and changing legislation.

2. Am I hiring the right people?

A business of any size can measure its success by its people, and having the right people on board is especially important for small businesses. In the modern job market, both applicants and employers have access to more information than ever before. It takes a skilled recruiter to navigate the large field of available applicants, and hand pick those select few who will add the most value to the company. A big part of successful recruiting is knowing exactly what you need before you start advertising an open position. Having accurate job descriptions is essential.

3. How do I encourage good performance and discourage bad behaviour?

In a small business, one underperformer can have a significant detrimental effect on the business. Having a solid performance management system in place is an excellent first step in ensuring you encourage top performers and set targets for underperformers. The features of a good performance management system include clearly defining each employee’s role and their expected contributions to the company’s objectives, and establishing specific, measurable, attainable, relevant, and timely (SMART) goals that are regularly communicated to the employee.

4. How do I let employees go?

It is inevitable for every business owner that they will have to let an employee go at some point. Termination of employment can be a difficult and highly emotional experience that may become derailed if it is poorly planned or executed. Therefore, it is best to follow some basic common sense guidelines when terminating employees. First, know what the employee is entitled to under the law and never try to cut corners or save costs by giving them less than they are owed. Second, plan the termination process ahead of time and know exactly how things will proceed. Third, try to limit the outpouring of emotions that may occur. The termination meeting likely won’t be a pleasurable affair; however, there are steps you can take to reduce the discomfort for both you and the employee being terminated.

Source: Innovation, Science and Economic Development Canada, “Key Small Business Statistics - August 2013,”

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