The Flip Side of Human Resource Management: 5 Problems Business Owners & CEOs Face When Handling Their Talent

From mistaking culture as family to the classic oversight of leaving leadership to chance, this article explores 5 rather unexpected problems facing CEOs and business owners who manage their own workforce

Running a company is a daunting prospect.

There are so many organizational and logistical concerns to handle that CEOs of small ventures and hands-on business owners always have their plates full.

Under such circumstances, employees are heaven-sent.

The person at the helm can delegate tasks, stay accountable to projects, benefit from varied perspectives and opinions and in general get more done thanks to the teams recruited and nurtured.

But what about the “hidden” stressors and problems that stem from handling human talent?

Most small to medium businesses generally rely either on the owner or the CEO to shoulder the bulk of “people interactions” and the attendant tasks of ensuring timely salary disbursals, mitigation of conflict and strategic contribution recognition that come with the domain.

People are creative, loyal and efficient. Yet they can also be unpredictable, whimsical and stubborn, resulting in a lot of chaos.

If an organization doesn’t have the budget or the bandwidth for a dedicated HR department, miscommunication, shattered expectations and lack of transparency are just some of the consequences of not meeting employee needs or anticipating trouble before it hits.

The Oblivious CEO

This incident is a hilarious take on what can go wrong when already overburdened CEOs and owners do not have systems in place to gauge the sentiments of the workforce and end up making way too many assumptions.

My friend is associated with a gold standard productivity brand that interviews both the C suite and the company talent in an attempt to find bottlenecks that may prevent tasks from getting completed.

Generally there is always some discrepancy between what CEOs believe is the state of worker engagement and how employees actually feel about their career and their potential of growth within the organization.

But for this small venture, the gap was an almost irreconcilable chasm.

The CEO was confident that he came through as the “problem solver” for the workers.

He termed the company culture as “inclusive and almost like a family” because his employees were emotionally invested in the business and that was a better motivator than perks or bonuses.

When the employee interviews – obviously anonymous – rolled in, the results were shocking.

67% of talent was actively looking for a better position – even if it was with a competitor.

A vast majority felt that their ideas weren’t appreciated or incorporated. The CEO always overrode any suggestions with his own. In fact, why did he bother asking in the first place?

And most importantly, the workers put in overtime, weren’t properly compensated for the extra effort and some were even contemplating a lawsuit – if they could just get a new job offer to insure their income.

I do laugh every time I am reminded of this example. But the CEO must have had to scrape all existing practices and start from scratch to keep the company afloat.

Not a pleasant proposition.

Disaster however can be averted if executives and business owners know what can go wrong when they have no choice but to juggle the management of the company’s human resource pool.

There are tools and policies that put the lion’s share of the administrative work and monitoring of performance and compliance issues on auto-pilot, ensuring detection of risks from the 50,000 foot view even if the captain of the ship isn’t involved with the mundane details.

 

5 (Rather) Unexpected Problems CEOs Face When Handling Talent & How to Solve Them

1. Relying on Grapevine for Recruitment

When new positions need to be filled, small businesses tend to look no further than their acquaintances and their workers in a bid to expedite the tedious process of searching for suitable talent.

The result? 47% of them can’t find qualified individuals to strengthen their resource pool and positively impact profit numbers.

 

The market right now is candidate driven.

Those with acumen, experience and skills can take their pick of high paying jobs with larger, more influential brands.

But this doesn’t mean SMBs are destined to struggle with incompetent employees.

They just have to grow out of the mind-set that properly orchestrated recruitment efforts are not worth the pay-off.

Because they most definitely are!

Implementing workplace policies that benefit workers and help boost employee retention is not simply a “nice” thing

A big driver of employee churn is onboarding an individual who is a poor fit in the first place.

A prospect recommended by an existing star worker isn’t necessarily equipped to do justice to the duties he is being considered for.

He may not be capable of functioning within the unique company culture either.

The time CEOs save by leveraging employee connections or a very limited number of network contacts costs them up to 213% of the hastily recruited talents’ annual salary when they churn.

Ouch!

It is true that most agencies charge top dollars to connect enterprises with candidates and this route might not be financially feasible for a team that is operating on a limited budget.

But a smart mix of tech and brand building can get around the seeming obstacle.

Solution:

Recruitment suites are a must have for the tech stack of any SMB. They allow business owners and executives to spread their missive of employment far and wide.

Since most of these tools come with functionalities like auto-posting on job boards, continuous monitoring of replies, social interactions, collaborations with prospects through reply templates, background checks and self-service pre-employment testing, recruitment software solutions take the candidate requirement from the microcosm of known channels to the macrocosm of unlimited opportunities where even those who have never heard of the brand can register its invitation on their radar.

All this without pushing the C suite to spread itself thin working on forms and conducting several rounds of interviews!

A weak employer brand can cost you job applicants

Wait a minute now…should employees be kept out of the effort to find the next company luminary?

Not at all.

Workers should be encouraged to chip in with prospect recommendations.

But these individuals must go through the rigors of the recruitment suite and shouldn’t be the only choice in any case.

Employees can also share stories of what it is like to work with the brand and segue into the application request to build credibility.

52% of content published by employees is trusted by job seekers and not utilizing this power is definitely a wasted opportunity.

2. Mistaking Culture for Family

Culture does eat strategy for breakfast.

And all business owners and CEOs – irrespective of the size of the organization – should strive to embed a sense of the values of the brand and a respect of the unique rhythm of the enterprise into the behavior and mind-set employees.

 But culture is NOT an excuse to throw compliance out the window.

Culture acts as the glue, bringing people from various backgrounds and ethnicities together within a framework so that the individuals have common ground to connect.

It doesn’t recommend eschewing professional boundaries.

However when a team is small, culture can lull the executives and owners into thinking of the workforce as an extension of the family.

It sounds great on paper, but in real life families are expected to put the benefit of the collective over individual benefit.

The U.S. has the world’s most costly legal system as a share of its economy

Business owners and CEOs who get a direct share of the profits are ready to make many sacrifices in a bid to take the company forward.

And if they mistake culture for family, they might end up neglecting some of the federal and state mandated rights of employees – like strict overtime monitoring, paid leaves and benefits.

This is not vindictive in any way.

It is merely an assumption that workers are more than happy to overlook inconveniences and just roll with the punches.

But is it pardonable?

A small business earning a million dollars pays up to $20,000 in lawsuits every year.

52% of all civil lawsuits target small enterprises. The price is too steep to write off.

Solution:

Compliance modules are amazingly effective in this regard.

CEOs and business owners gather and input all documentation around policies and mandates that apply to their company and put an intern or an employee in charge of monitoring the risks.

This software suit simplifies the complications around following the law and raises a flag whenever there is a violation.

Timely intervention and resolution allow businesses to work on the facet of nurturing employee bonds without having to worry about toeing the fine line between culture and family.

3. Assuming Self-Motivation = Employee Motivation

This is a branch off of the previous issue where culture building may be mistaken for the all forgiving largesse of families.

CEOs who are in charge of team development and are hard pressed for the time to dig deeper into what makes workers tick jump to one of these conclusions:

  • What motivates them also motivates the employees – this might be a sense of gratification from seeing the company make its mark on the global map or an appreciation of the business assets.
  • Money motivates employees. The customary bonus or company performance perk is enough to keep workers beaming.

While it may apply to some of the talent, most individuals – especially conscious Millennials – rate personal work satisfaction higher than money or the prestige of the entity they are working for.

Global engagement is at an all-time low of 13%!

SMBs just can’t afford to lumber on with workers who might rather be somewhere else and employees who are constantly looking for a better job offer.

Solution:

Since a sense of growth, personal development and achievement recognition are frequently cited as factors that impact motivation and engagement, CEOs and business owners need to iron out kinks from the processes that determine compensation slabs and their system of reinforcing the value of the rewards conferred.

American workers aren’t particularly engaged at work as a whole. And Millennials lead the pack: 71%

Performance Management solutions with Recognition suites are the perfect way of circumventing roadblocks in this regard.

Used in tandem, they can:

  • Accurately and independently identify star performers based on actual contributions to the company goal and progress made on assigned objectives. The shadow of favoritism is completely vanquished.
  • Give employees the freedom to update the status of their projects without involving CEOs and business owners whose time is better invested elsewhere.
  • Offer employees incentives like gift cards and social media mentions when they hit a particular number of points in the system based on their progress reports and the anonymous feedback of peers – collected on auto-pilot.
  • Enable workers to view their perks through a self-service system and be frequently reminded of the monetary value of intangible benefits – like daycare or even vacation time.

4. Letting Protocol, Oversight & Errors Derail Productivity

The US Bureau of Labor Statistics has pronounced that employees today are less productive than what they were a decade ago.

Given the proliferation of technology, which is supposed to improve the output of workers, this is a disturbing development.

 

Employees today are less productive than what they were a decade ago

For small enterprises often the single minded focus on strictly financial objectives can lead to protocol and human error derailing the train of productivity.

When there is no dedicated Human Resource department to oversee soft concerns like time tracking, leave requests and salary disbursal, the CEO or the business owner creates his own often unreliable processes to tackle them.

Secretaries frantically searching through spreadsheets to find the number of leaves taken by an employee or keying in the wrong base salary information causes a furor in the organization and costs endless man-hours to troubleshoot a snafu that could have been avoided.

On the other hand employees are also scattering their focus dealing with outdated time cards and jumping several administrative hoops – just to take a leave.

Moreover when there is no formal record of the time to output ration, CEOs and business owners often go by the hours worked and end up with a false and inflated sense of productivity.

The idyllic notion comes crashing down when deadlines are defaulted and the real scenario is exposed.

Solution:

A robust and comprehensive Payroll software and Time and Leave Tracking module are absolutely essential in this regard.

Here’s why:

  • The Time Tracking feature correlates input (effort) with output (tasks completed). The workers who take too long to tick off to-dos thereby qualifying for overtime can be spotted and coached to improve their productivity.
  • Leave and Absence modules allow employees to request time-off in a way that needs a one-click approval from the person in charge. Not only does this eliminate the tedium of endless email chains where the possibility of miscommunication is high, it also maintains a document of vacation time, sick leave and casual leaves for easy import into the payroll software and labor allotment based on talent availability.
  • An automated Payroll system is the panacea for all salary related and by default many productivity issues. It cuts down the paperwork, automates the calculation of compensation based on pre-defined salary slabs, pulls data from both the Time Tracking & Leave Management platform to ensure the correct pay check and most importantly always respects Pay Day by having everything ready beforehand!

5. Leaving Leadership to Chance

Deloitte University has found that “Leadership” is the second most dominant area of concern for HR professionals.

Without proper succession planning, the wins a company secures in the present can’t be capitalized on in the future.

However for most CEOs and business owners helming SMBs, leadership is legitimately the very last thing on their minds.

89% of American employees would consider a lateral career move with no financial incentive

Keeping track of market trends, taking pre-emptive risk mitigation measures and ensuring the engagement and productivity of employees don’t give them with a whole lot of room or scope to identify and nurture future leaders.

They by and large leave leadership to chance.

Not a wise move because 60% of companies ultimately face leadership shortages impeding performance, progress and stability.

Solution:

The revolutionary concept of Holacracy with a Succession Planning HR management software suit is the way to go for small to medium businesses.

Holacracy encourages the person in charge of a role to take independent decisions while moving towards the achievement of the overall purpose of the company.

It gives employees a taste of “leadership” yet reins them in with much needed guidance and protocol.

Applying the features of succession planning like career development management, charting worker response in “What If” scenarios and competency scale assessments to the foundation of Holacracy gives CEOs and business owners front row seats to the birth of company leaders.

The answer to labor hassles and misinterpreted employee management issues isn’t always throwing more “people” – aka a dedicated HR department – into the mix.

Sometimes the use of streamlined software solutions that can be adopted by the C suite with gusto leads to the automation of repetitive tasks and the elimination of redundant to-dos, allowing more freedom to the executives and creating a better workplace for employees.

Small businesses should consider investing in a people management software solution if they do not wish to purchase and install separate components of the tech HR stack.

This approach most definitely anticipates and eliminates the five unexpected problems faced by CEOs and business owners responsible for their labor:

  • Relying on grapevine for recruitment
  • Mistaking culture for family
  • Assuming Self – Motivation = Employee Motivation
  • Letting protocol, oversight & errors derail productivity
  • Leaving leadership to chance

Trina.

Written By

Trina Moitra

Trina M is a part of the CakeHR content team. She is a marketing funnel creator who has worked with 5 reputed HR SaaS startups and established ventures over the past several years. She has experience understanding how HR software should be sold and uses persuasion based strategies to generate results.