[South Africa] 3 common HR challenges facing small businesses

Human capital is the most valuable asset to a small business, particularly during early years when the efforts of every employee directly contribute to the sustainability and financial viability of the small and medium enterprise (SME). IOL considers the most significant challenges that small businesses face.

There are, unfortunately, no shortcuts when it comes to managing people in a small business environment. Doing it right begins with having a people-centric mindset and valuing the people who share your vision as an entrepreneur.

With regard to human resources management, these are the three major challenges that SMEs face:

Understanding South African Labour Law and how it relates to SME employees

The legal framework that regulates employment in South Africa is extensive. One of the first tasks that will land in the lap of any SME owner is coming to an understanding of how South Africa’s labour laws apply in the context of a small business.

For example, it is not unusual for small businesses to mitigate risk by employing independent contractors or freelancers, and this has legal implications.

According to legal and regulatory firm LexisNexis, a large number of freelancers who work for SMEs do not know that they are not considered employees, as defined in South African labour legislation. For this reason, making the distinction between an employee and an independent contractor from the outset is vital.

As independent contractors, they will be liable to pay 25 percent tax on all their earnings, which can be administered by the SME owner or by the freelancer themselves.

Nuances such as these will affect the clauses in their contracts and the terms of service. Whether one is hiring employees on a full-time basis or as freelancers, it is essential to be familiar with these two important labour law instruments: The Basic Conditions of Employment Act 75 of 1997 and The Employment Equity Act 55 of 1998.

Staff retention

A report produced by students from the Cape Peninsula University of Technology reportedly identified staff turnover as one of the biggest challenges SMEs in the micro-retail and tourism industries face.

Some of the internal factors behind high staff turnover in these small businesses include poor training, poor working conditions, inefficient management practices, low remuneration and the lack of formal recruitment and selection processes. There are some great lessons for SMEs in the report. A lot of focus can be placed on acquiring the first few employees in an SME, while little is done to keep those employees stimulated and happy in their roles.

Implementing a staff retention policy doesn’t necessarily mean spending thousands on company perks and entertainment. An SME owner could start by developing smaller incentive programmes, providing opportunities for growth and offering a healthy and stable work environment or remote working policy.

Preventing burnout

The majority of small businesses are run by individuals and small teams that are sometimes required to double-up on their roles to stay ahead and ensure that the business operations run smoothly. When processes are not implemented correctly and the culture in a small business is unhealthy, burnout can be inevitable.

The World Health Organization defines burnout as “a syndrome conceptualised as resulting from chronic workplace stress that has not been successfully managed. Symptoms may include lethargy, mental aloofness, pessimistic and cynical feelings related to work, and reduced professional capability.”

The pandemic and its effects on the mental health of employees highlighted to business owners that employee wellbeing is inextricably linked with productivity and profitability.

SME owners must realise that there is a strong case to be made for investing in ways to nurture employee wellness. This could include having a staff counsellor on call, having regular check-ins with staff members, providing a generous leave policy and recognising and rewarding people for their contributions or milestones reached.

Source: IOL

(Quote via original reporting)

Human capital is the most valuable asset to a small business, particularly during early years when the efforts of every employee directly contribute to the sustainability and financial viability of the small and medium enterprise (SME). IOL considers the most significant challenges that small businesses face.

There are, unfortunately, no shortcuts when it comes to managing people in a small business environment. Doing it right begins with having a people-centric mindset and valuing the people who share your vision as an entrepreneur.

With regard to human resources management, these are the three major challenges that SMEs face:

Understanding South African Labour Law and how it relates to SME employees

The legal framework that regulates employment in South Africa is extensive. One of the first tasks that will land in the lap of any SME owner is coming to an understanding of how South Africa’s labour laws apply in the context of a small business.

For example, it is not unusual for small businesses to mitigate risk by employing independent contractors or freelancers, and this has legal implications.

According to legal and regulatory firm LexisNexis, a large number of freelancers who work for SMEs do not know that they are not considered employees, as defined in South African labour legislation. For this reason, making the distinction between an employee and an independent contractor from the outset is vital.

As independent contractors, they will be liable to pay 25 percent tax on all their earnings, which can be administered by the SME owner or by the freelancer themselves.

Nuances such as these will affect the clauses in their contracts and the terms of service. Whether one is hiring employees on a full-time basis or as freelancers, it is essential to be familiar with these two important labour law instruments: The Basic Conditions of Employment Act 75 of 1997 and The Employment Equity Act 55 of 1998.

Staff retention

A report produced by students from the Cape Peninsula University of Technology reportedly identified staff turnover as one of the biggest challenges SMEs in the micro-retail and tourism industries face.

Some of the internal factors behind high staff turnover in these small businesses include poor training, poor working conditions, inefficient management practices, low remuneration and the lack of formal recruitment and selection processes. There are some great lessons for SMEs in the report. A lot of focus can be placed on acquiring the first few employees in an SME, while little is done to keep those employees stimulated and happy in their roles.

Implementing a staff retention policy doesn’t necessarily mean spending thousands on company perks and entertainment. An SME owner could start by developing smaller incentive programmes, providing opportunities for growth and offering a healthy and stable work environment or remote working policy.

Preventing burnout

The majority of small businesses are run by individuals and small teams that are sometimes required to double-up on their roles to stay ahead and ensure that the business operations run smoothly. When processes are not implemented correctly and the culture in a small business is unhealthy, burnout can be inevitable.

The World Health Organization defines burnout as “a syndrome conceptualised as resulting from chronic workplace stress that has not been successfully managed. Symptoms may include lethargy, mental aloofness, pessimistic and cynical feelings related to work, and reduced professional capability.”

The pandemic and its effects on the mental health of employees highlighted to business owners that employee wellbeing is inextricably linked with productivity and profitability.

SME owners must realise that there is a strong case to be made for investing in ways to nurture employee wellness. This could include having a staff counsellor on call, having regular check-ins with staff members, providing a generous leave policy and recognising and rewarding people for their contributions or milestones reached.

Source: IOL

(Quote via original reporting)