Entrepreneurs and startup founders often face the challenge of scaling their businesses while juggling multiple priorities. Many business owners are tasked with managing all aspects of their business, including:
Managing revenue-generating activities
Generating leads
Overseeing finance management
Improving client relations
Ensuring business growth
Entrepreneurship may require business owners to work tirelessly and make personal sacrifices to build successful and sustainable businesses. This demanding work schedule often leads to stress, burnout, and other health-related challenges. According to the Bureau of Labor Statistics (BLS), 20% of businesses fail within two years, 45% during the first five years, and 65% fail within the first ten years. These statistics indicate the challenges associated with starting and scaling a business.
Many entrepreneurs, especially those of color, face substantial obstacles and barriers when starting and scaling their businesses. Talent shortages further compound these challenges, and a study by Korn Ferry also indicated that companies would lose out on $8.5 trillion in revenue due to talent shortages over the next ten years. Recruiting top talent is essential for small businesses because team members drive value creation, and business revenue, and influence company culture. However, failure to attract, develop, and retain qualified team members can significantly impact revenue generation and sustainability.
An effective Human Resources (HR) department is essential for gaining a competitive advantage through recruitment. Developing a skilled, strategic, and adequately resourced HR team can help businesses succeed and remain competitive. Ensure your HR team focuses on these five (5) key areas to maximize business growth and market presence:
Consumer Needs: Your business success will rely heavily on attracting and retaining top talent who create effective consumer strategies that enhance the customer experience. HR teams can attract and retain the best candidates while providing valuable insights into the needs and preferences of prospective candidates and consumers. Leverage these skills to develop more engaging and effective consumer strategies to improve your market position.
Resource Management: As businesses try to find the best value at the lowest cost, budget constraints continue impacting vendor proposal processes, leading to increased scrutiny of cost proposals. HR can identify the appropriate resources to meet proposal needs, including:
Sourcing key personnel
Developing recruitment pipelines
Obtaining letters of commitment
Providing market-based compensation estimates
HR can also collaborate with your sales teams to integrate employee and talent value propositions, highlighting your company’s unique ability to meet client needs.
Business Optimization: HR is responsible for your employees from hire to retire. They also have extensive knowledge of business operations, which can provide valuable insights into:
Streamlining operations
Organizational realignment
Resource allocation
Business success depends on meeting customer needs and developing innovative, agile, and efficient operations, which can be facilitated through HR’s guidance.
Reduce Turnover Costs: According to Gallup, replacing an employee can cost 50% to 200% of their salary. High turnover rates can be a significant expense, especially if you have tight profit margins. However, your HR team can help mitigate these costs by developing:
Effective recruitment pipelines
Training and development programs
Compensation strategies
Create Cultures of Success: In 2019, SHRM found that 84% of workers say poor management created stress, and U.S. companies lost $223 billion due to culture-related turnover (SHRM Reports Toxic Workplace Cultures Cost Billions, 2019). HR can help identify the skills required for future business needs and develop strategies, programs, and training opportunities to support better cultures and work environments. As strategic business partners, HR is critical in driving business growth. Research by McKinsey has found that companies with strategic HR teams are 1.5 times more likely to outperform their competitors (Winning with your talent-management strategy, 2018).
Your company’s success is highly dependent on HR’s ability to effectively manage:
Recruitment
Employee engagement
Learning and development
Succession planning
Retention
Total rewards
Bringing the right people in at the right time will improve the trajectory of your business. Activate HR to improve these strategic activities and differentiate you from your competition in ways products and services cannot.
If you’d like to activate your HR team or determine the right time to bring in HR, contact us at info@abnormallogicllc.com to get started.