Small Business Hiring & Retention: The HR Solutions You Need

Top Challenges for Small Businesses in 2025 and How HR Can Help

Welcome to 2025! Small businesses are still the lifeblood of our communities and economy, but let’s face it—running one isn’t getting any easier. From finding top-notch talent to navigating tricky regulations, small businesses have their hands full. Luckily, a great HR team can make all the difference. Here are the top challenges for small businesses in 2025 and how HR can step in to help.

1. Finding and Keeping Great Employees

What’s the Problem? Everyone’s looking for talented workers, and small businesses don’t always have the deep pockets to compete with big corporations.

How HR Can Fix It:

• Show Off Your Unique Style: Highlight your company’s culture, flexibility, and growth opportunities to attract candidates who value more than just a paycheck.

• Think Outside the Box: Use social media, local job fairs, and partnerships with community groups to find hidden talent.  Employee referrals---anyone?  This is another great source of candidates if you currently have a stable and strong workforce within your team.

• Keep Them Happy: Offer mentorship programs, chances to learn new skills, and fun ways to recognize employees’ hard work.  Evaluating non-traditional benefits is another key consideration when you want to retain the workforce you have and make your organization intriguing to those who are not currently part of the team!

2. Making Hybrid Work Actually Work

What’s the Problem? Hybrid work is here to stay but setting it up can feel like trying to build IKEA furniture without the instructions.

How HR Can Fix It:

• Set Some Ground Rules: Create simple, clear policies for how hybrid work should function day-to-day.

• Phone a friend: Allow your employees who successfully work remotely to mentor employees who are new to the remote space.  They can share great insight on what works and what doesn’t.  It will also help form those strong relationships between co-workers that we all have become accustomed to.

• Invest in Affordable Tools: Use budget-friendly apps for video calls and project management.

• Support Balance: Offer flexible hours and mental health resources to help employees manage work and life.  Put together some in person teambuilding sessions if your remote workforce is within a reasonable travel distance, on a recurring predictable basis. 

3. Keeping Up with Rules and Regulations

What’s the Problem? Laws and policies are always changing, and it’s tough to stay on top of everything.

How HR Can Fix It:

• Stay in the Know: Keep tabs on new rules at all levels—local, state, and national.

• Train Your Team: Hold quick sessions to teach everyone the basics of compliance.

• Use Tech to Help: Get software that tracks and reports compliance automatically.

• Partner with local HR Experts: Whether it is your local SHRM affiliated HR Group/Association or an HR Consulting Partner, these are great ways to stay in the know!

4. Building a Diverse and Inclusive Workplace

What’s the Problem? Diversity, equity, and inclusion (DEI) are must-haves, but small businesses can struggle to make it happen.

How HR Can Fix It:

• Hire Smart: Write job descriptions that welcome everyone and build diverse hiring teams.  Competent and Confident managers know how to recruit for their weaknesses.  Do that!  Don’t fear someone doing better than you, always hire so that your employees make you look/work better.

• Educate and Engage: Run training sessions to help employees appreciate the value of diversity.  Encourage employees to engage with individuals that are outside of their areas of expertise.  This helps form opportunities for them to engage with people that might not be a natural draw for them and gives them an opportunity to grow!

• Listen Up: Create easy ways for employees to share feedback and ideas.  Then listen and act upon those comments, suggestions, and concerns.

5. Handling Economic Curveballs

What’s the Problem? Between inflation, unpredictable customer demand, and supply chain hiccups, it’s hard to plan for the future.

How HR Can Fix It:

• Be Flexible: Use freelancers or part-time workers to adapt to changing needs.

• Stretch Your Dollar: Look for affordable ways to offer benefits, like group discounts or wellness perks.

• Talk It Out: Keep employees informed and involve them in brainstorming solutions.

6. Keeping Up with Technology

What’s the Problem? Tech evolves faster than the latest social media trends, and staying current can be pricey and confusing.

How HR Can Fix It:

• Train Your Team: Offer workshops to help employees get comfortable with the tech you already have.

• Find Friendly Vendors: Work with providers that understand small business needs and budgets.

• Simplify Where You Can: Use HR tools to handle payroll, hiring, and performance tracking all in one place.

7. Taking Care of Employee Well-Being

What’s the Problem? Stress and burnout are real, and they hit small businesses especially hard.

How HR Can Fix It:

• Offer Support: Partner with counseling services or set up Employee Assistance Programs (EAPs).

• Check In Regularly: Create a culture where employees feel safe sharing their concerns.

• Make Wellness Fun: Try fitness challenges, meditation sessions, or flexible time-off policies.

Wrapping Up, how HR can fix Small Business Hiring & Retention

2025 might be throwing some curveballs, but small businesses can knock them out of the park with the right HR strategies. By focusing on your team’s happiness, embracing new technology, and creating an inclusive culture, you’ll be ready for whatever comes your way. Small businesses are the heart of our communities, and with a little help from HR, they can keep thriving for years to come.