Warning: preg_match() [function.preg-match]: Unknown modifier 't' in /home/content/52/11388552/html/wp-content/plugins/mobile-website-builder-for-wordpress-by-dudamobile/dudamobile.php on line 603

Warning: Cannot modify header information - headers already sent by (output started at /home/content/52/11388552/html/wp-content/plugins/mobile-website-builder-for-wordpress-by-dudamobile/dudamobile.php:603) in /home/content/52/11388552/html/wp-content/plugins/wpjobboard/application/functions/common.php on line 226
How HR Can Handle the Five Biggest Threats Facing Business | Express Pros Manchester

How HR Can Handle the Five Biggest Threats Facing Business

By John D. Roller, SPHR, CEBS

Are you prepared to respond to the top threats facing businesses in our new economic environment? A recent study has found several areas of vulnerability that businesses believe could cripple their operations.

Express Employment Professionals recently commissioned a third party study and found that, nationally, most organizations see serious problems on the horizon. The five major threats identified by businesses are:

  • Inability to innovate
  • Losing competitive advantage
  • Reckless hiring
  • Poor leadership/communication
  • State and local overregulation.

Available data on employment trends underscores the concerns of businesses:

  • 71 percent of employees are not fully engaged at work.
  • 60 percent of all employees plan to leave their current employer when the economy improves.
  • 50 percent of hourly employees stay in a job less than six months.
  • In 2010, the number of resignations beat the number of layoffs (2 million vs. 1.7 million)
  • 83 percent of companies point to a shortage of talent as their number one hiring concern.
  • 80 percent of turnover is a direct result of hiring mistakes.
  • Leadership is the top reason employees leave their company.
  • Regulatory agencies enact more than 3,500 new rules each year, and the cost of federal regulations can be as much as $1.75 trillion annually.


So how can businesses effectively address these concerns? Since most of these threats lie in employee-related areas, the first thing to do is partner with your HR department or your person handling this function and put together a plan. Use the HR expertise you have in-house first as they have the skill to assist you in turning around these problems and get your human capital performing again.

Inability to Innovate

More than technology, this is about the brainpower of your workforce. All businesses must retain and engage forward-thinking employees and provide an environment in which they can flourish. Are you already noticing gaps in needed skills in your company and have difficulty finding them? Is it likely you will have a “brain drain” as the economy improves? What effect would the loss of a key player have on your business and your ability to innovate?

Identify the various areas in your business where you can differentiate yourself, with product development and/or services. Ensure your employees have a good environment in which to be creative. Clearly communicate your objectives to your team upfront and then let them lead or participate actively in your strategic direction. Try the “projects without project managers” approach by letting a team work without a lead or guidance from a manager. The more you unleash restraints, the more creative people will be.

Losing Competitive Advantage

Failing to engage your workforce to create and develop new products and services faster than your competitors means you are losing your competitive advantage. Is pricing pressure increasing, or are you losing market share? Is your workforce productivity lagging? Have you seen more “time off” requests or sick time being used? Employee engagement is the key to turning this around.

Identify the areas where your company struggles with staying ahead of the competition. Use a survey to confirm whether employee engagement is a problem. If so, where does management need to change? You can re-engage your workforce by being generous with praise, eliminating levels of management, making your ideas theirs, encourage more and critique less, taking them to lunch, and giving small but more frequent rewards.

Reckless Hiring

A poor talent selection process can cripple your business. Think about the last time you made a bad hiring decision and the difficulty you experienced with transitioning this person either to perform at the desired level or in moving them out the door. Replacing a key individual can cost as much as 1.5 times their salary between direct recruiting costs, training, lost productivity, and other indirect costs. Do you have higher than average turnover, absenteeism, accidents, or errors?

Look at what this can cost your business. Nationally, turnover averages about 12 percent for all companies, and the typical “preventable” turnover is 75 percent of your total, or 8 percent in this case. So if you have even a relatively small payroll of $1 million, you could be losing $80,000 a year through preventable turnover. Take your fully burdened payroll expense and apply your preventable turnover ratio to this number.

In addition to fixing your cultural issues listed above, here’s how to recruit more effectively. First, understand what culture you want in your company and develop a list of questions you can ask to screen your candidates for fit. Take the time necessary to screen and go through two or three rounds of interviews, as well as check references. You’ll need a detailed scorecard to sharpen your focus and measure people against. This will allow you to know exactly what you’re looking for without adding extraneous skills or experience. You can also partner with a staffing agency and use “on-demand” talent to help with gaps or project work.

Poor Leadership and Communication

You’ve probably heard that most employees believe there could be better communication and leadership from their managers. The leadership team is the business’ most important driving force, as well as its biggest liability.

What communication methods are in place now? Some companies have effective processes that involve regularly scheduled meetings where manager provides a weekly update on the state of business and progress with goals, and in some cases financial information is also provided. The main point here is to eliminate any questions employees may have on where the company is going and how it is doing at the moment. You can use this time to re-engage employees by providing spot recognition for things done well.

Regulatory Nightmares

The single biggest external threat to business is government regulation on both the state and federal levels. Overregulation can make it hard to be a business owner—it distracts businesses from pursing their core competencies and erodes profits. Do you know how much time you or your employees spend on regulatory compliance? What is your exposure in areas where you’re not up to full compliance?

There’s not a lot you can do about this unless you speak to your elected officials directly. The best approach for managing the regulations we do have is to identify which are challenging to your business and then create a strategy to handle them so you can focus on your core business. Also, get involved with business organizations that have focus groups in this area, and visit with your legislative representatives to make your voice heard.

Many of today’s challenges actually lie within your workforce and you have the ability to change it. This being the case, it makes sense to engage your HR team to spearhead these people-related challenges or find a consultant who can help as well.

John Roller is owner of Express Employment Professionals in Manchester. The firm has divisions that specialize in professional, commercial, and administrative staffing, as well as human resource consulting services. He is the Past President of the Manchester Area HR Association. For more information, call 603-606-7177, email john.roller@expresspros.com or visit http://expressprosmanchester.com.