According to a new report from Xero, almost half of small business owners say that managing employee processes in today’s ever-changing regulatory environment is negatively impacting their mental health.

The new findings shine a light on the workforce challenges faced by Australian small business employers, the workplace experiences of employees, and the critical role of technology in this new world of work.

The pandemic and its associated long border closures have taken their toll on small business. Three in five employers believe that disruptions caused by COVID are still one of their top challenges.

Over the last 12 months, two-thirds of employers have faced:

• staff shortages
• late cancellations of multiple staff due to sickness
• or personal issues
• staff not turning up to shifts
• staff confusion over their rostered shifts

“This report highlights the impact of this workplace disruption on the small business community,” Chris O’Neill, chief growth officer at Xero, says in the report. “The challenge of managing employee processes has led to a “silent epidemic” in worsening mental health of many small business owners.”

The impact of inflation is a huge concern

Additionally, the impact of inflation on costs and services is one of the biggest concerns for 48 per cent of employers. Recent data from NAB’s monthly business survey showed the cost of doing business at record highs. Labour costs and overheads (input costs) have been at their highest levels since NAB’s business survey data began in 1997. Gareth Spence, senior economist at NAB mostly blamed COVID-19 related supply chain and staffing issues.

“We’ve really seen input costs increase at a faster rate, as we came out of the first phase of the pandemic,” said Mr Spence.

The Xero study found that inflation is compounding the issue of labour shortages. Thirty-four per cent of employers are seeing talent shortages as their biggest challenge in securing and retaining talent. To secure and retain talent, employers are also expecting to pay top dollar, with 39 per cent citing a rise in staffing costs and a rise in salary expectations (31 per cent) as one of their top challenges over the next 12 months.

“Employees are prepared to walk if employers don’t match their expectations for better pay, with one in five leaving their last employer due to low pay,” says Joseph Lyons, Managing Director, APAC at Xero. “With almost a third of employees planning to look for new opportunities over the next 12 months, employers will be under pressure to retain staff, amid ongoing labour shortages and rising costs.”

Many struggle to stay on top of constantly changing regulations

Adding to the mental health load for small business owners, the study also found that businesses are struggling to stay on top of employee regulation requirements.  More than half (56 per cent) say it’s stressful or confusing keeping up with employee entitlements and award obligations. Thirty-seven per cent of respondents worried their staff would be incorrectly paid because payroll regulatory obligations were confusing. This worry and the pressure of keeping up added to their feeling that their mental health was impacted.

“Many of our small business customers are now spending more time figuring out how to find and hold onto good people, while juggling the complexities of things like Single Touch Payroll (STP), payroll tax and the modern awards system,” notes O’Neill. “Small businesses can’t always afford a team of advisors to help them figure all of this out.”

Staffing issues like absent staff, flexible working arrangements and difficulty finding and retaining good staff have made rostering a challenge for over a third of small businesses.

“Retaining our staff is something I constantly lose sleep over. I went away for two weeks and came back wondering ‘is anybody about to resign?’,” Richard Jeffares, founder of Two Bays Brewing Co told Xero. “A lot of my staff get approached by other employers and thankfully they’re sharing this information with me, and we’re able to provide them with a working environment that’s keeping them here.

“But it causes stress — as a small business, there isn’t a lot of redundancy of roles. You don’t have a team of two or three people where the next person is ready to step up.”

Many employers are using technology to help them keep up with changing regulatory demands. Payroll compliance is a driving force behind software adoption, as is accurately tracking employee time and attendance.

The importance of both retention and productivity

Unsurprisingly, a fifth (20 per cent) of small business employers worry about retaining their staff.

After retention, the second most common concern for employers when managing staff is that they aren’t as productive as they could be. For instance, it takes staff up to four months on average to get up to speed and reach full productivity, with employers in hospitality saying it takes up to five months.

To help make essential employee-related processes more seamless for small businesses and their people, Xero is building an integration with its Xero Australian Payroll product and Planday.

The beta, announced today, marks an important stage of Planday’s entry into Australia where it will enhance Xero’s broader set of employee management tools including Xero Payroll, Xero Expenses and Xero Me (a simple self-service app for employees timesheet, leave and expense management).

“Our research shows poor communication, slow organisational processes and outdated technology is causing headaches for many small business employees and their employees,” says Curzon. “This isn’t surprising when a third tell us they still use spreadsheets to manage employee leave, time and attendance.”

The Planday beta is available now for eligible small businesses using the Retail and Clerks Awards in Australia. Customers can register their interest to learn more about Planday here.

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https://www.kochiesbusinessbuilders.com.au/five-important-ways-to-help-boost-your-wellbeing-in-fy23-and-beyond/