Small Business Tips for Overcoming HR Distrust

HR performs several functions that are necessary for small businesses as well as employees, including employee recruitment, onboarding, training, payroll and benefits, compliance and employee relations. Despite the benefits HR professionals provide, many small businesses find it difficult to maintain these teams’ credibility among employees.

A report from Secure Data Recovery found that more than a third of U.S. workers don’t trust their company’s HR department due to factors such as bias, favoritism and inconsistency. Within small businesses, in particular, the report revealed that 43% of employees don’t feel comfortable confiding in their companies’ HR teams.

A lack of confidence in HR can lead to distrust of leadership, a lack of transparency, poor workplace cultures and potentially high employee turnover. Therefore, it’s crucial for small employers and their HR teams to understand the key reasons for this distrust and implement strategies to foster credibility among employees.

Reasons for HR Distrust in Small Businesses

Small businesses tend to face unique HR challenges due to limited resources and staffing constraints. Despite a smaller number of staff, small businesses still have burdensome compliance, benefits and HR requirements. Many of these smaller organizations may not have a formal HR team at all, leaving managers and leaders in charge of HR functions in addition to other roles. Some small businesses may have an HR department of one, making it a challenging function to operate with minimal resources.

Key factors that contribute to HR distrust within small businesses include the following:

• Poor communication—Ineffective HR communications can lead to misunderstandings, unclear expectations and a lack of transparency, thus hindering productivity and reducing workers’ trust.
• Favoritism—Employees expect fair treatment. When HR shows bias or favoritism toward certain individuals for promotions, recognition or other opportunities, employees may feel betrayed and experience lower morale.
• Disorganization—Lost documents, missed deadlines, and overall inefficiency and ineffectiveness can result from a disorganized HR team. These consequences can be stressful for employees and impact their trust in HR. For example, one missed payroll due to an error can severely impact an employee’s life.
• Inconsistent policies—When HR applies workplace policies inconsistently, employees can feel confused, frustrated and unsure of what to expect. This practice can also open organizations up to risks and liabilities.
• Lack of empathy—By failing to be understanding and compassionate toward employees’ personal and professional concerns, HR can cause employees to feel undervalued, further eroding their trust.
• Failure to address concerns—Failing to take workers’ concerns seriously or ignoring their feedback may appear to employees as if HR isn’t committed to their welfare. This can lead to employees feeling unimportant and distrusting HR’s effectiveness. 
• Lack of employee advocacy—HR professionals have employment-related obligations and responsibilities to the organization. However, if employees view them as allies or advocates for the business instead of the workers, this will likely foster distrust.

How HR Can Gain Employees’ Trust

By improving departmental practices and focusing on employee needs, small businesses’ HR teams can earn trust among workers and help create a positive company culture. The following strategies can build trust in HR:

• Develop and maintain an effective employee handbook. It’s essential to establish policies and procedures in an employee handbook so that HR can communicate expectations to the workforce clearly. Adhering to the handbook’s policies consistently and treating all employees fairly can provide workers with stability and minimize risks.
• Invest in training and developing HR teams. Thorough and regular training and development equips HR teams with the skills and knowledge to support employees and address their concerns. It also enables HR to act competently and demonstrate its reliability to employees. For businesses with an HR department of one, this could mean upskilling or investing in that employee’s development so they can better serve the needs of employees.
• Align HR with employee needs. It’s imperative that HR understands and addresses the diverse needs of the workforce. HR teams should listen and respond to employee feedback and concerns. This alignment fosters trust, allowing employees to feel seen and heard. 
• Advocate for employees. When HR stands up for workers’ rights and well-being, employees are more likely to view these teams as their allies, thus instilling confidence and trust in HR.
  
• Practice transparency. Transparency entails open and honest communication about company policies, decisions and changes. This practice can help build trust with HR, as it reduces uncertainty, keeps employees informed and shows them that their involvement is valued.
• Focus on employee development and career advancement. Investing in employees’ careers and skills can show that HR is dedicated to their growth and personal development. In turn, this can gain workers’ trust, as HR demonstrates that it values their futures and long-term success.
• Prioritize employee needs. HR teams should focus on solving employee issues, such as helping them access their pay, fixing benefits issues, growing their careers, and assisting with paid time off, leave and administrative obstacles. By prioritizing workers’ needs, HR teams can prove their value to the employees.

Conclusion

Although it may be challenging for small businesses, it’s crucial to create productive HR functions so these teams engender trust among employees. By implementing strategies to address the key factors that lead to HR distrust, employers can reduce turnover and improve employee satisfaction and engagement, leading to a healthy workplace culture.

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This HR Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice. © 2025 Zywave, Inc. All rights reserved.