Human Resource (HR), the buzz in today’s corporate world, is gaining focus, momentum, and importance in relation to an organization’s success as a business competitor and employer. While organizations, in the past, have focused on bigger challenges like revenue, competition, and economic instability, HR has made its importance felt eventually; though there was an evident lack of attention to it earlier.
With changing business models and the industry, HR has now become the prime focus for most organizations, small or large, because people are the most important asset of an organization and have the power to influence its growth and success substantially.
Human Resource Management (HRM) involves creating the right roles and opportunities, planning for workforce recruitment, ensuring continual training and development, fostering strong performance management, offering attractive compensation structures and benefits, keeping updated with legislation and legal compliances, and providing protection against economic instability.
While there are numerous challenges that can influence HRM, these can broadly be classified into environmental (legal compliances, labor markets, economy, political unrest, etc.), organizational (restructuring, upsizing or downsizing, competition, change management, culture, etc.), and individual (work ethics, empowerment, growth and succession, etc.). This article outlines 8 top HR challenges commonly faced by organizations and their possible solutions.
1. Competition (attracting and retaining good talent)
Competition is not only the most important factor in business and client interactions but also the most influential and threatening factor in HR. It is all the more difficult for small and medium enterprises since they need to compete with big names and brands while recruiting talent.
The challenge does not stop at recruitment, but goes beyond to retention of employees and offering the correct benefits, exposure, opportunities, and work environment.
Solution: Strong employer branding plays a crucial role in attracting the good talent to your organization.With the emerging impact of social media and platforms like Glassdoor and Google, it helps to build a strong and positive brand presence on these platforms, because your prospective employees are privy to anything and everything published here.
Being active in Corporate Social Responsibility (CSR) activities is not an obligation but a privilege to many employers to give back to society. This passively helps set an emotional platform for prospective employee–employer bonding.
Furthermore, having a structured onboarding process helps combat initial hiccups in an employee’s experience in a new work environment, such as awkwardness to interact with strangers, not knowing whom to approach for issues, concerns, or questions, not knowing one’s key performance indicators for the job role, not knowing team members or the immediate manager well enough, etc.
2. Job and Culture Fitment
Recruitment is the first step that can make or break the success of a prospective employee’s journey in your organization. With expedited recruitment processes because of the growing need for human capital, assessments for job and culture fit are being restricted to a few rounds or hours of discussion, meetings, and interviews.
While this could be an advantage to speed up your recruitment process, the risk of incorrect or inaccurate mapping of a candidate’s skills to the job role and organization culture persists. This is leading to higher attrition rates and lower average employee tenure of organizations.
Solution: The first and foremost step to combat this challenge is accurate and effective screening of candidates. It is important for an organization to have clarity on what exactly they need in a candidate for a particular profile; identify forums/sites/avenues frequented by people matching most, if not all, these requirements; and post their job openings there.
This would take care of most applications being the right fit for the job. Role-plays during face-to-face discussions will ensure culture match assessments. Having probation periods or contractual arrangements for roles ensures that the candidate and organization have enough “secured” time to assess fitment and agreement.
3. Compensation and Benefits
With the cut-throat competition in today’s corporate world, it is becoming difficult for organizations (specially small and medium enterprises) to keep up with the compensation and benefits offered by big names.
Recruitment and retention then become extremely difficult. The increasing costs of benefits, training, taxes, and other human capital investments pose an additional threat to organizations’ progress and success.
The recent benefits being offered, in addition to attractive compensation packages, make it challenging to keep pace in order to still be a strong contender among sought-after employers.
Solution: Besides compensation structures meeting industry standards, it is important for organizations to offer other attractive benefits. However, these cannot be at the cost of the organization’s investment in human capital growing two-fold.
One way to ensure return on investment is to offer variable, performance-based components to an employee’s compensation, thus keeping a check on performance-linked reward. A strong reward and recognition program also serves as a good motivation and attraction to perform.
With increasing healthcare costs, organizations can either choose to pass the costs to employees (may be a hindrance in recruitment and retention) or bear the costs themselves. In case of smaller organizations, offering other flexible and attractive benefits to combat health-related concerns, such as extended vacation time, flexible timings, health camps and well-being programs, transport benefits, etc., could be a good idea.
4. Change Management
Change in an organization is inevitable in the fast-paced, ever-changing corporate world today. This change could be structural, economical, geographical, procedural, managerial, or technological, the latter having the greatest influence and posing the biggest challenges to HR.
HR faces major issues of reduced employee morale and satisfaction, self-doubt, attrition, etc., during change. Employees not being able to adapt to change can lead to the failure or death of an organization.
The inability to adapt to change could be because of various factors, such as employee resistance to change, lack of necessary skill and training to adapt to change, sudden but drastic requirements to change, etc. It is thus imperative for an organization to foresee, plan/predict, and communicate change.
Solution: The most important practice to manage change positively is to predict it and prepare your employees for it. Not everyone is open to sudden change.
Each employee would take different time to adapt to change of any kind. It is thus important to communicate, clearly and transparently, about the change, the need for the change, the benefit of the change, etc.
Further, communication should be regular before, during, and after the change to keep a check on the progress with respect to the change. It is also important to provide the necessary training and resources to upskill employees to handle changes in their work, job role, or organization at large.
Providing the necessary training makes them feel more confident and capable of managing the change, resulting in them accepting change more positively and openly. Another crucial aspect to keep in mind is that the focus on employee growth and progression is evident to them even during the change.
5. Continuous Learning and Succession Planning
Upskilling and continuous learning are extremely crucial to an employee’s growth and success in an organization. These days, with the increasing demands of the business, organizations are finding it difficult to foster an environment of continuous learning and development and keep pace with the rising ambitions of employees, for the paucity of time.
With the need for rapid growth and progression, planning the succession and growth path for all employees alike is becoming difficult. With lesser positions at the top, being able to create an interest and attraction in those positions and providing ample opportunities is a big concern for HR.
Solution: The basic principle to effective training and development is to identify trainings relevant to the current or future role of an employee. Further, adopting a practical rather than theoretical approach to training helps. For example, presentations and PPTs are now old school.
Current affairs, case studies around these, role-plays, debates, etc. are the new and effective ways of training. With the advancement of technology, online training spread over longer durations and offered to employees from home helps address challenges of time.
Cross-training and cross-skilling can work for creating opportunities of lateral progression for effective succession planning.
6. Performance Management and Alignment
While an organization may be able to provide the necessary training and development to its employees, it is equally important for it to be able to track the impact of this training on the performance of the employees.
Performance management and the related next steps, such as performance improvement plans, are becoming difficult with the fast pace of business operations and the lack of time for performance alignment.
Larger organizations also face challenges of helping employees understand how their job roles and performance indicators align to and contribute to the achievement of the overall organizational objectives.