CHALLENGES OF HRM

Challenges of HRM are important functions of any organization. It is the practice of

managing people to achieve better performance. These HR challenges might be
environmental challenges, organizational challenges and individual challenges, etc. Always
remember that these challenges are not related to the single dimension; rather they are
directed towards multi-dimensional issues that should be tackled with immediate care. The
following are the broad categories of Human Resource Management challenges in today’s
competitive world.

Challenges Of HRM
1. Environmental Challenges
2. Organizational Challenges
3. Individual Challenges

Environmental Challenges

The environmental challenges are related to the external forces that exist in the
outside environment of an organization and can influence the performance of the
management of the organization. These external forces are almost out of control of
the management of the organization.

These can be regarded as threats to management and should be handled in a

proactive manner. Following are the list of human resource management challenges
that are considered environmental challenges.

1. Rapid Change
2. Workforce Diversity
3. Globalization
4. Legislation
5. Technology
6. Job and Family Roles
7. Lack of Skills

Home » Human Resource Management Challenges

Human Resource Management Challenges

By Richard DanielsReading Time: 7 mins

Updated April 19, 2021

Challenges of HRM are important functions of any organization. It is the practice of
managing people to achieve better performance. These HR challenges might be
environmental challenges, organizational challenges and individual challenges,
etc. Always remember that these challenges are not related to the single dimension;
rather they are directed towards multi-dimensional issues that should be tackled
with immediate care. The following are the broad categories of Human Resource
Management challenges in today’s competitive world.

Challenges Of HRM
1. Environmental Challenges
2. Organizational Challenges
3. Individual Challenges

Environmental Challenges

The environmental challenges are related to the external forces that exist in the
outside environment of an organization and can influence the performance of the
management of the organization. These external forces are almost out of control of
the management of the organization.

These can be regarded as threats to management and should be handled in a

proactive manner. Following are the list of human resource management challenges
that are considered environmental challenges.

1. Rapid Change
2. Workforce Diversity
3. Globalization
4. Legislation
5. Technology
6. Job and Family Roles
7. Lack of Skills

Rapid Change

The world is changing at a faster rate because change is constant for several
centuries. So the management of the organizations should be quickly adaptive to the
changing requirement of the environment otherwise they become obsolete from the
market.

The human resource management of an organization plays a basic role in response

to environmental change. The HR department should adopt such policies that can
avail the new opportunities of the environment and keep the organization away from
the newly emerging threats.
Workforce Diversity

The changing environment provides both the opportunities and threats to the human
resource management of the organization. The HR manager should adopt such
policies that can make possible the diverse workforce of employees. Although on one
hand diversity creates a big problem, in the long run, the survival and performance
of the organization is flourished.

Globalization

One of the serious issues that today’s organizations are facing is the issue of
globalization. The world is converting into a global business and severe competition
is started between domestic and foreign companies. Such competition results in
laying off the effective workforce of the organization. The HR department can play
an important role in keeping the culture of the organization as global and wider.

Legislation

It is the old environmental challenge that is faced by the organization for many
decades. There are certain labor laws that are declared by the government for the
benefits of the working employees. Some of these laws are disadvantageous to the
interests of the organizations so it is one of the big challenges for the HRM to
implement all those labor laws within the organizations. If any such law is violated,
serious actions are taken by the relevant government authority that may result in
serious penalties for the management of the organization.

Technology

Technology is also growing at great speed especially in the field of computer and
telecommunication. New methods are emerging that quickly dominate the older ones
and make them obsolete. Therefore the skills required by the employees also change
with the changing technology and this would compel the worker to advance the skills
three to four times throughout their working lives. So there comes a burden on the
HR department to constantly update the skills and expertise of its employees.

Job and Family Roles

In recent years, dual-career families are increasing in which both the wife and
husband work. This creates a serious burden on the women that they have to give
time to their families also. In many organizations, the policies of HR favors the
employment of more than 10 years. The working hours of the organizations are also
strict and tight for the employees.
Job and Family Roles

In recent years, dual-career families are increasing in which both the wife and
husband work. This creates a serious burden on the women that they have to give
time to their families also. In many organizations, the policies of HR favors the
employment of more than 10 years. The working hours of the organizations are also
strict and tight for the employees.

Moreover, the selection and training procedures are two tough and time consuming
so most of the talented women hesitate to join any organization which would result
in the wastage of talent and potential. Even working men also suffer from these
employment policies because they do not properly give time to their families. So the
challenges for the HRM increase with this particular issue and special favorable
working policies are needed to be employed in all organizations.

Lack of Skills

The service sector development is expanding due to many reasons like change in the
tastes and preferences of customers, technological change, legal change, etc. All of
this affected the structure and managing style of business organizations.

The skills required in the employment of the service sector are also advancing but
the graduates of the technical colleges and universities are groomed according to
the latest requirements. Therefore most of the employees lack the standard required
skills to perform their duties and it becomes a big challenge for HRM to properly
train these new and old employees to become an efficient and effective worker.

Organizational Challenges
The organizational challenges for HRM are related to the factors that are located
inside the organization. Although these challenges are evolved as a byproduct of the
environmental challenges these can be controlled by the management of the
organization to much extent.

The proactive HR managers take notice of such challenges in advance and take
corrective measures before these would convert into serious issues. The human
resource management challenges within the organization include competitive
position and flexibility, organizational restructuring and issues of downsizing, the
exercise of self-managed teams, development of suitable organizational culture etc.

 Controlling Costs
 Improving Quality
 Developing Distinctive Capabilities
 Restructuring
Controlling Costs

An organization can avail of the competitive position by lowering its cost and
strengthening its cash flows. For this purpose, the labor cost of the organization is
minimized through an effective compensation system that adopts innovative reward
strategies for good performances. In this way, the favorable behaviors of the
employees are rewarded so the organization would get the ultimate advantage.

Moreover, the policies of compensation should keep the labor cost under control.
Effective employees should be selected that keep with the organization for longer
duration and proper training should also be provided to these employees. The HR
department should also restore the work of the employees along with the
improvement in the health and safety issue of the working environment. All of these
efforts would limit the cost of labor.

Improving Quality

Quality improvement can lead an organization towards a competitive advantage. The

total quality management programs are employed that improve all the processes
within the organization which would ultimately result in the improvement of the final
product or service.

Developing Distinctive Capabilities

Another method of gaining a competitive advantage is to employ the people that

have distinct capabilities to develop extraordinary competence in specific areas.

Restructuring

Another technique is the restructuring of the organization in which the methods of

performing different functions are altered positively. In the case of the HR
department, the majority of functions are still performed within the organization.

In some organizations, the major functions of the HR department are now

transferred to the other parties in the shape of outsourcing, shared service centers,
etc. The sizes of the HR department in those organizations are shrinking because
most of the functions are performed by outsiders. But in most organizations, the HR
manager performs all the relevant functions of HRM. The HR department is now
involved in mission-oriented and strategic activities.

Individual Challenges
The decisions related to the specific individual employees are included in
the individual challenges for the HRM. The organizational issues are also affected by
the fact that how employees are treated within the organizations. The problems
related to the individual level are as follows.
 1. Productivity
2. Empowerment
3. Brain drain
4. Ethics and social responsibility
5. Job insecurity
6. Matching people and organization

Productivity

Productivity is defined as the measure of the value that an employee can add to the
final product or service of the organization. The increased output per employee is
reflected as increased productivity. Ability and motivation are two important factors
that affect employee productivity.

The ability of the employee can be improved by the hiring and replacement along
with the proper training and career development. On the other hand, high quality of
work-life serves as an accelerator to the motivational factor of the employees.

Empowerment

In modern days, many organizations make changes in such a way that their
individual employees exert more control over their work as compared to their
superiors. This individual control of employees is called empowerment which helps
the employees to work with enthusiasm, commitment and learn new skills because
they are more normal decisions about their work by themselves and hence enjoy
their work.

Brain Drain

One of the challenges for HRM is the detachment of the key potential employees
from the organization which links with the competitors for higher remunerations etc.
In such cases, the organization loses its intellectual property and in many situations
the leaving employees at the higher levels also take with them the potential lower-
level employees. This brain drainage is becoming a serious issue in high-Tech
companies.

Ethics and Social Responsibility

Under this challenge, the organizations make an effort to benefit some portion of
society. This is now considered to be the social responsibility of the organization to
show favorable behavior towards society. Ethics serves as the basic principle for the
social behavior of the organizations.

Within organizations, the HR departments develop a code of conduct and principles

of the code of ethics that serve as guidance for the personal behavior of the
employees of the organizations. The employees also expect management to show
favorable decisions.
Job Insecurity

In recent years, restructuring and downsizing develops a sense of insecurity of jobs

within the employees of the organizations. How many employees only desire to get a
steady job rather than a job with a promotional future.

Even most successful organizations lay off their employees in the period of cut-
throat competition. The stock market also shows favorable results when layoffs have
been made. All these things create fear among employees about the insecurity of
their jobs which would hinder their effective performance.

Matching People and Organizations

It has been proved from the research that the HR department contributes to the
profitability of the organization when it makes such policies of employee selection in
which those employees are selected and retained that best suits the culture of the
organization and its objectives.

For example, it is proved from research that those employees would become
beneficial for high-Tech companies that can work in a risky, uncertain environment
having low pay. In short, it is an important challenge for the HR department to hire
and keep such employees whose abilities and strengths would match the
requirements and circumstances of the organization.

Challenges of HRM Face by Managers

1. Attracting Top Talent
As the demand for highly trained professionals at the „top of their game‟ grows, it becomes a
challenge for HR managers to attract the best talents. Managers should pay attention to how
well an employee fits into the organization; along with the job role. Factors like an
employee‟s dedication, work ethic, and fit in your company are more crucial than any other
skills he/she might have at present.

Furthermore, one of the challenges of HRM is to market the company well enough to attract
the top talents. Also, this includes mentioning the USPs of working with your organization.

The Solution For This Challenge of HRM is:

1. Creating videos of employee testimonial of working in the company
2. Building a reward system of referrals to encourage employees to bring in people to the
company
3. Building a culture to captivate the top talents which include showing appreciation,
encouraging collaboration, and practicing transparent leadership.

2. Embracing Change With An Open

Mind
One of the major challenges in HRM is to keep up with continuous changes in the world
Change is the only constant, however, it is up to the HR managers to embrace the change, and
prepare their employees for the same. Since HR managers are the strategic resource
planners of the organization they must ensure that the company doesn‟t have a deficit or a
surplus of human resources.

Above all Solution For This Challenges of HRM is:

1. Having open, clear, as well as honest communication with employees.

2. Ensure that the employees are well equipped with the skills and resources to deal with the
change. When employees feel secure and capable, the outcome is more likely to be positive.
3. Be a part of the high-level meetings to learn about the future requirements of the company.

3. Developing The Leaders of Tomorrow

HR Managers constantly face the challenge of mentoring and developing the future pillars of
an organization. This is one of the trickier challenges HR Managers face because a lot of
employees have a poor relationship with their managers. However, developing your
employees for better roles helps you save the costs of recruiting and training a new employee.
Furthermore, an employee that has grown within the company has grassroots knowledge.
While there isn‟t a one size fits all solution here, HR managers can take steps to develop
employees into leaders of tomorrow.

For Developing The Leaders of Tomorrow in An Organization & Solving This

Challenges of HRM You Can Take The Following Steps:
1. Managers can work on this by providing specific training sessions to talented individuals.
2. Show employees a clear progression path ahead of them, this will increase the likelihood
of them staying in an organization.
3. Develop interpersonal skills.
4. Give the employee opportunities to lead and present to the team.

4. Building a Culture of Continuous

Learning
Learning is a key factor in any organization. Upskilling employees help a company to gain an
edge in the market however, it is a difficult challenge in HRM. Likewise, employees feel
stimulated, engaged, and gain development opportunities. However, managers should ensure
that the skills gained by a set of employees serve to enhance their job roles. If the workplace
has a culture of learning and developing oneself this will ensure that every employee grows
with every passing year.

Few Steps to Foster a Culture of Continuous Learning & Overcome This Challenge of
HRM are:

1. Create a growth mindset where employees are willing to take feedback to learn and grow.
2. Teach managers how to give great feedback. What points should be covered, how to make
it objective, and how to make it easier for the receiver to receive it.
3. Set learning goals within teams. Set targets for employees to learn a certain skill or a piece
of technology every month.
4. HR managers can also use online learning, gamified learning, and microlearning.

5. Building a Diverse Team

As connectivity improves, the world becomes a smaller place. One of the HR challenges now
faces is the challenge of managing a workforce with diverse backgrounds, ideas, and
experiences. Also, This challenge of HRM comes with the responsibility to build a corporate
work environment that‟s welcoming for everyone. Building an inclusive team doesn‟t just
bring fresh perspectives into the company but also builds a chain of a diverse network. If
different voices are heard in your organization, the company will be more innovative and
more sensitized to cultures.
The Solution For This Challenge of HRM is:

1. Conduct cultural awareness activities to help employees understand new and diverse
backgrounds.
2. Team building activities will also enable the entire workforce to work as one team on
common objectives.
3. Educate your leaders to be open-minded and inclusive.
4. Celebrate cultural diversity.
5. Encourage culturally diverse hires.

6. Looking After Health & Safety

Maintaining health and safety standards ranks very high on any HR Managers priority list.
The general well-being of employees is what keeps an organization running and growing.
Along with physical well-being, HR professionals must also closely monitor the workload
and stress levels of employees in an organization. A sustained period of high stress and
anxiety is a cause of concern for the workforce.

Few Steps That You Can Take to Look After Your Employees are:

1. Build a system where work is divided equally amongst the employees

2. Managers should be trained to increase their emotional quotient to help employees better.
3. Employees should be trained to manage stress better with relaxation techniques.

7. Managing The Turnover Rates

One of the largest challenges of HRM is the challenge of reducing the turnover rates in an
organization. One solution to this is to create a quality employee experience. High turnover
rates in any organization lead to an increase in cost and use of resources. Apart from the cost,
high turnover rates can also affect the morale of employees in an organization. Understanding
the problems of employees can play a major role in reducing turnover rates.

The Solution For This Challenge of HRM is:

1. Always conduct exit interviews to truly understand the reason an employee is leaving the
company.
2. Select the right candidate for the job
3. Training as well as the development of employee
4. Be friendly with the employees
5. Think if flexible work hours would work for your company

8. Globalization
HR managers often deal with teams and workforces in geographically distributed areas. A
company‟s customer demographic is also more diverse. HR managers are tasked with
devising new plans and strategies to build an inclusive workforce that leverages the
technology of the 21st century. In addition, managers must embrace the diversity of their
workforce, and work towards reaching a new audience through them. It might be difficult to
have the same effect virtually on an employee however, there is software that can help
you build a work culture online.

While This Can Be One of The Challenges in HRM it Can be Solved Through Simple
Steps:

1. Ensure the correct systems are present for better management

2. Make sure that employees know where to connect in case they need any help
3. Be accepting of diverse cultures and languages

9. Compliance with Laws and Regulation

Many HR professionals struggle with keeping track of laws as well as regulations applicable
to the company. Also, this one of the crucial challenges in HRM. Not having the correct
policies in place can affect the company‟s growth and resources. Failure to have the right
policies might lead to lawsuits, fines, or even closure of the company at times. As well as HR
professionals should always stay updated with the changes in regulations ranging from labor
laws, working conditions to CSR.
This challenge of HRM can be simply solved with the StartupHR toolkit. In short it is the
largest collection of HR documents, templates & policies, Therefore, it is easy to make legal
policies for your company.

10. Retaining Top Talent

Retaining top talent is a challenge of HRM that truly affects the organization. Not only
nurture but also retain the top talent is important in the organization. A high turnover rate is
not only bad news for any company but also it costs resources and adds pressure to the top
management. Without the top talents working for your organization, it will be difficult to
truly build a company that lasts. Without a steady set of leaders, an organization will suffer
greatly.

However, there are a few steps that you can take to retain the top talents in your organization

The Solution To These Challenges of HRM is:

1. HR professionals can make sure that each employee feels recognized, and also, motivated
& engaged.
2. A favorable work environment will help retain talented individuals.
3. Also, Invest in the right technology pieces and hardware for employees
4. Offer opportunities to develop further

Challenges of HRM face By

Organizations
1. Turnover
A high employee turnover rate can not only affect the bottom line of business in any
organization but also, the employees who are satisfied with their jobs don‟t usually leave. A
company must collect data and also, try to observe the turnover trends over time. This might
be a pointer as to where the problem is. Companies can provide desirable benefits, pleasant
working conditions, opportunities for advancement and also, decent pay to their employees.
Here Are a Few Tips Which Can Help Companies to Maintain a Healthy Turnover:

1. Proactively seeking feedback from employees before they leave. Also, This can highlight if
employees are dissatisfied with a certain aspect.
2. Ingraining transparency into the working of your organization.
3. Setting up realistic expectations from your employees.
4. Communicating your goals as well as benchmarks clearly.
5. Setting up a proper mechanism for onboarding employees.

2. Productivity
The constant effort to enhance employee productivity has become the new business norm.
Not only Managing but also maintaining high employees productively needs quick, smart,
and consistent procedures and also, HR professionals are tasked with keeping a track of all
employees, addressing their issues & filling the gaps.

You Can Greatly Improve Employee Productivity by Keeping a Few Things in Mind:

1. Equip your team with the right tools they‟ll need for the job.
2. Improve the cultural fit in an organization with smart recruiting.
3. Upskill and train your employees so they are familiar with the latest tools and
technologies.
4. Try to avoid micromanaging your employees. because of „Less managing gets better
results‟.
5. Encourage your employees to relax and also, dedicate some time for self-care.

3. Relationships With Customers

Customer service is arguably the most critical factor in an organization‟s long term success.
Especially, Customers can quickly use social media platforms to express their displeasure if
they aren‟t satisfied. Consultants must keep a keen eye on feedback as well as leverage 21st-
century technology to improve their customer satisfaction.

Here’s What You Can Focus On To Improve Your Relationship With Customers:
1. Increase the focus on personalization. and also, Your customers want to be treated like
people, not numbers.
2. Develop transparency in your work, which will give your customers a peek. in short,
“behind-the-scenes”.
3. Provide the right content to customers at the right time.
4. Allow your customers to occasionally collaborate with you.

4. Uncertainty About The Future

Organizations not only hire trained professionals but also experts to look at trends and
patterns in the current market and determine the future course of action. Being able to predict
and act upon the changing corporate scenario is the difference between success and failure in
an organization.

Dealing with uncertainty in an organization can be extremely difficult. The current

Coronavirus situation has underlined just how uncertain our futures can be. However, you
can always do a few things to mitigate the uncertainty-

1. Doing something practical, right now, which will improve your company‟s chance of
success.
2. Deliver value to your customers before anything else.
3. Shift your focus towards everything which you can control.
4. Also, Develop short term strategies.
5. Place a calculated bet on what might work a few years from now. It‟s risky, but it‟s the
only way forward.

5. Financial Management
A CFO or a financial consultant is crucial for any organization, no matter how small it is. A
financial advisor helps in making robust financial calls regarding cash flows, profit margins,
reducing costs as well as help to increasing productivity. A business idea backed by numbers
is one that is more than likely to succeed.

Even if you don’t have a CFO at present, we’ve mentioned some basic strategies which
you can follow to manage your finances:
1. Have a clear, step-by-step business plan ready before acting on any new business idea.
2. Monitor your financial position and Also, get to know the basics of cash flow management.
3. Avoid credit lending as well as ensure that your customers/clients pay you on time.
4. Control your overheads and try to keep a track of your daily expenditure.
5. Clear your taxes and file for IT returns on time.

6. Monitoring Performance
Performance indicators provide metrics for how well a business is doing. KPI– which covers
employee as well as customer satisfaction, internal process quality & finances is a key
indicator. Organizations must monitor their performance with in-depth reviews and analysis;
rather than just relying on ambiguous sales numbers.

Here are a few guidelines which can help you monitor your organizational performance
more effectively-

1. Set SMART goals to be specific, measurable, actionable, relevant & timely, and see if they
have been achieved.
2. Measure outcomes- the benefits that result from the work performed, rather than outputs.
3. and also, simplify and clearly define how you measure performance.
4. Eliminate „silo‟ thinking i.e. enable information to flow freely throughout the organization

7. Regulation & Compliance

As mentioned earlier, it can be difficult for CEOs or top managers to keep a track of laws and
regulations applicable to their company. Some laws and regulations might not be apparent at
first glance, hence the documentation should be read thoroughly. Also, it is advisable to hire
an external consultant or entrust someone within the company to keep up with all the
regulations. Non-compliance may cost fines or worse for a company.

How to Ensure Regulatory Compliance, You Ask? Here Are Some Tips:

1. Not only Identify laws but also regulations applicable to your industry and operations
process.
2. Determine what requirements you fall short of, and also, devise a plan of action.
3. Document the compliance process. This will help you immensely during audits.
4. And also, Monitor changes as they happen.

8. Understanding Generation Z
In the past few years, businesses have had to adapt to new social market channels ( Instagram
as well as Facebook), and also deal with globalization, and adapt to the change. Businesses
have to learn to work with the millennial generation. Also, They have to work to understand
their point of view, work style, and what they might potentially bring to the table.

Experts Have Predicted That Generation Z Will Be Better Future Employees Than The
Previous Generation. Here Are The Reasons.

1. Generation Z is well equipped with globalized technology, Also, they have grown up with
it.
2. They have more willingness to start up their own ventures and also, learn.
3. They are looking for fulfillment and excitement in their job roles, and hence are more
likely to come up with creative ideas.

9.Technology
Technology is changing at a lightning-fast pace. New methods of working (Remote work),
new procedures for development (DevOps), new channels for marketing (social media), app
development, cloud computing have all evolved within the last decade. Additionally, for
existing organizations, this becomes a matter of keeping up with the technology.

Here’S How You Can Stay At The Top Of Your Game And Keep Up With All The
Technological Changes Happening All-Around-

1. Pay attention to what other companies are adopting as well as more importantly, what
works for them.
2. Talk to your technical team frequently as well as try to gauge what might be a good plan
going ahead.
3. Technology is only part of your solution – the business problem is the driving force. In
addition, Align your technology according to your needs only.
4. Take a few minutes each day and also, research the emerging trends.
5. Encourage your team and also, employees to build business plans and ideas based on the
latest tech.

10. Meeting Aspirations of Employees

Once a company is done with the process of onboarding new employees, the next challenges
for HRM are to retain them. Companies can start with simple activities such as mapping their
employee goals, establishing a workplace based on trust and respect, and keeping
communication open to meet the aspirations of their employees and build loyalty.

Here Are Some Ways Which Will Help You Meet The Aspirations Of Your Emp