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
- Environmental Challenges
- Organizational Challenges
- Individual 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.
- Rapid Change
- Workforce Diversity
- Job and Family Roles
- Lack of Skills
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.
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.
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.
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 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.
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.
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.
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When the workforce of an organization is effectively used in combination with other factors of production, the opportunities of the environment are availed and the threats are eliminated. The competitive position of the organization can be influenced by the policies of HR in the following ways.
- Controlling Costs
- Improving Quality
- Developing Distinctive Capabilities
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.
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.
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.
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.
- Brain drain
- Ethics and social responsibility
- Job insecurity
- Matching people and organization
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.
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.
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.
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.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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