The proliferation of technology and changes in the business environment have increased the importance of human resources in the modern world. The major challenges facing human resources arise from this elevation of human resource activities to a core strategic function.
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Finding and Retaining Talent
The primary challenge facing human resource is to have the right people ready at the right time at the right place.
The spread of technology and globalization has ensured a level playing field for firms in terms of technology, information, and availability of finance. The human resources of an enterprise, hitherto considered as just another resource such as land or capital, are now the key differentiator among firms, and as such the most critical source of competitive advantage.
Although the availability of labor usually exceeds the availability of vacant positions, talent that makes a difference has always remained scarce. The increased competitiveness among firms ensures that finding new ways to increase the level of talent in the organization remains the key challenge facing human resources. The very existence of many knowledge-centric firms in fact depends on the ability of the human resources department to hire and retain the right talent.
Retaining existing talent is easier than hiring new employees, and as competition increases among firms, human resources looks at various ways on how to retain talent. Possible interventions include custom-made compensation packages and fringe benefits, job enrichment, autonomy, better working conditions, and more.
The traditional human resources management approach entailed either hiring people with the required skills or training employees to develop the skill sets required for the organization. The challenge for human resources in the new order is to ensure an employee-employer fit.
Ways to ensure employee-organization fit include
selecting employees based on the ability to do the job
hiring employees who value teamwork and who can work with other employees
hiring employees whose personal values and outlook match organizational values and culture
Research by Dr. Christopher Collins at Cornell University's Center for Advanced Human Resource Studies indicates that firms do well to adopt a hiring strategy of attracting and selecting employees whose personal values and outlook fit organizational culture and values. Such firms have 7.5 percent higher revenue growth, 6.1 percent higher profit growth, and 17.1 percent lower turnover compared to firms that do not adopt this strategy.
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Ensuring Employee Competence
The traditional approach to equipping employees to fulfill organizational requirements entailed training and developmental interventions. The scope of training and development has undergone much change in recent times noted for high labor mobility. Human resources departments need to balance the cost of training with the reality of such employees quitting before the organization realizes the investment from the training intervention. Organizations also give increasing preference to talent management over training.
The dimensions of HR challenges in this regard include:
understanding the employee’s innate skills and competencies and providing employees with opportunities to apply these skills for the benefit of the organization
skill enhancement of the workforce to promote adaptability, resilience, and agility
adopting a market driven approach
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Adopting a Bottom-Line Oriented Approach
Another major challenge facing human resources is to integrate its functional activities with the company’s strategic goals. This entails taking a bottom-line oriented approach while making decisions or framing policy. While such a stance does not pose problems for most functional areas such as quality control or finance, the interests of the employees very often run at cross-purposes with the interests of the organization in terms of profitability.
Human resources departments face the difficult task of walking a tightrope trying to affect trade-offs between genuine employee concerns and the commercial imperatives of the organization. For instance, while employees remain accustomed to pay for performance, the new reality is to compensate employees to the extent of value they add to the organization in terms of profitability, regardless of their level of performance. Similarly, while that latest trend is towards contract or performance based tenures, employees prefer a more stable plan and are accustomed to time-based tenure with many benefits.
The key role of human resources in overcoming such challenge includes:
Devising and implementing various motivational approaches, heralding a shift from performance-oriented pay to results-oriented remuneration or gain-sharing.
Changing employee mindset from a process-oriented approach to a customer-oriented approach. Initiatives such as Total Quality Management, Six Sigma, and the like play a major role in this regard.
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Managing diversity ranks among the most underestimated challenges confronting human resource. The increasing thrust towards globalization has resulted in internationalization of the workforce, and the increased demands for talent has resulted in groups of people hitherto out of the workforce entering the workforce.
The dimensions of workplace diversity include age, ethnicity, gender, physical abilities, race, sexual orientation, educational background, geographic location, income, marital status, religious beliefs, parental status, and experience.
A key challenge facing human resources is to manage and retain such diverse talent. The dimensions of workforce diversity challenge include:
reconciling the corporate culture to accommodate diversity and individual sensitivities
thinking globally and acting locally, by being responsive to the culture of the region, adapting to the societal requirements of host societies, and complying with local labor legislations
Change is the only constant in today’s business environment, forcing organizations to keep pace with such changes constantly and rapidly to exploit new opportunities. Change takes the shape of organizational restructuring, mergers and acquisitions, right sizing, implementing outsourcing, providing telecommuting opportunities for employees, and the like. Focused change intervention increases productivity, improves organizational communications, improves process efficiency, improve quality, and raises employee morale.
The challenges related to change for human resource management include:
helping employees overcome resistance to change by convincing them about the bigger picture
provide leadership for the change processes
ensuring stability of systems and processes during the change process
equipping employees to deal with the changed realities.