Challenges of HRM
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
Environmental Challenges
Organizational Challenges
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.
Rapid Change
Workforce Diversity
Globalization
Legislation
Technology
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.
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.
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.
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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.
Controlling Costs
Improving Quality
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.
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
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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.
Productivity
Job insecurity
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.
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.
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
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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.