HR Management

Biggest Challenges Facing HR Departments

The HR function has been changing over the years. More businesses are realigning the role of HR so they can best manage and grow their company cost effectively. Some companies have decided that it’s best to outsource some functions to third parties so that internal resources can focus more time on strategic issues. It’s safe to say that companies today are constantly examining their HR function with a goal of figuring out best practices and best allocation of time.

HR deals with many issues, but probably the biggest challenges facing HR Departments today are Recruitment, Retention & Motivation, Leadership Development and Corporate Culture. As HR works to move to a more strategic role, addressing these issues has become a continual and time-consuming process. Here’s why.

Recruitment, Retention and Motivation

This may be the most challenging issue that challenges HR today. Human Resource professionals anticipate that retaining the best employees will be the greatest HR challenge in 2022, according to a November 2012 poll by the Society for Human Resource Management. 59% of respondents ranked this factor in their top three challenges, compared to 51% in 2010. Predictions indicate there will be a lot of people looking for new jobs when the economy improves. There is always the perception that the “grass is greener on the other side of the street”. In times of economic slowdown and periods when growth is slow, employees become more open to considering other employment options.

Employers today must find new methods to attract talent through social media, postings on job boards and even other traditional methods such as attending job fairs and sending out promotional mailings to generate interest. The new generation employees are looking for jobs that provide a balance between employment and family, and desire autonomy and the ability to make a difference within the organization. Companies are well advised to search for diversity that can generate new ideas, better productivity and a sense of equality that builds teamwork. Lack of technical talent has made it difficult for companies to fill specialized positions. Even during periods of high unemployment, technical and technology-driven companies find a shortage of employees with the training and competencies to perform in niche jobs.

Retention has become tougher than any time in the past and has become a heightened issue. Companies sometimes need to offer more in terms of benefit packages or incentives, because people increasingly look for jobs that reduce their risks in tough economic times. Employers are advised to identify their key employees from entry-level to upper-level management and take the appropriate steps that are unique to their businesses to retain these individuals. Employers should consider merit pay increases, projects that increase an employee’s responsibilities, and other benefits like flex time, telecommuting, or technologies to keep employees happy.

Building a workplace where employees are motivated is an ongoing issue confronting HR professionals. Offering positive reinforcement and feedback to team members has become an ongoing initiative for HR. Company managers must inspire employees and coach them to become top performers. HR professionals need to understand what motivates company employees and incorporate them into compensation or rewards systems. Finding out why people are leaving and addressing the issues is a role HR also plays.

Leadership Development

The SHRM poll and a similar one in 2010 by PricewaterhouseCoopers both indicated leadership development as a key challenge for HR. 52% of respondents indicated this factor was a concern, a significant increase over 29% in 2010. The workforce is aging quickly, leading many HR teams to consider putting formal succession plans in place and to begin more emphasis on developing future leaders. As companies grow and expand, developing leaders has become a major initiative. Successful companies that work on leadership development will also make strides with better employee retention.

Employees repeatedly say that poor leadership as a reason for leaving jobs. They also want a more active leadership role in decisions within their jobs, which may necessitate training. Unfortunately, businesses sometimes struggle to produce the budgets necessary for strong employee training and development programs that emphasize leadership and growth.

Culture

Research has proven that culture influences organizational performance, whether performance is defined in terms of customer satisfaction, attendance, safety, stock price or productivity. Human Resources plays an active role in the development of an organizational culture. Great workplaces with a great corporate culture are more financially successful than their peers. Great workplaces have lower employee turnover than their competitors and can recruit top talent that fits their culture and needs. The result is they provide top quality customer service and create innovative products and services that contribute to their overall financial success.

There is a strong relationship between cultures and hiring that comes into play with employee sourcing, selection, and retention. Cultural fit is the makeup of someone. It’s who they are and what they bring to the table. Generally, it can’t be taught. If your corporate culture is not in synch with your candidate, it will be difficult to change them. Most people can pick up new skills with relative ease if you have the time to train them. Most companies pay relatively little attention to culture despite its importance. It has been proven that actively managing and developing culture through hiring can significantly improve employee retention and performance. In the end, this directly influences organizational profitability and growth.

As companies recognize the need to evolve the HR function to address Recruitment, Retention & Motivation, Leadership Development and Corporate Culture challenges, outsourcing some or all of these functions allows them to take a strategic approach to these challenges while cost effectively growing their company.

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