The rapidly transforming business landscape means that there are currently many human resource management challenges which will continue to evolve for years to come. Tom Marsden, Director of Professional Services at Alexander Mann Solutions says that HR departments really need to be adding real business value to their organizations. “Although the restrictions of the recession aren’t over yet, companies are recognizing that in 2010, they will need to take steps to retain their workforce. This could be through an increased emphasis on training and engagement programs or by investing in areas that will optimize expenditure, such as integrated technology systems or improved candidate attraction schemes. The signs are that HR departments are preparing to maximize their resources and staff as organizations look to grow.”
The Evolution of HR Professionals
Coach. Counselor. Employee advocate. Business strategist. As the business world changes, so does the role of HR professionals. Since human resources is a business-driven function, effectiveness depends on a thorough understanding of the strategic corporate direction, as well as the ability to influence key policies and decisions. In addition, human resource management challenges must be defined and solutions determined in order to succeed.
Today’s Top 10 Human Resource Management Challenges
Due to the fluctuating economy as well as local and global advancements, there are many changes occurring rapidly that affect HR in a wide range of issues. In the Survey of Global HR Challenges: Yesterday, Today and Tomorrow, conducted by PricewaterhouseCoopers on behalf of the World Federation of Personnel Management Associations (WFPMA), several challenges for human resource management were revealed. This survey, which concluded that “despite national and regional differences, there was remarkable unanimity,” disclosed the following top 10 human resource management challenges:
|Challenges||% of Companies|
|1. Change management||48%|
|2. Leadership development||35%|
|3. HR effectiveness measurement||27%|
|4. Organizational effectiveness||25%|
|6. Staffing: Recruitment and availability of skilled local labor||24%|
|7. Succession planning||20%|
|8. Learning and development||19%|
|9. Staffing: Retention||16%|
|10. Benefits costs: Health & welfare||13%|
Taking a Closer Look at the Top 3 Human Resource Management Challenges
1. Change Management
Since this is generally not a focal point for HR professional training and development, change management represents a particular challenge for personnel management. The WFPMA finds that “This may also be the reason why it is cited as the foremost issue as HR continues to attempt to help businesses move forward. An intensified focus on training may be needed to develop added competencies to deal with change management.”
2. Leadership Development
As the second of the biggest challenges for human resource management, leadership development needs to be a critical strategic initiative. HR professionals are faced with being expected to provide the essential structures, processes, tools, and points of view to make the best selection and develop the future leaders of the organization. The WFPMA reports that, “Across the globe leadership development has been identified as a critical strategic initiative in ensuring that the right employees are retained, that the culture of the organization supports performance from within to gain market position, and that managers are equipped to take on leadership roles of the future so that the organization is viable in the long term.”
3. HR Effectiveness Measurement
How can improvement happen without the right tools to measure HR effectiveness? As with many other areas of business, this profession also needs to be able to measure results in terms of transaction management, as well as in terms of the positive influence on business. “Utilizing metrics to determine effectiveness is the beginning of a shift from perceiving HR’s role as purely an administrative function to viewing the HR team as a true strategic partner within the organization,” the WFPMA says. “In fact, the next section reports that survey participants believe a critical future issue for HR will be organizational effectiveness – again supporting HR’s critical role as a strategic partner to management.”
This world federation also notes that, “Where HR departments have traditionally focused on measuring their own effectiveness, there is an evolving recognition that they can provide organizational value by measuring the effectiveness of the entire business organization. The shift is significant as it represents movement from simply counting the numbers hired to determining the ROI of collective and individual hires on a long-term basis. Going beyond measuring turnover, this new approach considers ‘bad’ turnover and ‘good’ turnover along with the overall cost of replacement hires.”
The Numbers Speak Volumes
When you start looking at the numbers, you realize the significant impact of trends and challenges in human resource management. There are many variables that influence human resource management. To give you a glimpse at some of the upcoming changes, the HR Leadership Council has released the following statistics:
- One in four high potentials plans to leave their organization in the next year.
- By effectively developing employees, managers can be better coaches and improve performance by up to 25%.
- Three out of five organizations have either restructured or plan to restructure within the next six months.
- Recent declines in employee engagement further decreased overall productivity by 3 to 5%.
- Leaders with strong people development skills are 50% more likely to outperform revenue expectations.
- Delivering on critical onboarding activities boosts new hire performance by 11.3%.
- 77% of midsized companies use (or plan to use) wellness to reduce costs.
- 46% of midsized-company CFOs anticipate a merger or acquisition in less than six months.