Top 5 biggest HR challenges and how to overcome them

The vital role of Human resources (HR) is being increasingly recognised as companies realise that their people are key to their success. Creating the right workforce, balancing legislative requirements, and engaging employees is no easy task. We outline the top challenges HR teams face and insights into overcoming them. 

HR is a key focus in today’s business world, with recent events and challenges highlighting its critical importance for company growth, success, and sustainability. Of course, businesses have to focus on revenue, competition, and the state of the economy.

However, with people at the forefront, companies are challenging traditional approaches to how they get things done. The face of employment has changed significantly and for a company to survive, or indeed thrive, these changes must be embraced. That means tapping into what HR has to offer and leveraging this to the maximum.

“People are key to the success of any business”

It’s been a big learning curve for many companies when realising that their people affect all aspects of the business. By treating people fairly, they will contribute to a company’s growth and long term sustainability.

HR has the responsibility to educate but also to play a part in creating the right workforce. This means attracting and retaining talent and identifying leaders of the future at an early stage. Balancing this alongside keeping up to date with legislative changes brings challenges, to say the least.

There are many challenges faced by HR and these are what we believe are the top 5 right now. 

1. Attracting and retaining talent

Companies are facing a deluge of applicants for every vacancy.

The numbers of those seeking work, driven by the effects of the pandemic, is at a five-year high. HR departments face the prospect of being overwhelmed, but this needs to be managed to ensure they attract the right talent for every role.

Attracting talent is only one half of the challenge though. The second challenge is retaining that talent. This often proves the most difficult.

High levels of staff turnover has financial and operational consequences for a company. But more importantly, poor retention means that potential future leaders leave and join competitors instead. 

To attract the right talent to apply for a job, it’s important that a company correctly manages its brand image. Leveraging social media can help show a company in a positive light and can give potential candidates a glimpse of their culture.

When it comes to retention, it’s common to lose employees early on in their journey. This can be avoided by developing an effective onboarding process. This doesn’t need to be complicated. It can be as simple as ensuring that an employee understands their key responsibilities and know who to turn to for advice.

It’s also vital that new employees are introduced to their colleagues, perhaps even buddied up with one, to help them settle into a new company and feel part of the team. This is even more important now that so many of us are working from home. 

2. Offering attractive and unique benefits and perks 

Salaries that meet industry standards is a vital first step in ensuring that employees are appropriately rewarded for their efforts. But this is just the tip of the iceberg. 

When it comes to keeping employees motivated and performing at their best, financial rewards or other benefits are important. This can be challenging for medium or small businesses that have to compete with bigger companies.

Larger sized companies generally have bigger budgets and can negotiate better benefits and discounts for their employees. HR leaders must constantly monitor the employee benefits and perks being offered within their industry and then tackle the next hurdle of how to match these. 

Another way of keeping workers motivated is to reward them based on their performance. High-performing employees are then given the chance to earn bonuses or other rewards. This type of scheme can lead to a significant rise in productivity. 

These benefits and rewards are all quite standard, however. But why be ordinary when you can be exceptional? Prioritise exploring benefits and perks that are new, innovative, or solve a genuine problem.

One such example is allowing employees to access their pay on-demand rather than having to wait for an official payday. Employees can access their pay in a more flexible way that helps avoid the disconnect between income and expenses.

Perks such as this will keep staff motivated because they are rewarded more regularly. It can also be a huge factor for employees when considering whether to stay at a company or join a competitor.

“Seek out employee benefits that are new, innovative, or solve a genuine problem.”

3. Managing change effectively

HR has a hugely important role in effectively managing organisational change. This might be procedural, structural, or operational such as implementing new IT systems.

When employees have change thrust upon them, it can be a destabilising time for them. Morale and productivity can dip and employees can become disengaged.

While change can’t be avoided, it must be managed correctly. This poses a significant challenge to HR teams.

When poorly managed, change has the potential to cause a domino effect resulting in negative consequences for the company. There is also the risk of losing valuable team members.

So, given that change is unavoidable, how can HR contribute in this area and avoid any fallout?

The only way to ensure that change is managed correctly is through the use of effective communication. Organisational change is inevitable. But it can often be predicted.

Alerting employees to potential changes allows time to seek their buy-in. Sudden change is likely to have the most severe negative consequences. That’s why clear and transparent communication at the earliest possible stage is key.

Once the change has been implemented, it’s important to monitor the impacts and talk to all employees affected to seek their feedback. Training, upskilling, or qualifications for staff to embrace the changes mustn’t be overlooked. For employees, this helps them feel valued and more capable of accepting the changes. 

4. Succession planning and ongoing development

Once a company has managed to attract the required talent, it’s vital that they receive ongoing development and upskilling. This means that the employee is more able to fulfil their role, but it also ensures that motivation levels remain high.

Often, the challenge here is a lack of time. There are organisational targets to hit and only so many working hours in a day. This often means that training and development get overlooked or delayed.

Training is sometimes hastily thrown together and doesn’t engage delegates. But even worse is that employees can see this as a sign that their employer isn’t committed to them. This can lead to talented employees seeking opportunities and qualifications elsewhere.

For a company to deliver effective and relevant training, it must be based on employees’ current or future roles. When it comes to employee engagement, there has to be a hook. This can be as simple as ensuring that the training is relevant. It’s also important to carefully consider how training is delivered.

We all know that long PowerPoint presentations are not engaging. However, role-plays and debates have proven an effective way to foster learning. There’s also room to use technology by allowing some of the learning to take place away from the workplace.

Helping employees to see a clear career path and purpose behind training boosts motivation and allows HR to build-in a clear succession plan.

5. Leadership development

Many companies develop robust training programmes for their employees. But leaders can still be somewhat neglected. There seems to be a belief that once a leader has reached a certain level, then further development or qualifications become less important.

Recognising the importance of an effective leadership team means realising the influence that they have on an organisation as a whole. These leaders are likely to be well-versed in the procedural and operational side of the business.

But it can’t be taken for granted that this knowledge equals the ability to effectively manage a team. Poor people management skills lead to disgruntled employees and an ineffective workforce.

Leaders can be given a sense of value by embracing their training needs. The natural consequence of this is the cascade effect which boosts employee morale. Although leaders may not require training in the context of the business, there are skills such as conflict management and delivering feedback that do require ongoing development.

Ensuring that leaders are trained in these skills means that employees are treated with respect and that poor performance can still be dealt with effectively.

A commitment to leadership development signals to them that their progression is being taken seriously. Importantly, it also reduces the risk of them being recruited by a competitor. With people being the key to all organisations, it’s vital to understand that this applies to all levels within an organisation. 

We’d love to chance to speak to you about how Openwage can benefit your employees’ financial wellbeing. To find out more, please get in touch.