An organization integrates people, information, and technology to generate cash flows and revenue for the company’s success. This is complemented by elements of organizational design, which deals with management hierarchies and departmental groupings. Organizational design is necessary in order for clarity of goals, growth of the organization, adaptability to changing trends, and using opportunities for individual growth. When two firms use similar organizational designs and use the same tools to manage their different processes, what, then, determines which organization would be more sustainable and successful? Sometimes, the simple answer is Human Resource Management (HRM). HRM covers various functions that don’t end at recruitment or allotting roles, or giving out payrolls. HRM covers a multitude of functions which is necessary not only from the organization’s point-of-view but also for employees’ growth and self-development. The main functions of HRM include job design and analysis, workforce planning, training and development, performance management, payroll and benefits allocation, and legal issues.
The HRM department of a company can be a differential advantage that only a few companies get to enjoy. For example, Fed-Ex, following a simple motto of People-Service-Profit since the 1970s, has executed it in the best way possible. Fed-Ex believes in taking care of and budding their employee in order for them to deliver the highest quality of service to their clients, and in return Fed-Ex gets to enjoy profit and sustainability. This is not achieved in a whip; the management rolls out feedback forms to it employees, employees provide feedback, and management meets to discuss the same with the employees. This assesses and resolves the problems in the early stages, thus making it an efficient way of staying updated and moving with the trend without making major changes in the company’s operations.
The era of the 21st century brought many technological revolutions which have changed how firms in almost every industry operate. One major change was budding start-ups with a computer and office space the size of a room. Mark Zuckerberg made a billionaire company with was much different than its bureaucratic predecessors. This new idea gave way to small enterprises. Small enterprises mostly suffer from a lack of HR members and most of the time it’s the CEO of that enterprise that heads the recruitment process. This clearly indicates a lack of functionality of HR but regardless, they should be ready for upcoming HRM challenges for developing high-performing business cultures.
The main challenges faced by HRM irrespective of the size and nature of the industry are listed below:
1. Talent Retention
Employees should be taken as building blocks of an organization rather than a commodity that can be replaced if not performing satisfactorily. This is because an organization prospers due to its top performers, loyal workers, and people who think of the organization’s profit before its own. Organizations can’t afford to lose this kind of employee as this would account for recruitment and training costs for the person filling that role and loss in productivity of the organization for that time period. HRM plays a major role in retaining employees as HRM tries to resolve every employee’s problem. Troubles concerning fewer pay grades, overtime working hours, allotment of benefits, etc. are a few to name. Lets’ go over a few roles of HRM and the challenges that they face while dealing with it.
HRM is responsible for recruiting the right person for the right job, but they face the challenge of people lying just to fit in with the job description. This would be costly for an organization when an HRM ends up recruiting and training the wrong person for a job. This would be because a person would be less productive due to unaligned competency and tasks present in the organization for a short span of financial support and might be involved in deviant workplace behavior.
A few candidates who are hired have the tendency to be bored in a short span of time. This is similar to hiring a candidate not fit for the job because no matter what job it is, it needs continuous effort and attention for long periods of time to give any results. Candidates like this look for big rewards in short amounts of time thus changing their jobs most of the time without spending considerable time in any organization.
HR launches incentive schemes to motivate top performers. This is called performance management and requires continuous monitoring of that employee, followed by performance reviews at the end of the day, month, or year as the period decided by the organization. Candidates have unrealistic expectations from their job. These expectations are related to monetary growth, personal development, the organization’s culture, and other employee behavior towards self. Sometimes these expectations are not met and changing the job resorts to being the only option. Talent retention is important in order to maintain considerable skill and workforce for operations of the organization but it is also important as employees leaving the organization creates a negative view about it and it becomes more difficult to attract and retain new talent.
2. Leadership Development
Leadership is the quality that everyone wants but only a few have to ability to rightfully exercise it. Leadership not only affects what values are shared in order to achieve goals but also affects how the team’s culture is exhibited, and also plays a pivotal role in retaining an employee. Poor leadership leads to employees leaving their jobs. Employees also seek leadership in their decisions within their respective departments or teams. But since everyone cannot be a leader, there are a few steps that could be followed in building a leadership culture:
- Creating a shared purpose and individual accountability: Millennials are taking up roles and responsibilities in organizations. A millennial is motivated differently and makes decisions differently. Millennial wants to be a part of the big-game strategy and also wants their actions in the organization to be part of it. So starting steps would be making the long-term goals relevant for the employees, followed by individual goals of employees relevant for achieving long-term goals. Accountability on the other hand serves as a pillar of organizational culture. Since we know that a leader always takes responsibility for his actions and consequences, embedding this culture would create transparency and reliance among employees.
- Measuring ROI of soft skills: Soft skills play a major role in the service industry, but almost all industries have a major need for soft skills. For example, it was Steve Jobs’ dedication and interaction that lead to Apple being a giant in today’s world. Leaders have the quality to lead by influence rather than to lead by authority. In any organization, the manager is present who needs to have mastery of soft skills for managing and making others work. Soft skills create an agile organization, develop innovations, create the best culture to work in, and make the company most admired. When someone has a clear vision of what the goal is, only then they can work out a strategy to achieve it. The strategy depends on the values the team and leader carry.
- Building trust and perspective management: No leader has succeeded without followers. Followers believe in their leader, their ideals, and their values and depend on him to take good decision that benefits all. Perception drives attitude and attitudes affect others. If perception is set right, it can drive the best attitude from oneself and leave an impact that pleases everyone.
3. Maintaining the Organizational Culture
Organizational culture refers to the set of rules, norms, lifestyles, beliefs, and values the organization operates with. If a person shares the same beliefs and values as the organization, employee engagement increases and so does the level of productivity. The challenges lie in maintaining a constant culture throughout the organization that is consistent with everyone. It should involve all employees so that the culture of shared values and beliefs is more than words. Finally, it is important for success that everyone keeps moving in the same direction together.
4. Training and Development
With ever-changing organizational set-ups through actions such as mergers, acquisitions, and changing technology and trends, an organization needs to learn new things in order for them to stay relevant. These changes are followed by high expectations and demands of an increasing workforce, which puts pressure on HRM to carry out training and development which gives maximum returns on investment. The following are a few challenges that affect the ROI of a training program:
- Learning effectiveness: The quality of training is defined by what a participant learns and does after the training. Training method having learning objectives closely aligned with job improvement is crucial for return on training investment.
- Engage learners: If a teacher is not teaching well, students are not willing to learn. Combining these two, we get three combinations where the training program becomes irrelevant and only one outcome where the training program is a success. Thus, trainers should also engage the learners which helps them absorb and apply, as much as possible.
- Tracking skills applications: Now we got a perfect combination of effective delivery and engaged learning but it still isn’t relevant if the application and learning of the program is unidentifiable. The skills learned in the training program are sometimes so subjective that it becomes difficult to be evaluated objectively, with one example being soft skills.
HRM has always faced these challenges and come up with ways to resolve them, which represents more of a reactive approach. A robust online software solution helps organizations be more proactive with these challenges. The various modules of HRM software work together to help organizations digitize their HRM processes and be much more effective in managing their people. Goal management lets everyone set clear goals to be achieved, and performance management helps in developing appraisal programs and rewarding high performers. Succession planning identifies and develops high-performing talent, while the training management module helps keep a check on the various training requirements. Benefits management allocates benefits according to targets reached or goals completed and dashboard services help monitor tasks quickly.