Everything you need to know about the challenges of HRM. The organisations today realise that human resource is the most valuable asset and are adopting policies like competence building, job rotation, performance linked pay, empowerment, etc., which promote the overall development of the human resources.
Greater stress is also being given in the field of employee welfare and social security with increased post-retirement benefits like health insurance, provident fund, pension, etc.
HR professionals have to play a vital and pivotal role by acquiring, preparing and maintaining human resources for the meeting various challenges.
Social, economical, technological conditions are changing. These changes are already affecting business and will have an even greater impact in future. Human behaviour is also complex.
The individuals rarely react exactly in an identical manner even in identical situations. These changes pose major challenge to the human resource management. The human resource function has to make a pro-active and creative response to these challenges and the consequence they hold for the human resource function.
The challenges of HRM can be studied under the following heads:
A: Challenges of HRM Faced by HR Professional:- 1. Managing Workforce Diversity 2. Meeting Aspirations of Employees 3. Empowerment of Employees 4. Management of Human Relations 5. Dynamic Personnel Policies and Programs 6. Building Responsive Organisation 7. Creating Dynamic Work-Culture 8. Building Core Competence and Creating Competitive Advantage and 8. Outsourcing HRM Functions.
B: Challenges of HRM Faced by Organisations over the Last Few Decades:- 1. Technology 2. Economic Conditions 3. Social 4. Political 5. Labour Legislation 6. Workforce Diversity 7. Levels of Education 8. Corporate Reorganization 9. Competitive Advantage 10. Quality of Work Life.
C: Challenges of HRM into 3 Broad Groups:- 1. At Organisational Level 2. Workplace Level 3. Department Level.
D: Challenges of Human Resource Management Faced in the 20th Century
E: Major Challenges of HRM in Retail Industry:- 1. Recruitment 2. Training and Development 3. Compensation 4. Attrition and 5. Retention.
Challenges of HRM: Faced Over the Decades, by HR Professionals, Organisations and Retail Industry
Challenges of HRM – 9 Emerging Challenges Faced by HR Professionals: Managing Workforce Diversity, Meeting Aspirations of Employees, Empowerment and a Few Others
The organisations today realise that human resource is the most valuable asset and are adopting policies like competence building, job rotation, performance linked pay, empowerment, etc., which promote the overall development of the human resources. Greater stress is also being given in the field of employee welfare and social security with increased post-retirement benefits like health insurance, provident fund, pension, etc.
HR professionals have to play a vital and pivotal role by acquiring, preparing and maintaining human resources for the meeting the above challenges.
In doing so, HR professionals will face the following challenging tasks:
Challenge # 1. Managing Workforce Diversity:
An important challenge that human resource managers face involves workforce diversity, i.e., the increasing heterogeneity of organisations with the inclusion of employees from different groups such as women, physically disabled persons, retired defence personnel, backward classes, ethnic groups, etc.
Whereas globalisation focuses on differences between personnel from different countries, workforce diversity addresses differences among people within the same country.
For instance, more and more women have been joining the organisations in India and women executives have also been occupying important positions at the middle and top levels in the organisations. This in itself is a challenge for organisations as, traditionally, the Indian society has been male dominated.
Workforce diversity has significant implications for the management. The managers will be required to shift their approach from treating each group of workers alike to recognizing differences among them and following such policies so as to encourage creativity, improve productivity, reduce labour turnover and avoid any sort of discrimination.
When workforce diversity is managed properly, there would be better communication, better human relations and congenial work culture in the organisation.
There has been a rise in the proportion of employees in today’s industries who belong to the younger generations whose aspirations are different from those of the earlier generations. Today’s workers are more careers oriented and are clear about the lifestyle they want to lead. Considerable changes have been noted in the career orientation of the employees.
They are becoming more aware of their higher level needs and this awareness would intensify further among the future employees. The managers would be required to evolve appropriate techniques to satisfy the higher level needs of the employees and develop suitable plans for their career advancement.
There has been a general change in the profile of workforce in industrial and other organisations. The organisations in future will get better qualified and career oriented young employees. The proportion of professional and technical employees will also increase as compared to the blue collared employees.
They will seek greater degree of participation in goal setting and decision-making and also demands greater avenues of self-fulfilment. To respond to these demands, organisations will have to be redesigned or restructured to empower the employees so that they have sufficient autonomy or freedom to take decisions while performing their jobs.
Empowerment involves giving the employees more information and control over how they perform their jobs. Various techniques of empowerment range from participation in decision-making to the use of self-managed teams. In future, organisations will follow team structures which will pave the way for empowerment of lower levels.
Empowerment would be all the more necessary to speed up the process of decision-making, make use of environmental opportunities and to serve the customers and society better.
Management of human relations in the future will be more complicated than it is today. “Many of the new generation of employees will be more difficult to motivate than their predecessors. This will in part be the result of a change in value system coupled with rising educational levels. Greater skepticism concerning large organisations and less reverence for authority figures will be more common. Unquestioning acceptance of rules and regulations will be less likely.”
Since workforce in future will comprise better educated and self-conscious workers, they will ask for the higher degree of participation and avenues for self- fulfilment. Moreover, the proportion of professional and technical employees will increase in relation to blue-collar workers. The ratios of female employees in the total workforce wall also rise. Integration of women within managerial ranks might itself be a problem.
Money will no longer be the sole motivating force for majority of the workers. Non-financial incentives will also play an important role in motivating the workforce. In short, human resources will be treated as assets which will appear in the Balance Sheets of business organisations in future.
The Human Resource Manager of tomorrow will not only look after personnel functions, but will also be involved in human resource policies and programs for the entire organisation. Similarly, human resource management is not merely going to be an exclusive job of the HR Manager, but every executive in the organisation would be made responsible for the effective management of people in his unit.
Thus, management of human resource will receive greater attention of all managers from top to bottom. The human resource manager would play a key role in the formulation of personnel policies, programs, plans and strategies of the organisation. Every HR program will have to be properly planned and directed by the human resource manager in consultation with the line and functional managers.
The Human Resource Manager will have to contribute tremendously to the building up of responsive organisation. Creating adaptive customer-oriented organisation would require soliciting employees’ commitment and self-control and encouraging empowerment of employees.
Instead of imposing himself as the traditional boss, the future manager will have to think of himself as a ‘team-leader’, ‘internal consultant’ and ‘change facilitator’.
The human resource manager will have to mobilise a new work ethic so as to assist the top management in setting up and enforcing quality standards. Greater efforts will be needed to achieve group cohesiveness because workers will have transient commitment to groups.
As changing work ethic requires increasing emphasis on individuals, jobs will have to be redesigned to provide challenge to the employees. Flexible starting and quitting times for employees [flexitime] may become necessary. Further, focus will shift from extrinsic to intrinsic motivation of employees.
In future, changes will have to be initiated and managed to improve organisational effectiveness. A work culture conducive to absorption of changes in the technological, economic, political, socio-cultural and international environment will have to be nourished by the HR/Personnel executives if they want to acquire higher status in industry and society.
They will also have to make top management more actively involved in the development of human resources for meeting the challenges of environment and enhancing organisational effectiveness.
Over the years, human resource management has emerged as a discipline in its own right and the HR manager as a professional. Professional dynamics will enhance its prestige and quality of service. However, its survival and success in future will depend upon the judicious application of knowledge and skills available.
Human resource management will emerge as a well-established, well-respected and well-rewarded profession, comparable to other established professions provided the challenges and opportunities are successfully exploited for its advancement.
The human resource manager has a great role to play in developing core competence by the firms. A core competence is a unique and unimitable strength of an organisation which may be in the form of human resources, marketing capability, or technological capability. If the business is organised on the basis of core competence, it is likely to generate competitive advantage.
Because of this reason, many organisations have restructured their business by divesting those business activities which do not match core competence or acquiring those business activities which fit their core competence such as Gujarat Ambuja acquiring cement companies and Reliance Industries acquiring yam companies.
In fact, organisation of business around core competence implies leveraging the limited resources of the firm. It needs creative, courageous and dynamic leadership having faith in the organisation’s human resources.
In today’s globalized market piece, maintaining a competitive advantage is the foremost goal of any business organisation. There are two important ways a business can achieve a competitive advantage. The first is cost leadership which means the firm aims to become the low-cost leader in the industry.
The second competitive strategy is differentiation under which the firm seeks to be unique in the industry in terms of dimensions that are widely valued by the customers.
Putting these strategies into effect carries a heavy premium on having a highly committed and competent workforce. Such a workforce would enable the organisation to compete on the basis of market responsiveness, product and service quality, differentiated products and technological innovation. Creation of competent and committed workforce is a great challenge for the human resource manager.
These days, many organisations are outsourcing routine HRM functions so as to focus on strategic HR issues that affect corporate performance and shareholder value. The HRM functions which are of routine type and can be safely outsourced include recruitment, selection, compensation, job evaluation, training, etc. Outsourcing of such functions would enable the management pay greater attention to core business activities.
The term ‘outsourcing’ means getting some service from external service providers or agencies rather than performing it within the organisation. This practice is called Business Process Outsourcing (BPO). The basic feature of BPO is that companies hire out on contract those services or tasks which fall outside the area of their ‘core competence’.
For example, a business enterprise may outsource employment of personnel, training of personnel and payroll accounting to a specialised service provider, often called a BPO film.
Outsourcing of routine HRM functions is cost effective. The management need not invest in the staff and necessary infrastructure for the performance of routine functions. Further, BPO firms use their expertise in the performance of such functions.
Challenges of Human Resource Management – Faced by Organizations over the Last Few Decades
The management of human resources have changed over the last few decades but this change has been relatively slow in comparison to the changes in other areas of business and management.
The management of human resources are facing the following challenges:
An organization’s technology is the process by which input are transformed into output by its workforce. Revolution in technology and ether technological innovations which adversely affect the interests of the workforce and there occupational mobility There is a need to upgrade abilities of employees if the organization want to survive in a competitive world market.
Hazardous, risky, and repetitive jobs could be handed over to sophisticated robots. The old concepts of work have under gone dramatic change. The changes have been coming so fast that organizations have realized that they must perform and prepare for a great range of human resource flexibility.
2. Economic Conditions:
The economic conditions have a strong influence on human resources management People, goods, capital and information are moving around the globe and number of organizations are trying to become global players. IBM, Coca-Cola, Motorola and Gillette are earning more than half of their revenues from operations outside USA.
President Clinton’s successful endorsement of NAFTA [North American Free Trade Agreement] will further increase efficiency and markets, and create a greatly, increased competitive challenge to enterprises worldwide. India has become a sourcing centre for many global organization. They have successfully utilised the services of skilled manpower which is available here at low price to create distinct cost advantages for their products.
Overall, growing international competition and interdependency, intensifies the pressure on executives, supervisors and all employees to become more innovative, more quality and cost conscious. Therefore, it is the responsibility of HR managers to play challenging roles and create a competitive advantage for the organization, into global market place.
Changing social trend around the world help account for importance of the human resources management to the organization Social applications, both formal and informal, will have large influence on the attitudes and behavior of employees at work because people are normally social oriented. The job of managing become more challenging and more variable. This trend intensify the importance of all managers’ roles in selecting and managing human talent.
HR managers have realized the importance of conducting their business in a socially relevant and responsible manner. Organisations do not operate in isolation. They are the part of society therefore social impacts have to be carefully evaluated before undertaking any programme. If public believes that any organisation is not operating in the interests of society then it is the responsibility of an organization to alter its practices in respect to satisfy society’s needs.
Political scenario effect the functioning of HR managers due to ideologies, opinion and thinking power of political parties. For smooth working of organization’s political stability is a necessary parameter because on the basis of this the organizations and HR managers will formulate their policies and practices. Political interests and unstability create unrest and loss of production to the organization.
The role of trade union is also very important. Due to the positive attitudes of trade union the Bajaj Auto worliplant signed a wage and productivity of agreement with its own internal union in year 1996. The result of awareness of workers, organization such as Polychms, Philips and Mahindra have successfully implemented a VRS scheme for his employees.
5. Labour Legislation:
There have been a number of labour legislation both in the states and at the centre which are influencing HRM policies and programmes in a big way due to lack of fuller understanding and overlapping among labour Acts. Although, the HR managers cannot manage the personnel unilaterally because it has to abide by the rules and regulations imposed by the Government from time to time.
The important legislation enacted in India affecting HRM are:
The Workmen’s Compensation Act, 1923, The Trade Unions Act, 1926, The Payment of Wages Act, 1936, The Factories Act, 1948, The Minimum Wages Act, 1948; The Employment State Insurance Act, 1948, Industrial Disputes Act 1948.
The Industrial Employment (Standing Orders, Act,) 1946. The Provident Funds and Miscellaneous provisions, Act, 1952, The payment of Bonus Act, 1965, The Employment Exchange [Compulsory Notification of vacancies] Act, 1959, The Payment of Gratuity Act, 1972, The Maternity Benefit Act, 1961 and The Apprentice Act, 1961, etc.
6. Workforce Diversity:
Diversity issues in Indian organizations are peculiar owing to differences in social ethos, cultural differences and regional origins. Due to this changing nature of the workforce the organizations are becoming heterogeneous in term of age, gender, knowledge, ability and religion. Specially the increase of women and reserved categories has resulted in the need of organisation to re-examine their policies, practices and values. In addition to this HR managers have to deal with issues of child labour and contract labour.
7. Levels of Education:
The educational level of the workforce are better. They have more expectations about equity and better working conditions. Better educated employees always challenge and question management decision and want more meaningful work and a great voice in decision making process.
Educated workers often demand more responsibility and autonomy than their employers are willing. Therefore, the organization has to develop a more flexible approach to all aspects of HRM. Managers will be required to face a wide variety of demands from employees.
8. Corporate Reorganization:
In the free economics of the world the reorganization of corporate policies and corporate culture are very essential because these factors have a major impact in determining the interaction between human resource management and other departments with-in the organization.
The political changes, faced by employee in the organization during the course of reorganization are as follows:
(i) Job changes including new roles.
(ii) Transfer of new geographic locations.
(iii) Change in compensation and benefits.
(iv) Changes in career possibilities.
(v) Changes in organizational power, status and prestige.
(vi) Staff changes including new colleagues, bosses and subordinates.
(vii) Creation of open culture.
(viii) Establish two way communication system.
(ix) Establish relationships between people and position.
(x) Establish shared values and beliefs within an organization.
The understanding of the above listed points within the organization is very important in order to formulate appropriate HR policies and strategies.
9. Competitive Advantage:
An adequate HRM practices is helping in achieving the competitive advantage. This refers to unique benefits that an organization can offer to its customers. The benefits can range from lower prices for equivalent services offered by competitors, superior quality of products better after sales service, guarantees on trouble free performance or even special extra advantages that justify a premium price. If customer perceive the uniqueness of products or services, the consequence is competitive advantage.
The human resources has become central to competitive advantages is brought out effectively in the following Jack Welch, Chief Executive Officer, General Electric – “We have found what we believe to be the distilled essence of competitiveness. It is the reservoir of talent and creativity and energy that can be found in each of our people.”
10. Quality of Work Life:
The quality of work life means different things to different person. To Prof. Lloyed it means, “the degree to which members of a work organization are able to satisfy important personal needs through their experiences in the organization.” There are many factors which can contribute to “quality of work life.”
Walton cites the following:
(i) Adequate and fair compensation.
(ii) Appropriate balance of work.
(iii) A safe and healthy environment.
(iv) Opportunity for continued growth and security.
(v) An environment in which employees develop self-esteem and a sense of identify.
(vi) Job enrichment and job rotation.
(vii) Interpersonal skills and team work.
(viii) Developing and using employees skills and abilities.
(ix) Due process and privacy.
(x) A sensible integration of job career and family life and leisure time.
These considerations have a profound and sustained impact on the way human resources are managed.
Challenges of HRM – At Organisational Level, Workplace and Department Level
Social, economical, technological conditions are changing. These changes are already affecting business and will have an even greater impact in future. Human behaviour is also complex. The individuals rarely react exactly in an identical manner even in identical situations.
These changes pose major challenge to the human resource management. The human resource function has to make a pro-active and creative response to these challenges and the consequence they hold for the human resource function.
Some of these challenges are discussed under three broad groups are:
1. Organisational Level.
3. Department Level
The organisational level challenges include:
(i) Integration of human resource plans with corporate plans.
(ii) Task of motivating executives in view of reduced promotional opportunities.
(iii) Wages settlement and executive salaries.
(iv) Integration of change techniques.
(v) Task of keeping the organisation young and productive.
(vi) Industrial relations movement from conflict to cooperation.
(vii) Development of an organisational culture.
These are explained below:
(i) Integration of HR Planning:
There is a challenge relating to integration of human resource planning with strategic plans of the organisation. Here, effort may be made to forecast the human resource required to implement the plans of the entire organisation for meeting varied requirements including expansion, diversification or reduction in operations.
The process of integration is likely to positively reinforce the human resource objective of the enterprise and effect human resource planning. The integration of training and development objectives and strategies with the corporate plans represents a major challenge to improve organisational performance.
(ii) Motivation of Executive:
The developments pose a great challenge to human resource managers forcing them to evolve measures for motivating the executives in a stagnant environment. To overcome the frustration arising from blocked upward mobility among executive’s efforts may be made to redesign the job as a motivational measure for providing alternate job experience or providing lateral movement.
Other motivational measures include indirect compensation or benefits, recognition of their personal worth and treatment a dignified way. A friendly and supportive relationship can bring individuals a source of worth. A superior may treat individuals a source of worth. A superior may treat individuals with dignity and recognition of their personal worth.
(iii) Wages and Salary Differentials:
The third challenge involves wage settlements and emerging trends in the dynamics of relationship with respect to executives. There are varied challenges in the domain of wage and salary administration especially in public sector enterprises in India. The Bureau of Public Enterprise issues guidelines to regulate negotiations in public enterprises which do not remain unknown to even trade unions.
(iv) Change Techniques Integration:
Business is altered by new or different technologies, product lines, financial resource, marketing plans and ways of managing human resources. Hare we are attempting to focus on strategies to improve business effectiveness through management of human resource.
The application of innovative change techniques has become imperative in view of the declining productivity growth and the economic competition. While introducing change the companies use varied amount of participation and adhere to a process-oriented approach.
a. Organisational development
b. Productivity sharing plans.
c. Joint participation
d. Problem-solving groups
e. Autonomous work team.
(v) To Keep Organisation Young Productive:
There is a challenge task of maintaining a young and productive Organisation. Here, effort may be made to task into account the emerging dimensions relating to the unbalanced age structure of the human resource in the future. This necessitates adherence to a designed strategy for renewal of manpower in a phased manner. In recent past a large number of giant industrial enterprises were set up.
These enterprises recruited large number of young qualified industrial workers in the same age group of 20 years within a span of 4-6 years of its inception. A new dimension relating to the future age structure of the manpower is important to upkeep the efficiency, capability and productivity of the organisation.
In view of this, a designed strategy for renewal of manpower is important in a phased manner a few years ahead of mass retirement period is called for. Young blood has to be inducted to balance the aged workforce and revitalize the organisation.
(vi) Development of Good Industrial Relations:
The present industrial relations situation in India is marked by multiplicity of unions giving rise to barriers in the process of bi-partisan and collective bargaining. It has become very difficult for the management to ascertain who the right representative among their employees is.
The unions tend to make irrational and false promises and adopt erratic and violent measures to compete with the rival unions. Indeed inter-union rivalry stemming from political groupism has caused violent clashes designed by outside leaders. This problem can be resolved by evolving a system of recognition of trade unions.
In connection with the above measure an attempt may be made to accomplish industrial harmony through workers participation which has vast potential for the integration of workers with the organisation. However, the practice of this concept must start from top and percolate downwards to supervisors. The secret of harmonious industrial relation rests with the improved inter-personal interaction based on trust and confidence between workers and management.
(vii) Development of Good Culture:
There remains to be accomplished a challenging task of developing an organisational culture where members have values conducive to organisational growth, innovation and effectiveness. Organisational growth, innovation and effectiveness are influenced by the members and their values system.
A managerial behaviour has special impact because of its strong modeling influence. Such values are essential for institution building so that continuity and vitality achieved.
Workers are working at the workplace with different machines, equipments and facilities.
Methods, system and technology are changing very fast and following challenges are faced:
(i) Adoption to Technological Changes:
Changes in technology in altering the nature of work itself. We are entering the age of the electronic workplace. Managers and workers which will be increasingly subject to technical obsolescence. Many will also be displaced by the advancing technologies. These changes are both good and necessary in business are to remain competitive. However, it would be a serious error to ignore the impact of these changes on employees. The challenge to the human resource function is a large one.
(ii) Challenge from Hardly Working Workers:
There will be some individuals in any organisation who are just not carrying their own weight. They are not considered as an asset at least for the organisation.
The causes for such ineffective or non-performing manpower can be two-fold:
a. Causes due to personal factors of the individual.
b. Causes due to underutilization of manpower arising out of external factors.
The task of utilizing non-performers necessitates development of competence among executives to assist the unutilized workforce by understanding its strengths and weaknesses, providing feedback on its performance and Vising counselling to revitalize it.
(iii) Challenge Related to Grievances:
There is hardly a company or an industrial concern which functions absolutely smoothly at all times. In some, the employees have complaints against their employers, while in others it is the employers who have a grievance against their employees. These grievances may be real or imaginary, valid or invalid, genuine or false.
But grievance will be invariably there. The nature and pattern of grievance may differ. The way of grievances may differ the way of their expression may differ but they are there. Hence, the need for creating a formal grievance handling procedure becomes a must.
(iv) Focus on Socio-Psychological Needs:
There is a challenge relating to the shift from economic man concept of human being to a dynamic self-activating concept. This necessitates emphasis on the overall quality of work life and fulfillments of socio-psychological needs of people. Modern employment contract will have to provide assurance for the overall quality of work life rather than mere economic support.
(v) Improvement in Managerial Effectiveness:
There is a challenge relating to improving the effectiveness of all managers in the process of human resource management. All executives have develop concern for different personnel and industrial relations functions such as – appraisals, rewards, punishments, promotions, selection, training and development, discipline and dealing with unions.
The following are challenges at HRM department level:
(i) Process orientation.
(ii) A concern with strategy and proactive approach.
(iii) Research orientation.
(iv) Developing personnel policies.
(v) Strengthening a matrix personnel department globalisation.
(vi) There must be a focus on process orientation involving development of formal processes which the line executive can use in managing people effectively.
(vii) There must be a concern to development human resource strategies in line with organisational goals. The development of these strategies must be based on environmental scanning, embracing, emerging political issues, socio-cultural changes, economic factors, advancing technology and international events influencing domestic labour relations. This anticipation of problem areas by environmental diagnosis is a very crucial strategy.
(viii) The challenge relating to research orientation involves audit of current practices and manpower utilization, experimentation of innovative ideas, evaluation of personnel programmes and computerization of manpower information system for enhancing the quality and efficiency.
(ix) There is a challenge, for developing personnel policies. This may involve improvement of human resource system to fulfil growth and development needs of people, formulation of policies to meet organisation’s internal requirements, long-term perspective and maintenance of consistency, and firmness in implementation and interpretation of these policies.
(x) There is a challenge relating to reinforcement of a matrix organisational personnel department at plant level.
This challenge can be met by:
a. Working closely with the like executives.
b. Seeking to handover the personnel function to the line executives through persuasion, education, and adopt a consultative role.
c. Evolving a participative approach in developing personnel policies.
d. Maintaining a high level of reputation of integrity and ability.
Challenges of Human Resource Management – In the Post-Modern Globalized World
The question arises in the mind, how the HRM would change and what types of role has been played in the post-modern globalized world.
The HRM has been challenge to bring for the future in the following things:
i. In the HRM, companies or organisations are expected to invest more in health or welfare of workers.
ii. In the HRM, multinational corporations is bringing cross-cultural work force and the consequent need to manage diversity on cultural, ethnic linguistic, religious, etc. properly.
iii. In the HRM, organisations emphasis on maximizing strategies viz. total quality management, flexible management systems, etc.
iv. In the HRM, participative management for knowledge workers and it need an active policy to retain good workers is expected to be increasingly felt in the coming years.
v. Flexible structuring in organisational design in response to changing requirements would be needed.
vi. Now the organisations are less linear and more complex and also environment more uncertain than predictable.
vii. Today, organisation basically desired for a total quality management, which is based on productive process and particularly in science and technology.
viii. In the HRM, organisations are perceived as organic entities constantly and continuously vitalized and growing.
ix. In the HRM, demographic changes in the work force will be a challenge as more old/young women/backward castes are expected to force changes in HR policies.
The future of HRM, would bring or based on participative management and it fully deals with a total quality management it specially deals with the science and technology. Training is only one of the options to learning and development. Training would need to be tailored according to changing requirements viz, customer preferences, specific need of a strategic plan in a given time frame, etc.
Challenges of Human Resource Management – Faced in the 20th Century
The 20th century has brought about revolutionary changes in business management practices across the world. Companies fight with one another in the market arena with human resources as a competitive weapon. The performance efficiency among companies is reflected by the quality of human resources deployed in these enterprises. HRM is the prime mover of management of people at work. It has to encounter a lot of challenges in the corporate journey.
Geographical boundaries of a country have only political relevance. The economic relevance has transcended the geographical frontiers of countries. Enterprises set up their facilities abroad and anywhere in the home country. They are trying to become global players in order to survive in the market. Business managers transact business in multiple languages and in different cultures. In the globalized environment, HR managers are required to play challenging roles and create competitive advantage for their firms.
Many Indian companies have become global companies. They are reorganising their operations and refocusing their energies board on core competence. Many non-core areas are out sourced to external agencies specializing in areas. It helps the companies focus precious resources to core areas of the business. Firms are starting their operations where human resources with higher skill and competence are available at lower cost.
Companies either directly set up their facilities or access the overseas market through tie up with local players. Besides concerns take the inorganic route to grow big in size through merger and acquisition.
In this context, HR managers have to play a vital role.
Some of their roles include:
b. Security for women employees – Globalization has made the people work round the clock in response to changes in global timings. Laws have been changed in India to enable women employees do night shift. In this context, HR managers have to arrange for security and safety of women employees commuting to work and leaving the workplace during late night hours.
g. Job satisfaction survey – Undertake periodical surveys and find out areas of dissatisfaction of employees and accordingly advise the management to put in appropriate measures to check employee attrition.
h. Well-being measures – In the context of acute competition for talented workers, HR managers have to advise the management to put in place well-being measures like subsidised canteens, fitness studios, housing quarters, congenial work environment, creche, recreation facilities, health check up on to keep them from being headhunted by competitors besides recommending compensation and perquisites on par with industry leaders.
j. Cross exposing and cross training employees – Employees are supposed to be master of one but jack of all in the contemporary environment. HR managers have to cross expose and cross train the contemporary workforce so that they become multi-skilled.
Challenges of Human Resource Management – Faced in Retail Industry: Recruitment, Training & Development, Compensation and a Few More
The Indian retail industry has been growing at a tremendous rate with numerous new players entering the market. The industry currently accounts for 8% of the employment and is estimated to be the fifth largest globally. The saturation of retail segment in a few western countries has spurred the growth of the Indian retail sector.
The retail sector is welcome in India with a huge population comprising the youth segment with disposable incomes and the tendency to spend.
The changing lifestyle and shopping patterns of Indians, mostly in urban areas, make them welcome the convenience of one-stop shopping. The retail industry has come up with a large number of employment opportunities. According to Assocham, the retail market is set to more than double its present size in 2010.
The major challenges in the retail industry are that of:
2. Training and Development
Some of the challenges are inter-related, like increased attrition inadvertently means reduced retention and appraisal is directly related to compensation. Hence, we will be emphasizing only on attrition, recruitment, job poaching, and training and development.
Challenge # 1. Recruitment:
People get attracted to job opportunities when they know the career growth attached to the profile, the brand name (The Company name) or the compensation package. The major problem with Retail companies is that they do not plan the career growth of the selected employees.
Hence, the prospective candidates feel a career in Retail is only being on floor in the store or in the store management, which is more like working in a Kirana Store. The only difference is they have better infrastructure. Hence, prospective candidates are not attracted to retail job opportunities.
i. Retail is not a good paymaster compared to other industries in the market. There is no enthusiasm for the right candidate to apply.
ii. Retail industry is at a growing stage and therefore, employment structure has not been clearly defined. That is proper job descriptions are not available. There is a high level of mismatch in employees’ qualifications and calibre with the jobs they do. Hence, job analysis is an important challenge in the retail industry.
iii. The Indian education system does not provide any specialization in the retail marketing. Recently, courses have come up regarding Retail diploma, but people are not aware of these courses as they have not been advertised properly. Hence, retail companies should take up the responsibility of advertising the career opportunities.
When an employee joins the company, he/she should be provided with rigorous training on all the aspects of retail management, which at present, many companies fail to do. E.g. – Pantaloons Retail encourages their staff to take up further education in retail management. For training, PRIL had a strategic tie up with 13 leading B-schools across India.
Retailer Association of India is also offering Retail Management Program with different B-schools in India. Many universities have now started graduate programs in retail management.
Challenge # 2. Training & Development:
With the growing pace of retailing in India, the rate of growth of retail malls and markets may have even exceeded the population growth. However, keeping up with the pace of retail growth, no such development in the growth of training facilities for prospective retail employees has taken place. This poses the biggest challenge for the human resource management department of any retail organization.
Retailers’ Initiative in Training & Development:
New developments are always taking place in the retail scenario. With the growth in retail, the consumers are maturing by each passing day. With such dynamic changes in this field, the employees of any retail store ought to learn and train themselves to meet the new challenges. This is one of the most important profiles of any HR department.
Training and development can take place in various ways. An organization may like to give on-the-job training to the fresh incumbent. Whereas, the seniors may be sent for some advanced training to back up the vast experience, which they already have.
Retailers are now emphasizing the career path in their organizations through strong human resources initiatives. Department store Lifestyle, for instance, recommends its top employees for transfers to its parent organization, the Dubai-based Landmark group. Such incentives help in motivating their staff to work for better prospects. Lateral movements within the chain are a popular way of combating boredom among employees, a common reason for quitting.
Shoppers’ Stop’s strategies are a mix of the old and new. The retail chain claims to pay salaries that are 20-25 per cent higher than what its rivals offer and also invests heavily in training its employees (up to 52 hours of training per employee per year). It claims to fill more than 65 per cent of its vacancies through internal promotions and linking these to sales. (Earlier, a 5 per cent increment was given across the board.)
On an average, salaries have gone up by 9 per cent as a result. Employees are encouraged to study further, and Shoppers’ Stop picks up their tab for professional courses. The retail chain has also tied up with City and Guilds, a major British awarding body, to administer certification program in retail selling for its employees. So far, 45 Shoppers’ Stop associates have been awarded certificates.
Challenge # 3. Compensation & Benefits:
The HR department of any retail business needs to have policy guidelines regarding compensation and miscellaneous benefits to be given to the employees. For this, the HR department needs to know similar policies and guidelines in similar organizations.
Benchmarking is very essential so far as compensation and benefits are concerned. Compensation and benefits at any point of time are the best way to satisfy the employees at the lower and middle level of management.
The retail industry offers much lower compensation. The average pay for floor operations in entry-level salary ranges from Rs. 3,000 to 8,000. After undergoing training in customer service and acquiring soft skills, employees tend to look out for jobs with better remunerations.
Challenge # 4. Attrition:
Today, there is a constant war for talent in the retail sector. It is not actually the First Mover, who is going to have an advantage but the Fast Mover. Both the employers and employees are trying to move fast. Major attrition is due to retirement, death, and resignations. But today, there is a phenomenal increase in resignations.
The Indian retail sector is suffering from very high annual attrition rates. It is today around 50%, which is very high when compared to other sectors. Low salaries, inadequate training, and bad work conditions are the primary reasons for the high rate of attrition in retail. Attrition is the highest for entry-level, front-end staff – 80 per cent – but tapers off as you climb higher – 10-12 per cent for managers.
Mobility reduces as employees grow senior and settle both into the company and personally, with families and so on. Typically, youngsters join the retail industry at lower salaries, get some much-needed experience and then, move on to better jobs or back to school.
Following are the few reasons, which are usually cited for increased attrition rates in the Retail Sector:
a. Career Path:
Lack of career growth prospects has been one of the major reasons for attrition in the retail sector. There is not much difference in the job profiles at various levels in the retail sector. There is not a satisfactory progression for a person who joins at the entry level and aspires to grow to the higher-level position.
b. Flexible Working Hours:
Most of the firms in the retail sector have long working hours when compared to flexible timings offered by various other sectors.
Jobs in the retail sector are usually considered quite monotonous. There is no learning curve which develops for any individual over a period of work span. These jobs give little scope for creativity, to learn new things, or experiment with new ideas.
d. Working Conditions:
Retail firms lack adequate facilities for employees, such as restrooms, and pick-up and drop services for employees working late. Considering that they also employ a large number of women employees, it becomes imperative to provide such basic facilities.
e. Work Pressure:
Subordinate-superior relations play a vital role in retaining employees. The pressure from superiors to meet targets and the lack of compatibility, between subordinates and superiors, also lead to attrition.
f. Job Poaching:
The retail industry is facing a shortage of middle management level professionals. Major retailers are hiring aggressively from similar and smaller organizations by offering better packages. They are creating various levels of management and are on a hiring spree.
Some of the areas such as technology, supply chain, distribution, logistics, marketing, product development and research are becoming very critical for the success of the organizations. All of these would lead to the recruitment of highly professional people who specialize in these fields.
g. Job Hopping:
No doubt, job hop has become the latest trend today or a shortcut to success, but one cannot jump from one job to another as and when it strikes one’s imagination. Although two or more jobs on a resume no longer are an employment risk, but too many jobs in less than two years’ time portrays one as a chronic job hopper. The future employers, who are probably looking for a long term employee, might not be impressed with the job hopping tendencies.
Challenge # 5. Retention:
In terms of retaining staff, again few companies have a defined strategy for doing so. Companies tend to believe that the same factors as the ones that attract talented employees will help to keep them. Holiday entitlement, flexible working and benefits options emerge as increasingly influential, while financial benefits and management and career development are seen as less important.
As the retail industry continues to grow, employee retention is likely to remain a challenge. The way forward is to ensure that the workplace is made more enjoyable for all employees.
i. Reward the Best Performers:
Appreciating and rewarding the best-performing employees act as great motivational tools to retain employees.
ii. Model Career Plan:
Planning career progressions of all performing employees can serve as an effective tool to retain employees, as it provides them an opportunity to strive to reach higher levels in the organization. Most of the reputed organizations have appropriate HR policies in this regard.
iii. Rotate Jobs:
Job rotation for an operations manager can happen in the following manner. The Manager Operations can rotate to different sections in the same store. E.g. – G.M., Electronics and Furniture, Food Bazaar, Apparels, Ware house, C.R.M., Category, etc. Another way of job rotating the Manager Operations can be to rotate to different stores in the same city, or even to another city.