The rapid occurrences of change in the social, political and economic environments that creates a significant impact on organizations leading to multiple challenges and threats for the human resource management function and for the HR manager.

Challenges for the HR manager has to meet the demands of the management as well as face the angered and irritated employees.

Some of the challenges faced by an HR Manager are as follows:- 1. Attrition 2. Downsizing 3. Employee Absenteeism 4. Work-Life Balance.

Some of the challenges faced by HR Manager in business environment are:- 1. Aligning HR Role with Business Strategy 2. Integrating the Needs and the Interests of Employees and Management 3. Change Agent.


4. Recruitment, Selection and Training 5. Developing Competitive Advantage through People 6. Retaining High Potential Employees 7. Quality of Work Life (QWL).

8. Making Performance Appraisal a Positive Experience 9. Developing a Fair Personnel Compensation Policy 10. Dealing with Employee Diversity 11. Developing Welfare Facilities 12. Dealing with Trade Union and Safeguarding the Interests of Workers and Management

Challenges Faced by HR Manager (With Examples)

Challenges Faced by HR Manager

Human resource management deals with specific and defined areas of planning and control, resource allocation, conflict resolution and settlement of legal claims. There are three important requisites of sound HRM practice-advising, implementing and organising change.

It is no doubt, that the role of manager in the HRM is playing a vital role. Designations of HR managers are found differently in different organizations. Human resource functions have been found to be determined by the organisation’s history, work culture and the level of differentiation attained in processes and product.


The challenges of the Human Resource manager has been discuss in the followings:

i. The Human Resource Manager functions as a catalyst and a change agent to the extent that he helps the line to achieve its objectives.

ii. The HR manager has to be both a process and a policy specialist.

iii. The HR manager functions as a consultant to all sections.


iv. He is a prime mover of policy inputs and recommendations.

v. The HR manager follows the strategic plan. He plays a vanguard role in policy making and implementation functions.

The rapid occurrences of change in the social, political and economic environments that creates a significant impact on organizations leading to multiple challenges and threats for the human resource management function and for the HR manager.

Challenges Faced by HR Manager – In Workforce Diversity

Workplace diversity means people of different ages, gender, race, physical ability, religious belief, education, and work experience work together in an organization. Management of workforce becomes difficult when there is such diversity in the workforce.


1. Age Group:

Employees belonging to different age groups work together in the organization. The attitude towards work, overall experience and loyalty of senior employees differ from that of the younger employees. The challenge of the HR manager is to bridge this gap and find a common ground that will help in achieving organizational goals.

2. Disability:

The challenge for the HR manager is to provide proper placement and equal growth opportunities to all employees, including the physically and mentally challenged. The needs and expectations of handicapped employees should be considered. For instance, provision of lift and slope at workplace for easy mobility.


3. Gender:

The challenge for the HR manager is to provide equal growth opportunities to the men, women and transgender employees in the organization. This includes framing fair promotion policy, equal compensation, welfare facilities and so on.

4. Language:

With people of many languages and nationalities working together, communicating information and policies to employees can become difficult. The policies framed should be simple and communicated in a language that is understood by all. Further, employees should not be discriminated on the basis of their language.


5. Religion:

Employees of different religions and cultures should be given equal and fair treatment. Any employee should not be side-lined by his co-workers or his superiors on the basis of ones caste, religion or creed. HR manager has an important responsibility of keeping such issues under check and train employees to treat everyone with respect.

6. Lifestyle:

Employees want a job that best suits their lifestyle. Nowadays, they prefer employers who provide flexi-job timings, part-time schedules, job-sharing, educational leave, paternity leave etc. The HR department is responsible for assessing and balancing the demands and expectations of the workforce.

Challenges Faced by HR Manager – Attrition, Downsizing, Employee Absenteeism and Workforce Balance

1. Attrition:


Attrition refers to gradual decrease in the size or strength of the workforce. Employees may leave the organization either on reaching retirement age or due to better job opportunities available in the market. However, the same vacancy is not filled by new no employees; instead the job is distributed between the existing employees. This is a challenges for the HR manager as he has to meet the demands of the management as well as face the angered and irritated employees.

Causes of Attrition:

1. Reduction of Costs – The management may purposely adopt this policy in order to reduce costs of the organization. Recruitment of new employees increases training, remuneration and welfare costs of the organization. Hence, the management may resort to attrition.

2. Retirement – Employees leave the organization after certain years of service as they reach the retirement age.

3. New Job Opportunities – Employees leave their current job when they find better job opportunities outside the organization.

4. Wrong Placement – When employees are assigned a job which does not suit their skill or potential, it leads to job dissatisfaction. Hence, they search for relevant opportunities outside the current organization.


5. Lack of Growth Opportunities – Employees also leave the organization when there is lack of future growth opportunities in the organization.

6. Other Reasons – Delayed salary payment, unfair salary deductions, work overload, poor employee- employer relationship etc. cause unnecessary stress and may compel employees to leave the organization.

2. Downsizing:

Downsizing means to reduce the number of employees in the organization through proper planning. It also involves eliminating certain job positions and distributing the job between the existing workforces. Downsizing becomes important when there is excess manpower in the organization.

The main aim is to have a workforce that matches the needs of the organization. Further, downsizing helps to reduce operational costs and improve efficiency of employees. Management provides lump sum amount to the employees who lose their job due to downsizing. This is done in order to gain co­operation from employees.

Causes for Downsizing:

1. Cost Reduction:


Organizations spend huge amounts on account of training, remuneration and welfare benefits provided to employees. Reducing employees will help in reducing these costs. Downsizing is mostly undertaken by the organization in order to survive the market competition and change in business environments.

2. Merger:

Merger refers to combining of two companies to form a new company. Two companies combine their operations to increase their market share and face the market competition. During mergers, unnecessary job positions or excess workforce is eliminated through lay-offs or voluntary retirement schemes.

3. Acquisitions:

Acquisition leads to restructuring of the organization. When a company purchases stakes of another company to gain control over its management and working, it is called as acquisition. Generally, staff of the acquired company is at the risk of losing jobs through the process of acquisition.

4. Recession:


During recession, businesses tend to reduce their production and trading activities due to low demand for goods and services. Further, decreased profit during recession results in closing down of certain units. This results in reduction of workforce in order to sustain unfavourable market situations.

5. Unprofitable Activities:

The organizations stop or reduce production of those goods which remain unprofitable for extended time period. This results in reduced business activities and the company is forced to lay-off certain percentage of employees in order to reduce expenses.

6. Excess Workforce:

If there is excess workforce than required to carry out organizational activities, management has to lay-off or terminate certain percentage of employees in order to reduce its expenses. This results in increased efficiency of existing employees as well as of the organization.

7. Introduction of Technology:


Use of modern machines and technology helps in producing goods at lower costs. Further, it also reduces the demand for human resources since production activities are carried out by machines. Hence, management reduces the number of employees in the organization by offering fair compensation.

8. Outsourcing:

Outsourcing means giving contract to another company to perform certain non-core activities of the organization. It reduces manpower requirement of the organization and the management may resort to downsizing to free up their capital and to reduce expenses.

3. Employee Absenteeism

Employee absenteeism is the intentional or habitual absence of an employee from work. It is one of the major problems faced by almost all organizations. Excessive employee absenteeism leads to back logs, piling of work and work delay. It ultimately results in decreased organizational productivity and can have a major impact on company’s finances, morale and corporate image.

Causes of Absenteeism:

Some of the common causes of absenteeism are as follows:

1. Work Load – Heavy workload, pressure to meet deadlines, stressful meetings and feeling of being unappreciated also lead to employee absenteeism.

2. Excessive Stress – Excessive stress levels caused by poor working conditions, longer working hours, dominating superiors, non-coordinating peers as well as stress due to personal reasons can lead to absenteeism.

3. Work Place Harassment – When employees are bullied or harassed by their co-workers or bosses, they frequently remain absent in order to avoid the unpleasant situation.

4. Disengagement – Employees who do not feel strong commitment towards their jobs, colleagues and organization are more likely to miss work due to lack of internal motivation. Further, lack of job satisfaction also contributes to absences.

5. Injuries and Illness – Acute and chronic injuries, illness and medical appointments are the most commonly reported reasons for missing work. Accidents can occur on the job or outside of work, resulting in absenteeism.

6. Other Responsibilities – Employees may be forced to miss work in order to fulfil their out of work responsibilities, such as taking care of their child or elderly person at home.

4. Work-Life Balance:

Work-life balance is the term used to describe the balance that an individual needs to strike between times allocated to work and other aspects of life. It is not easy to achieve work-life balance in today’s unpredictable and fast-paced business world. As we become more connected through technology and social media, it is becoming increasingly difficult to separate work from personal lives.

Organizations expect so much from their employees that they feel pressurized to achieve greater results. It leads to longer working hours, higher stress levels and less time to spend on other aspects of life. The organizations need to aid their employees to achieve the balance between their work and personal lives.

Benefits of Work-Life Balance:

1. Employee Engagement – When employees are able to achieve the work-life balance, it leads to increase in their involvement with work. It also increases their loyalty and commitment towards the organization and helps to improve organizational productivity.

2. Employee Retention – The organizations that aid its employees to achieve work-life balance find it easier to retain competent and talented employees.

3. Higher Morale – The employees feel satisfied when their out-of-work needs are taken care of. It leads to rise in their morale & improvement in performance.

4. Lower Absenteeism – Employees do not feel that they are missing out on life. It leads to reduction in rate of absenteeism. It also leads to reduction in costs associated with staff turnover and new recruitment.

5. Improves Corporate Image – It also helps the organization to improve its image in the market. It also helps the organization to attract talent. A happier and less stressed workforce produces better outcomes and aids the organization to achieve long-term growth.

6. Other Benefits – It leads to improvement in employee’s physical and mental well-being. It also results in better quality of social life through increased interactions and further development of social networks.

Challenges Faced by HR Manager In Business Environment (With Examples)

During the last few years, lot of changes has taken place in the business environment. These include innovations in business strategies, market responses and technological processes. The HR manager has to anticipate the changes, finalise strategies and respond in an innovative and timely manner to succeed in the long run.

Challenge # 1. Aligning HR Role with Business Strategy:

Changes in the business environment such as globalisation, computer revolution, Internet, mechanisation, automation of office operations, outsourcing and satellite communication have considerably affected the manpower requirements in terms of knowledge, skills and attitude. The aspirations and expectation of the employees are increasing. HR has to meet the changing needs of the management as well as of employees.

HR managers have to play a very active role in integrating HRM strategies with Business strategies of the organisation and to ensure employee competencies, motivation and organisational climate in a planned and systematic way. HR activities should be matched or aligned to the corporate or Strategic Business Unit (SBU) strategies such as mergers and acquisitions, joint ventures, diversifications and voluntary retirement plans.


(a) Top management of the company prepares strategic plans. The strategic plan explains us how it will match internal strengths/weaknesses with the external opportunities and threats to achieve a competitive advantage in the marketplace. The strategic plan tells us where we are, where we want to go and how should we get there. The HR department then formulates specific HR strategies to achieve the objectives of the organisation,

(b) Even a closely guarded area like insurance sector has been opened up to private companies and there are plenty of opportunities for trained people in this sector.

Challenge # 2. Integrating the Needs and the Interests of Employees and Management:

Employee’s interest includes adequate wages, acceptable hours of work, safety and healthy working conditions, opportunity for expression of views, economic security and career growth, whereas management is concerned with loyalty, co-operation and commitment of employees, low personnel cost and maximum productivity.

HR has the responsibility for ensuring a satisfactory achievement of the objectives of the organisation and that of the employees. One of the most formidable challenges of HRM is to change the values, beliefs and norms established by the top management and HR efforts to be concentrated on top management. It is said that “the biggest challenge in a change process is top management”.


(a) The profile of employees, i.e., literacy, knowledge, skills, aspirations, etc. are changing. They are concerned with ethical practices and quality of working life. Learners and stars are expecting faster growth opportunities in the organisation,

(b) Traditional industries are not able to offer better remuneration package to their employees and at the same time, they want to retain good performers in the organisation. The management wants increased productivity of employees at lower cost.

Challenge # 3. Change Agent:

In today’s competitive world, the management is concerned with survival and growth of business. Downsizing, reengineering, outsourcing, cost cutting, computerisation, voluntary retirement scheme and contract labour are some of the means companies use to run the business successfully. However, employees resist change for a variety of reasons. The HR manager has to communicate the situation to the employees, listen to their problems, explain the need for change and facilitate change processes. HR function has to become an integral part of top management and as a partner to the strategic process of growth.


(a) Rural markets are growing and many banks and insurance companies are entering rural market in a big way. They require people who understand rural realities and are prepared to work in rural areas,

(b) In many organisations, personnel records, processing of payroll, salary remittance, payslip, expense statements, leave applications, attendance recording, field force reports, etc. are computerised. Through the use of IT and Internet, companies are moving towards paperless offices,

(c) Flexible Working Hours, i.e., allow flexible starting and leaving times for the employees. However, all the employees have to be present in the office during core time and should work for the stipulated total number of hours per day in the office.

Challenge # 4. Recruitment, Selection and Training:

During selection, the procedure to test prospective candidate for his suitability for the job is a strategy, the HR manager has to decide. Another area would be whether to take fresh people and train them or take experienced person for the specific job in the organisation.


(a) In IT field, it is a practice to take fresh engineering graduates through campus interviews. Should they be trained only in IT field or the training to include soft skills also?

(b) Internet-based training is becoming popular in our country. The employees can take online courses from company’s intranet or from vendors who provide such facilities. The HR strategy regarding training and development of employees has to be worked out in consultation with senior managers in the organisation.

Challenge # 5. Developing Competitive Advantage through People:

HR plays a major role in building an organisation’s competitive advantage. This is more so in software, insurance, consultancy, travel, tourism and entertainment services. A firm’s success depends upon establishing a set of core competencies that distinguish the company from its competitors and deliver superior value to customers.


(a) HUL’s strength lies in having a well-developed distribution set-up.

(b) Core competency of McDonald’s is trained staff and timely delivery to customers. It is rightly said that one can raise money or construct an office/factory, but requires people to build a business,

(c) Through product positioning, the company tries to create and build a distinct image of the brand in the mind of the customer compared to that of the competitive brand in the marketplace. In the same way, employer brand helps the company in attracting and retaining good performers despite better offers received from rival companies.

Challenge # 6. Retaining High Potential Employees:

High performers have tremendous opportunities to grow and occupy senior positions in the corporate world. They may like the job as well as the organisation and even recommend their organisation as a good place to work based on learning opportunities and pay package. They seek challenging assignment. However, if they find career progression is not as per expectations, they leave the organisation.

Providing attractive pay, increment and fancy designations may not meet the aspirations of high performers. Hence, HR has to find out innovative ways such as career growth plans, working in new projects, intra-company succession plans, accelerated development programmes, etc. to retain such high performers. HR has to focus on objective assessment of the performance, feedback, mentoring and coaching programmes also.

Challenge # 7. Quality of Work Life (QWL):

Workaholism or excessive working has become a trend among urban executives. This includes high level of commitment to the work, staying late in the office, working on weekends, etc. Some managers consider this as a positive quality during appraisal interview. However, long hours of working in the office, over a period of time, causes stress, affects the health and productivity. Quality of Work Life (QWL) means having policies and procedures that make the work rewarding to the employees.

If the quality of work life is encouraging, the productivity of the employee would improve. Work and quality of life provides for a balance between work and family aspects of life. Family and social life should not be affected due to long hours of work on a continuous basis, working on holidays, regular business travel, etc.

Challenge # 8. Making Performance Appraisal a Positive Experience:

There are many cases, where managers do not take much interest in the performance appraisal of employees and consider this as a ritual to be repeated every year. They do not give regular feedback to the employee regarding the progress made by him in achievement of key objectives. HR can play a major role in explaining the benefits of performance appraisal to the employees and the managers. There is a need to make managers good appraisers and training of appraisers is essential. Refresher courses could be conducted both for appraisee and appraisers so as to improve quality of performance appraisal.

Challenge # 9. Developing a Fair Personnel Compensation Policy:

The most common elements of compensation are basic salary, DA HRA/HRS, conveyance allowance, special allowance, reimbursements, annual benefits and retrial benefits. While employees are aspiring for higher and higher wages, management wants to control personnel costs.

During the last few years, the concept of ‘Pay for Performance’, i.e., performance related pay, cafeteria means of compensating employees, profit sharing and stock options are becoming popular in industries. Therefore, HR has to keep updated with the trends in employee compensation and suggest most appropriate remuneration package that is within the financial reach of the organisation and at the same time, motivate the employees to perform better.


In IT field, employee compensation, turnover and retention are major challenges faced by HR department.

Challenge # 10. Dealing with Employee Diversity:

Today’s workforce consists of people with differences in age, education, experience, knowledge, skills and aspirations.


(a) The veterans who have several years of experience and have strong work ethics, the middle aged who are loyal to the employer and are comfortable working in a stable environment and the younger generation who are ambitious, well informed and need freedom and flexibility. Experienced people can provide advice arising out of years of work experience and the new generation is hasty and brings in the new ideas and smart way of working. Different generations have different opinions and expectations and it is a challenge to handle the diverse group at the same time.

(b) Stagnant Employees – Business environment is constantly changing and plateaued (stagnant) employees are a serious concern for the organisation. Such employees feel that they have been working in the organisation for several years and they have nothing more to learn, achieve or contribute in their professional career.

This situation may arise due to various factors — boredom of doing routine work for several years, comfort zone, complacency or the employee is highly proficient in his job and the managers do not want to shift him to another job. However, the reason for plateauing may vary from employee to employee. HR manager has to discuss with the employee and reporting manager and prepare a time-bound development programme and monitor the progress shown by the employee.

(c) Weaker Sections of the Society – The management has to protect the interest of weaker sections of the society and this group includes minorities, backward classes, and physically handicapped people. HR has to convince the management to modify the policies so that they are not denied job opportunities or discriminated in the workplace.

There are over two million educated persons with disabilities (PWDs) and the Government has taken several measures -reservations, concessions, subsidies- for the welfare of the these people. These educated PWDs can be employed in many areas such as business process outsourcing, insurance, banking and also in manufacturing sector.


(i) Gitanjali group provides training to PWDs in jewellery designing, and manufacturing for a period of six months and they have provided jobs to about 1000 PWDs

(ii) Cafe Coffee Day, Coca Cola, Lemon Tree Hotel Chain have employed differently-abled people

(iii) In BPOs where attrition rate is as high as 50%, the PWDs can work in back end data processing.

(d) Retired Employees – There are a growing number of retired employees who are choosing active professional life even after retirement. Their expectations are different from younger generation of employees, i.e., Flexible working hours, working independently without being closely supervised, respect for age and experience, etc.

Example – Companies like Muthoot Finance has more than 4000 retired people (mostly ex bankers) working in their branches. RPG, Maruti, M&M also make use of the services of retired people to undertake special functions such as quality assurance, R&D, business development, liaison with banks and institutions.

(e) Loyalty towards organisation – In good old days, lifetime employment with a company was a common feature among employees. Younger generation of employees does not want to be wedded for lifetime to a particular organisation. Employees are open to change if the workplace is not conducive or fails to meet their goals and aspirations. Management style is changing from autocratic to more participative and collaboration style and it is evident from the leadership practices in professionally run organisation.

(f) Women employees – Out of a total population of about 120 crore, about 50 crore comprises of working class. However, women constitute only about 12.5 crore of the workforce. Service sector consisting of IT, BPO, travel, tourism, aviation, event management and financial services offers a variety of jobs to women. The numbers are high at entry level and low at middle and senior positions.

Working women do experience stress and stress-related health problems as they have to balance between office work and family obligations. There are individual situations such as post-natal period, late working hours, working on holidays, etc., where HR has to create a favourable work environment for women.

Example- Semiconductor Chip Maker “Intel” has enhanced maternity benefits to 150 days from the current three months. Besides new mothers returning from maternity leave can work part time at full pay up to one month.

(g) Job sharing – Job sharing is suitable for people who are interested in doing part-time job. Example – Retired employees, women employees and elderly employees.

Challenge # 11. Developing Welfare Facilities:

Developing Welfare Facilities such as transportation, canteen, good physical working conditions, and recreation cost money to the organisation.


An office is a place where an employee spends good amount of time on day-to-day basis. When the office ambience is pleasant, employee feel happy when reporting to work. Proper lighting, ventilation, greenery etc. can help employee work more productively and many companies give importance to office space management.

However, it has been observed that employees always demand additional facilities and this leads to dissatisfaction among them.

Challenge # 12. Dealing with Trade Union and Safeguarding the Interests of Workers and Management:

The HR manager has to deal with union leaders and members of the union who very often oppose company policies and procedures. He has to look into the demand of the union and at the same time, protect the interest of the management and ensure that the work is carried out without any interruption.

Example – Dealing with union in nationalised banks and LIC is a challenging job.