CHALLENGES OF HRM:

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.

Challenge # 2. Meeting Aspirations of Employees:

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.
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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.

Challenge # 3. Empowerment of Employees:

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.

Challenge # 4. Management of Human Relations:

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.

Challenge # 5. Dynamic Personnel Policies and Programs:

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.

Challenge # 6. Building Responsive Organisation:

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’.
Challenge # 7. Creating Dynamic Work-Culture:
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.

Challenge # 8. Building Core Competence and Creating

Competitive Advantage:
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.

Challenge # 9. Outsourcing HRM Functions:

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:

1. Technology:
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.

3. Social:
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 behaviour 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.
4. Political:
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 identity.
(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.