Preparing for Future HR Challenges

Abstract

This paper explores challenges that human resource departments will grapple with in the next five to ten years. In the current changing-business environment, preparing for future human resource challenges is paramount. The labor industry today is not only competitive, but it is also unpredictable and the trend is expected to continue. The human resource department has to prepare for issues such as employment, labor laws and the wage per hours. The paper explores these challenges and outlines preparedness measures in detail. These preparations include training, acquiring knowledge, changing legislation and complying with existing laws. The paper concludes that ultimately, all measures put in place must be aimed at strengthening employer-employee relationships and protecting the organization’s interests. 

Introduction

In today’s highly competitive business environment, the responsibilities of the human resource (HR) function have become critical for corporate functioning and success. The rapidly transforming business landscape translates to mangy HR management challenges that continue to evolve over the years. For a company to meet its business objectives, there have to be tools to support the HR manager and enable him to meet the challenges of an ever-evolving business climate effectively. Schroeder and Ahmad (2003) argue that for a human resource department to be relevant in a company, it has to add real business value. It also has to be able to anticipate employees-related challenges and put in place strategies that offer solutions to tomorrow’s problems today. This paper is a guide to addressing the new issues and challenges that human resource functions in companies are bound to face in the next five to ten years. 

Challenges

Organizations globally will face particular critical HR employment challenges in the coming years. One of the most significant challenges for HR managers expected to linger on for many years to come is dealing with diversity. The HR function has undergone radical changes in the 21st century to enable businesses to explore global economies. In order to achieve this, workplaces today employ people from diverse cultural, religious, and regional backgrounds. How an HR manager handles a team of people with different norms, values, traditions, behaviors, and judgments has an impact on the business’ day-to-day performance. 

Managing talent is another significant employment challenge for the HR function in an organization. Talent shortages loom, especially in well-developed countries, and HR managers must take steps if they hope to address this challenge-and avert disaster. The loss of knowledge and capacity as aging workforce retires makes talent shortages even worse. Companies must mitigate these risks to retain to meet the unique business needs and goals that keep them relevant. 

Immigration reforms further pose a daunting task to HR managers in their quest to access relevant talent in new locations outside their national boundaries. A key human resource implication of immigration reform is the execution of a functional employment verification plan. This is just one of the complexities that HR managers have to grapple with in a bid to abide by their countries’ immigration systems. 

Many companies currently face wage and hour collective actions forwarded by existing and former employees. While the courts continue to wrestle with wage per hour cases, different countries provide employers with some guidance. As employment trends evolve to more flexible and comfortable arrangements for employees, HR managers are bound to face problems balancing between satisfied employees and maintaining a company’s financial stability. 

Labor laws continue to be a thorn in the flesh for many organizations. The law of the land governs the boundaries of the relationship between the employer and employee. Sources of legal obligations that act together to form labor laws include contracts, statutes, awards, statutory agreements, and common law. The human resource department is heavily tasked to stay updated on labor laws and to reorganize employment terms and contacts to ensure they align with the law.  

Managing Talent

Dealing with this two-fold challenge – talent shortage and managing demographics – requires a critical action planned by the HR management. Companies, through their HR departments, need to widen their pool of potential employees. For example, according to Levi-Jakšić and Barjaktarović (2012), the number of European companies that move to new locations to access budding groups of talented employees will triple in the next eight years. 

To capture the unique expertise that a business requires to remain competitive in the high-competitive global markets, its HR function must identify the specific type of talent they need and the best avenues for accessing them. To further exploit global talent pools, a company’s HR function must be able to source from all over the world. Companies should also ensure that they meet the demands and needs of a diverse group of talented people all over the world. 

To manage demographics in a way that benefits a company, the HR function needs a system that clusters employees whose specific experience creates opportunities for the business. One of the most effective strategies to protect a company from demographic risk is effecting a comprehensive scheme of job families. The HR manager must forecast how the current workforce will develop over a given period of time; say five to ten years. This should be done with expected attrition, recruitment, and retirement in mind. 

Next, the HR manager must dissemble different scenarios to determine the type and number of employees the company will require in the given period of time. It is important for an HR manager to understand that an aging workforce will impact a company’s ability and productivity. Such risks can be mitigated by enhancing healthcare programs to allow the aging workforce maintain high levels of productivity, design new career systems for them such as working at home, or adapt other relevant shift models. Also, to retain specialists as long as possible, HR departments must tailor career tracks that fully utilize and reward different types of employees in different age groups. 

Migration Laws

Online recruitment through social media, corporate websites and job boards has made worldwide talent markets accessible to organizations. Taking into consideration these current globalization trends and employees' willingness to migrate within and beyond their continents for employment, an effective HR department must have a good strategy on how to capitalize on the situation. Although companies can use the widening talent markets to the advantage of their strategy, the HR department must ensure compliance with the migration law when hiring. 

A different set of rules exists in different nations. For example, in the U.S., a company’s HR department must abide by the Immigration Reform and Control Act or IRCA, and ensure that foreign workers are not preferred over “qualified U.S. citizens”. It is the responsibility of the HR department to get foreign labor certification from the relevant authorities before hiring a foreign worker. It is also their due diligence to ensure foreign employees operate within the geographical restrictions of their visa, to avoid repercussions that may restrict the company’s future alien hiring. This can be achieved through job training and comprehensive briefing before an employee takes up a position. 

As companies increase the number of foreign employees on their payroll, record-keeping can be a burden. The HR department can resolve this by keeping a public access file for each of their foreign employees, especially those with a non-immigration visa. The file should detail the original visa petition and labor condition applications. This makes it easy for an HR manager to track down an employee, especially where a worker ceases employment, and the company is liable for back pay. 

Workforce Diversity

Diversity according to a Chancellor's Committee on Diversity at the University of California (2013) is “the variety of experiences and perspective which arise from differences in race, culture, religion, mental or physical abilities, heritage, age, gender, sexual orientation, gender identity and other characteristics”. Diversity at the workplace can be an asset or liability depending on how the HR function in a company handles it. As the world becomes more liberal, so do the range of beliefs, sexual orientations and other identities broaden. An effective HR department is one that will plan and implement systems and practices that maximize people’s potential advantages and minimizes disadvantages. 

In order for a company to manage a diverse workforce, its HR manager will also be required to provide a clear advantage in a time when creativity and flexibility are expected to be critical for business competitiveness. Companies will require flexibility and will need to be able to adapt to a new breed of employees who are not comfortable being confined to a specific way of thinking, dressing or behavior. Recognizing that heterogeneity promotes creativity, creates an environment for better solutions, and allows a higher level of critical analysis to situations allows a company to accommodate rather than fight diversity. 

The HR department will be required to have a good understanding of institutional distinctive philosophies such as sexism and racism. The HR manager must also have the ability to give negative feedback to employees who are culturally different from him or herself. Testing assumptions before acting on them also allows an HR function to function from a point of knowledge. For example, assuming that an Arabic woman may not be interested in a leadership position because the region does not support female leadership denies both the employee and company to explore potential. An HR manager must also install measures that ensure a company makes a good faith effort to fulfill its affirmative action objectives. 

Labor Laws

Labor laws have been in existent since the 14th century. However, to quote Cihon (2013), “labor laws were heavily pro-employer until the 19th century when courts decriminalized labor unions and workers were able to combine and thus counterbalance corporate power”. Employees’ rights continue to be a subject of heated debates, and as a result, labor laws continue to evolve and change to suit the current beliefs of the majority. For example, until recently, paternity leave did not exist in most companies. It is expected that, in the next five to ten years, more changes will be incorporated into labor laws in order to cater to changing beliefs on issues to do with sexuality, gender equality, a need for more flexible working schedules and religious beliefs.

The HR department of any company must be flexible and always prepared to assimilate any changes in labor laws into their system. It must participate fully in employment negotiations, including terms and conditions of a position, and ensure that the company retains the right to run its operations as it deems fit through standard rules and regulations. The HR department must also confer with the company’s finance department on budget matters, and have a good understanding of labor costs, before bargaining with new employees to avoid pay discrepancies every so often.  

Meeting the legal obligations of a company minimizes trouble with the law and legal challenges from employees. The manager should ensure the company is well updated in labor laws, prepare in advance for changes, and invest in a team that can interpret and advice the company on sources of legal obligations. As Cihon (2013) explains the roles of the parties to an employment relationship are dictated by the common law, and as such, both parties should have a clear grasp of that law.

Wage/Hour Regulation

Having employees from different of the globe makes the matter more complex. Each country has a unique set of payroll landscapes, which an employer must fully appreciate. The details of key pay per hour issues such as overtime pay and minimum wage also vary from one country to the other. Acquiring in-depth payroll knowledge and complying with every detail of it is a challenge that many HR managers will grapple with in the next decade. 

To keep employees happy and satisfy a company’s interests, an HR manager requires an avid understanding of labor laws related to pay and compensation, employees’ expectations and needs, and current remuneration trends and rates in the industry the company serves. However, Hyman (2012) explains that the hallmark of a payroll-savvy company is not so much about understanding all the payroll technicalities, but rather identifying the right compliance areas when evaluating payroll services. 

If a company wants to hire virtual workers from other countries or expand to other geographical regions in their recruitment, it must, through its HR function, familiarize itself with legislative differences and similarities in each country where they recruit. An effective HR department must also be able to evaluate the benefits, risks, and cost of recruiting from different regions of the world. For example, a small company might want to steer off countries that high penalties for con-compliance to minimize costs where such instances occur. In addition, outsourcing can ease the burden of wage per hour discrepancies.

Conclusion

Ultimately, an HR manager has a dual role: to strengthen employer-employee relationships and to protect the organization’s interests. In the coming years, recruitment, employment, and exit policies are bound to change to accommodate changes in lifestyles, beliefs, laws, talent requirements, globalization, and organizations’ needs. Companies will need to evaluate their qualitative and quantitative needs for talent in light of their business requirements and strategies. For instance, a company that plans for geographical expansion must implement measures that enable it to access highly skilled new talent. Companies will also need a good grasp of the law and preparation for labor-related legislative changes. 

References

Chancellor's Committee on Diversity UCSF (2013). Chapter 12: Managing Diversity in the Workplace. Retrieved from http://ucsfhr.ucsf.edu/index.php/pubs/hrguidearticle/chapter-12-managing-diversity-in-the-workplace/

Cihon, P. J. (2013). Employment and labor law. S.l.: South-Western.

Hyman, J. T. (2012). The employer bill of rights: A manager's guide to workplace law. New York: Apress.

Levi-Jakšić, M., & Barjaktarović, R. S. (2012). Innovative management & business performance: [symposium proceedings]. Belgrade: University of Belgrade, Faculty of Organizational Sciences. Operations Management, 21(1), 19-43.

Schroeder, R.G., & Ahmad, S. (2003). The impact of human resource management practices on operational performance: recognizing country and industry differences.