5 Challenges Human Resources Is Facing in 2022 — and How to Overcome Them

May 10, 2022・9 mins read
5 Challenges Human Resources Is Facing in 2022 — and How to Overcome Them

The human resources sector is going through severe disruption. The persistent pandemic, skyrocketing inflation, and the Great Resignation are just some of the issues HR professionals have juggled in recent years. Unfortunately, these disruptions are set to continue throughout 2022. For instance, according to Joblist's United States Job Market Report, 68% of all employed workers plan to quit their jobs this year. Meanwhile, Wells Fargo estimates that U.S. inflation could reach its highest annual level since 1981, due to the Russia-Ukraine conflict. Therefore, with unprecedented shakeups now the order of the day, human resources need to improve their understanding of how current challenges are impacting operations. They also need to work towards developing more adaptable workforce models. Today's post highlights the top 5 HR challenges and what organizations can do to stay ahead of the curve.

Staff retention

Employee turnover has risen dramatically over the last 2 years, primarily driven by:

  • Pandemic-fueled changes in workplace expectations
  • Increasing remote work opportunities
  • New generational mindsets
  • A competitive job market
  • A struggling global economy

According to HireVue, 55% of employers have reported higher turnover in 2022 than in 2021. Staff turnover is problematic in several significant ways. For starters, the costs of recruiting, onboarding, and training new employees can add up quickly, especially when positions need to be filled regularly. Furthermore, high turnover rates can negatively impact company morale, hinder productivity, and cause even more resignations. Considering the open positions that have been created from this mass exodus and the many emerging remote opportunities, it is safe to assume that this trend will not slow down in 2022. Therefore, HR departments will need to get more innovative to retain their best talent. Some practical approaches include:

  • Investing in employee growth: Employees are less inclined toward leaving when they know their employer is investing in helping them grow professionally within the company.
  • Encouraging heart-led leadership: Employees stay longer in a people-centric organization with transparent, empathetic, and empowering leaders.
  • Offering competitive benefits: HR professionals need to keep up with industry compensation standards and reward employees that demonstrate value.
  • Prioritizing flexibility and work-life balance: The traditional 9-5 workday is quickly becoming obsolete. Organizations that offer more flexible work arrangements have a better chance of attracting and retaining top talent.

Increased pressure to reduce costs

Harsh business environments have resulted in significant financial strain for organizations worldwide. According to Deloitte, more than half of CFOs expect staff, energy, material, supply chain, and inflationary costs to increase substantially in 2022. To offset rising costs and protect their bottom lines, organizations are tightening their operational budgets, especially in support activities like human resources. These cost-cutting initiatives come when the job market is pushing employers to increase salaries and prioritize spending on diversity, technology, learning, and health insurance premiums. As the pressure to do more with less intensifies, HR leaders need to approach this year's budgeting activities with a heightened sense of creativity and resourcefulness. Here are a few tips that can help human resources make the most of a tight budget:

  • Reduce non-essential programs: Human resource departments facing budget constraints can re-evaluate their current initiatives. Potential cost-saving opportunities may include discontinuing unnecessary professional development programs or scaling back on social events and workplace perks.
  • Outsource specific services: In some cases, it may be more cost-effective to outsource tasks than to handle them in-house. For instance, organizations can partner with a staffing agency that specializes in finding top talent. They can do this rather than maintaining an in-house recruiting team.
  • Reallocate existing resources: Sometimes, the solution to a tight budget is not cutting costs but using existing resources more efficiently. For example, if an organization is struggling to fill open positions, HR can consider using internal talent pools. Or they could consider redeploying employees to new roles

Employee engagement and productivity issues

Employee engagement levels have taken a downward turn in recent years, dropping from 36% in 2020 to 34% in 2021 and 32% in early 2022. Gallup's 2022 survey also reveals that 17% of employees are actively disengaged, increasing 1% from last year.

Engaged employees are critical to an organization's success. They tend to be more productive and have better attendance, and are less likely to leave their jobs. Unfortunately, according to Gallup, employee engagement levels have taken a downward turn in recent years, dropping from 36% in 2020 to 34% in 2021 and 32% in early 2022. Gallup's 2022 survey also reveals that 17% of employees are actively disengaged, increasing 1% from last year. Several factors contribute to these low engagement rates. These include a lack of development opportunities, a poor work-life balance, and a lack of trust in leadership. As the workforce evolves, HR professionals must find new ways to engage and motivate employees. Some strategies that can help increase employee engagement include:

  • Improving communication: Employees need to understand the company's goals and how their roles contribute to these objectives. HR can enhance communication by implementing regular check-ins, conducting periodic surveys, and holding town hall meetings.
  • Offering development opportunities: Employees want growth opportunities within their organization. HR can develop impactful training and mentorship programs or e-learning courses to meet this demand.
  • Encouraging a healthy work-life balance: A healthy work-life balance is essential for engagement as it helps employees feel less stressed and more fulfilled. Organizations can promote this balance by offering flexible work arrangements and encouraging breaks throughout the day.

Rapid changes in skill requirements

The ongoing disruptions have forced organizations to rapidly adapt their operations to meet the changing needs of their customers. However, many employers have found that their current workforce lacks the skills needed to meet these new demands. A McKinsey & Company study reveals that a staggering 87% of companies are experiencing a skills gap or will have one within the next few years. McKinsey highlights technological advancements as the primary reason for the rampant skill shortage. Technology has changed day-to-day operations and requirements, and the upskilling programs in many organizations are yet to catch up. Now more than ever, HR professionals need to continuously assess their organizations' skill requirements and take proactive action. Below are a few ways HR can stay ahead of the gap.

  • Hiring for potential: When looking for new talent, it is better to focus on hiring individuals who have the potential to learn new skills quickly rather than those who already possess all the required skills.
  • Upskilling the existing workforce: Many employees are willing to learn new skills if given the opportunity. Organizations can provide training and development opportunities to help employees stay ahead of the curve.
  • Partnering with educational institutions: HR professionals can partner with local colleges and universities to design programs that meet the specific needs of their organizations.

HR digitization

The COVID-19 pandemic dramatically accelerated the uptake of technology in corporate settings. As people went to work from home, organizations quickly turned to digital solutions to maintain communication, productivity, and cohesion. Human resources was one of the functions most impacted by this shift. Within weeks, HR teams went from being comfortable with conventional work tools to requiring a deep understanding of digital platforms. While many professionals found some footing in 2021, 24% of HR leaders still ranked effective technology utilization as their most significant hurdle for the year. Between keeping employers engaged as they work remotely and utilizing new cloud-based tools to streamline day-to-day processes, HR has a lot on its digitization plate. Here are some tips to help HR professionals make the most of digital tools:

  • Choosing the right technology: With so many options on the market, HR needs to select the right tools for their needs. Demos and free trials are an excellent way to test out different products before committing.
  • Implementing change management: Any new system comes with a learning curve for employees. HR can ease the transition by deploying change management strategies like clear communication, training, and continuous support.
  • Monitoring usage and performance: Closely monitoring a solution's usage and performance metrics helps ensure it is utilized effectively and achieves the desired results.
While many professionals found some footing in 2021, 24% of HR leaders still ranked effective technology utilization as their most significant hurdle for the year.

Overcoming HR challenges

Recent events have triggered profound, immediate changes to the employer-employee dynamic. Over the last 2 years, the HR landscape has witnessed at-scale employee turnover, dynamic resource reallocations, and new staff needs and demands. These all have placed the sector's professionals, departments, and organizations under immense pressure to reinvent their strategies. Admittedly, HR has responded reasonably well to the disruptions, given the widespread adoption of remote working and the increasing attention toward employee mental health and wellbeing. Nevertheless, to excel in human resource management, organizations need to move from traditional strategies that support uniformity and bureaucracy to flexible, responsive models that promote connectivity, automation, efficiency, and antifragility. If you're in HR, you can give your organization a better chance of overcoming the sector's top challenges by:

  • Getting more innovative to retain your best talent
  • Finding ways to reduce costs
  • Increasing engagement
  • Upskilling your workforce
  • Digitizing your HR

With the right approach, you can manage your workflows more efficiently, connect with employees more effectively, and automate many of your processes to free up valuable time.

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