Punjabi University

School of Management Studies

Assignment Paper for the Fulfillment of the course on Management of Human Resource

Prepared by: Mekuanint Abera

Roll number: 130423543

Punjabi, Patiala

March, 2014

Table of contents pages

Challenges of Human Resources Management.........................................................21.0 Introduction.......................................................................................................................................2

2.0 CHALLENGES OF HRM IN MODERN MANAGEMENT..........................................................................5

2.1 Globalization..................................................................................................................................5

2.2 Workforce Diversity.......................................................................................................................6

2.3 Technological advances.................................................................................................................7

2.4 Changes in political and legal environment...................................................................................7

2.5 Changes in the Economic Environment.........................................................................................7

2.6 Revolution in Information Technology...........................................................................................8

2.7 Organizational Restructuring.........................................................................................................8

3.0 Mobility of Professional Personnel....................................................................................................9

4.0 Strategies for Changes.....................................................................................................................10

5.0 Growing Importance of HRM...........................................................................................................10

6.0 Nature of HRM:................................................................................................................................10

7.0 Factors Contributing to the Growing Importance of HRM...............................................................11

7.1Accommodation to workers' needs..............................................................................................11

7.2 Increased complexity of the Manager’s job.................................................................................11

7.3 Legislation and litigation..............................................................................................................12

7.4 Consistency..................................................................................................................................12

7.5 Expertise......................................................................................................................................12

7.6 Cost of Human Resource.............................................................................................................12

8.0 The New Environment.....................................................................................................................12

9.0 Reshaping HR...................................................................................................................................13

10.HR Management Activities...............................................................................................................14

11. Summery and Conclusion................................................................................................................15

References.............................................................................................................................................15

Challenges of Human Resources Management

1.0 IntroductionHuman beings are the most important resource in an organization. A firm’s success depends on

the capabilities of its members. Most problems, challenges, opportunities and frustrations in an

organization are people related.

Human resources are the life blood of an organization. Despite the application of technology in

modern business management, human resources are still relevant and most adaptive resources of

the organization. The strategic values of HR stem from the fact that apart from other resources

employed in the course of production (land, capital, technology etc) which are passive, human

resources are endowed with discretionary decision-making power and thus have competitive

advantage over the other resources. Besides, HR combines other resources in the right mix to

formulate appropriate strategies for the accomplishment of the desired objectives of the

enterprise. This essential attribute of HR assist the enterprise to make rightful decisions and

respond effectively to the threats and opportunities within the environment of the organization.

Thus the enterprise depends highly on its HR for success and survival. This dependence

continuously is increasing considering the complex and turbulent nature of the business

environment of this century.

The management of HR is complex and problematic because the individuals as workers hardly

adapt or voluntarily embrace the objectives of the organization. As individuals, the employees

have needs, aspirations, motivations, desires and interests which influence their behavior at work

but unfortunately these objectives are sometimes in conflict with the corporate objectives of the

enterprise. In reconciling this conflicting interests Human Resources Management and Planning

are useful tools employed in harmonizing the needs of the employees with the goals and

objectives of the organization on a continuous basis.

In a nutshell, the primary task of HRM is to ensure that the organization HR are utilized and

managed effectively. HR practitioners are saddled with the responsibility of designing and

implementing policies and programmers that will enhance human abilities and improve the

organization’s overall effectiveness. Empirical studies have shown that poor human relations at

work, neglect of staff welfare programmer and lack of motivation are often the factors that cause

industrial strife and declining productivity in the work setting. The modern day entrepreneurs

recognize that the HR are vital element in the organization and concomitantly acknowledge the

role the HR practitioners play in developing these valuable resources. To acquire and retain HR

in the organization, the HR practitioners in brief perform four critical roles:

i. Create and implement policies, which should be in writing and communicated to all employees

through circulars or the employee handbook.

ii. Offer advice and counsel the employees on matters bordering on productivity, safety at work,

career path or management, morale, honesty and integrity, human relations etc.

iii. Provision of services that assist Line Managers in performing their jobs or serving the

organizational units i.e. recruitment, selection and placement, compensation management,

training and development, staff welfare programs, industrial and labor relations, research and

planning.

iv. Control of HR programmer and laid down procedures i.e. to monitor and ensure that HR

policies and guidelines are implemented religiously or to the letters e.g. grievance handling and

disciplinary procedures, Federal Character principles or Quota system, fairness of appraisal

exercise, granting of loans etc.

Each of the above functions is a complex flow of activities and it underscores HR management

functions as integral part of the overall corporate plans of the enterprise. It follows therefore, that

HR management function is a joint responsibility for all managers within the enterprise.

The pace of globalization is increasing continuously in terms of markets for goods and

services, investment opportunities across borders amongst others. Enterprises face

competition from all fronts. Human resource management is not left out in this

transformation crusade as it has obligation to move along with the changing demands of the

globalization process. One of the objectives of this paper is to show that effective managers

should constantly be aware of the changes taking place in domestic (home country)

environment, as well as around the globe (international and foreign environments) on HR

issues and developments. By so doing, they can scan their environment on an ongoing

basis, and when they detect opportunities and/or threats, they can transform their

organization to seize the opportunities and/or combat or neutralize the threats as the case

may be (C.Anyin.Ph.D, 2011).

Human Resources Management is one of the toughest duties of a manager since humans differ in

terms of attitudes, values, aspirations, motivations, assumptions, psychology, and life goals.

Looking at today’s competitive world, managerial level staff will require more conceptual and

strategic skills. Thus, managers should for example ensure a suitable, relevant and up-to-date

training for specific skills of lower level employees.

Managers have to be proactive, able to anticipate technological developments and prepare their

staff for whatever technological changes that might take place.

This will be a successful task only when the HRM itself is fully aware of those changes and has

the means to deal with them.

HR managers have a number of roles to fulfill. They are the guardians of the key assets of the

organizations. They are also counselor and protector of employees and directly responsible for

productivity. The government, including the Ministry of Labor, expects HR managers not only to

comply with labor laws, but also to promote harmony at the workplace; this will directly

contribute to healthier and more attractive work environment. As a result, both job hunters and

seekers will feel compelled to target such organizations in their search for new job opportunities.

The success or failure of HR depends also on the top management recognition of the importance

of HRM, and secondly on its commitment to assist HR to carry out its functions. Human

Resources jobholders need capability, integrity and professionalism in order to succeed in the

ever-changing environment (Tannir, 2007).

HR managers are facing many challenges in present business scenario like Globalization

workforce diversity, technological advances and changes in political and legal environment

change in information technology. All these challenges increase the pressure on HR managers to

attract, retain and nurture talented employee. HR professional can’t ignore these challenges

rather they ought to be line to design and execute innovative mechanisms of developing skills

and competencies of human resources to prepare them to accept the emerging challenges

(Srivastva, 6, July 2012).

2.0 CHALLENGES OF HRM IN MODERN MANAGEMENTThe environment faced by HR management is a challenging one; changes are occurring rapidly

across a wide range of issues. A study by the Hudson Institute, entitled Workforce 2020, has

highlighted some of the most important workforce issues. From that and other sources, it appears

that the most prevalent challenges facing HR management are as follows:

1. Economic and technological change

2. Globalization of business

3. Workforce availability and quality concerns

4. Demographics and diversity issues

5. Organizational restructuring

The environment faced by human resource is challenging one; changes are occurring rapidly

across a wide range of issues (Shahi Raz Akhtar, 2012). It appears that the most prevalent

challenges facing HR management are as follows:

2.1 Globalization At a political and economic level, globalization is the process of denationalization of markets,

politics and legal systems i.e. the use of the so-called global economy. Globalization refers to an

extension beyond national borders of the same market forces that have operated for centuries at

all levels of human economic activity (village markets, urban industries, or financial centers). It

means that world trade and financial markets are becoming more integrated.

Growing internationalization of business has its impact on HRM in terms of problems of

unfamiliar laws, languages, practices, competitions, attitudes, management styles, work ethics

etc. HR managers have a challenge to deal with more functions, more heterogeneous functions

and more involvement in employee’s personal life.

2.2 Workforce Diversity According to Thomas (1992), dimensions of workplace diversity include, but are not limited to:

age, ethnicity, ancestry, gender, physical abilities/qualities, race, sexual orientation, educational

background, geographic location, income, marital status, military experience, religious beliefs,

parental status, and work experience. The role of the Human Resource Manager is evolving with

the change in competitive market environment and the realization that Human Resource

Management must play a more strategic role in the success of an organization. Organizations that

do not put their emphasis on attracting and retaining talents may find themselves in dire

consequences, as their competitors may be outplaying them in the strategic employment of their

human resources.

With the increase in competition, locally or globally, organizations must become more adaptable,

resilient, agile, and customer-focused to succeed. And within this change in environment, the HR

professional has to evolve to become a strategic partner, an employee sponsor or advocate, and a

change mentor within the organization. In order to succeed, HR must be a business driven

function with a thorough understanding of the organization’s big picture and be able to influence

key decisions and policies. In general, the focus of today’s HR Manager is on strategic personnel

retention and talents development. HR professionals will be coaches, counselors, mentors, and

succession planners to help motivate organization’s members and their loyalty. The HR manager

will also promote and fight for values, ethics, beliefs, and spirituality within their organizations,

especially in the management of workplace diversity.

The future success of any organizations relies on the ability to manage a diverse body of talent

that can bring innovative ideas, perspectives and views to their work. The challenge and

problems faced of workplace diversity can be turned into a strategic organizational asset if an

organization is able to capitalize on this melting pot of diverse talents. With the mixture of

talents of diverse cultural backgrounds, genders, ages and lifestyles, an organization can respond

to business opportunities more rapidly and creatively, especially in the global arena, which must

be one of the important organizational goals to be attained. More importantly, if the

organizational environment does not support diversity broadly, one risks losing talent to

competitors. This is especially true for multinational companies (MNCs) who have operations on

a global scale and employ people of different countries, ethical and cultural backgrounds. Thus, a

HR manager needs to be mindful and may employ a Think Global, Act Local approach in most

circumstances. With a population of only four million people and the nations strive towards high

technology and knowledge-based economy; foreign talents are lured to share their expertise in

these areas. Thus, many local HR managers have to undergo cultural-based Human Resource

Management training to further their abilities to motivate a group of professional that are highly

qualified but culturally diverse. Furthermore, the HR professional must assure the local

professionals that these foreign talents are not a threat to their career advancement. In many

ways, the effectiveness of workplace diversity management is dependent on the skilful balancing

act of the HR manager.

2.3 Technological advances There is a challenging task of adapting workplace to rapid technological changes which

influence the nature of work and generate obsolescence Advanced technology has tended to

reduce the number of jobs that require little skill and to increase the number of jobs that require

considerable skill, a shift we refer to as moving from touch labour to knowledge work.. There is

new-new working technology. In this situation organizations have to change it technology. New

technology creates unemployment and in other hand, there comes scarcity of skilled manpower.

Like this, technological change brings difficulties and challenges in organization.

2.4 Changes in political and legal environment Changes in political and legal environment means changes in political parties and rules

regulation due to which new laws are come and you have to follow all laws while doing

business. Many changes taking place in the legal and political framework within which the

industrial relation system in the country is now functioning. It is the duty of human resource and

industrial relations executives to fully examine the implication, of these changes and brings

about necessary adjustment within the organization so that later utilization of human resource

can be achieved. It is the responsibility of Human Resource manager to anticipate the changes

and prepare organization to face them without any breakdown in its normal functioning

2.5 Changes in the Economic Environment This includes examination of the impact of a number of factors on production. Some of the key

factors are the scarcity of raw materials and other inputs including power and electricity,

encouragement of the culture of consumerism, increasing consumer awareness and demand for

quality products, continuing upward trend in the inflationary pressures with decrease in the

purchasing power of rupee and its spiraling effects in the ever increasing aspirations of workers

for higher wages and other material benefits and mounting costs on the employee welfare and

other benefits. In an inflationary economy, the resources tend to become scarce and the costs of

machine, materials and labour multiply. These push up the capital and running costs.

2.6 Revolution in Information Technology Information technology has influenced HRM through human resources information systems

(HRIS) that streamline the processing of data and make employee information more readily

available to managers. More recently, there has been and in the future there will be impact of

revolutionary computerized information system in the management it covers two primary areas

Application of computer in the managerial decision making process

1. Use of electronic computers managerial decision making process

2. In future computerized information system will have increasing impact at the coordinate and

strategic levels of organization

2.7 Organizational RestructuringMany organizations have restructured in the past few years in order to become more competitive.

Also, mergers and acquisitions of firms in the same industries have been made to ensure global

competitiveness. The “mega-mergers” in the banking, petroleum, and telecommunications

industries have been very visible, but mergers and acquisitions of firms in many other industries

have increased in recent years. As part of the organizational changes, many organizations have

“rightsized” either by (1) eliminating layers of managers, (2) closing facilities, (3) merging with

other organizations, or (4) outplacing workers. A common transformation has been to flatten

organizations by removing several layers of management and to improve productivity, quality,

and service while also reducing costs. As a result, jobs are redesigned and people affected. One

of the challenges that HR management faces with organizational restructuring is dealing with the

human consequences of change. The human cost associated with downsizing has been much

discussed in the popular press: a survivor’s mentality for those who remain,

unfulfilled cost savings estimates, loss of loyalty, and many people looking for new jobs.

Whereas many large firms have cut jobs by reducing their workforces, many smaller firms have

continued to create jobs. This is particularly true in high technology industries, such as software

development. These entrepreneurial firms are faced with growth, while trying to attract sufficient

workers with flexible capabilities and to conserve financial resources. More discussion on HR’s

role in organizational restructurings is found in Chapter 2, focusing on strategic HR planning.

Consequently, in both large and small organizations the management of HR activities is crucial.

3.0 Mobility of Professional PersonnelOne of the interesting facts will be increase in the mobility of various managerial and

professional personnel between the organizations. As individual develop greater technical and

professional expertise, their services will be greater demand by organization in the environment.

How can we overcome with these challenges?

1. Cross cultural training of HR personnel so that they understand other cultural people

2. Motivate Professional personnel more and more so that do not change organization more

frequently financial motivation is not always required you can motivate through non-financial

motivation like encouragement, training of employee, job satisfaction

3. HR should adopt the change at internet speed.

4. Shifting HR strategy with changing economy – strategy of HR should be agile, capable of

flexing and adaptive to changes in the economy.

5. Technical changes in the workplace often require the implementation of additional training for

workers. As training and development is generally the realm of the HR department, this creates

yet another challenge for human resource managers. HR must first determine what training is

necessary and then implement training measures to ensure all workers can keep up with technical

changes. Human resource managers must also determine when it may train existing employees,

and when it must search for new workers to fill technical positions within the organization

6. Training of HRIS – Human resource information system should be given to the HR managers

or HR professional so that they can overcome Information Technology challenges.

7. Proper performance evaluation system and proper career development plans should be used in

the organization to reduce professional mobility.

4.0 Strategies for ChangesThe first corner stone to achieve is the development of new initiatives, programs and

agendas. Human Resources must move beyond being the “police of policy” and “regulatory

guard”. Instead, HR must be the pioneers in assisting the organizations achieve results,

especially by helping employees to enhance their capabilities to ensure organizational

objectives are met.

The future of HR depends on its ability to align HR with the changes that are happening in

the workplace and the economy. New models of competitiveness are needed so that

organizations can better service their customers. Consequently HR must be the champions to

help gear employees to provide added value.

The new approach of HR is to emphasize new mindsets and new ways of thinking about

business instead of sticking to policies and bureaucratic patterns. HR professionals should

and must focus on cultural change, and the development of human capital, especially in

international organizations. ‘Think globally. Act locally”.

HR should sponsor a model of change, which will help the employees adapt to and be

comfortable with changes. Here, a lot of question may arise, such as: How do we decide

which practices to be transformed and which should be kept for purpose of continuity? How

do we change and learn rapidly? How do we honor the past yet change the future? How do

we capture the hearts and minds of employees?

5.0 Growing Importance of HRMThe success of organizations increasingly depends on people-embodied know-how- the

knowledge, skill, Attitude.

6.0 Nature of HRM: HRM involves management functions like planning, organizing, staffing, directing

and controlling.

It involves procurement, development, maintenance and management of human

resource.

It helps to achieve individual, organizational and social objectives.

HRM is a mighty disciplinary subject. It includes the study of management

psychology communication, economics and sociology.

It involves team spirit and team work.

HRM plays important role in creating organizations and helping them survive. Our world is

an Organizational world. We are surrounded by organizations and we participate in them as

members, Employees, customers, and clients. Most of our life is spent in organization, and

they supply the goods and services on which we depend to live. Organizations on the other

hand depend on people, and without people, they would disappear.

7.0 Factors Contributing to the Growing Importance of HRM

7.1Accommodation to workers' needsWorkers are demanding that organizations accommodate their personal needs by instituting

such programs as flexible work schedules, parental leave, child-care and elder-care

assistance, and job sharing. The human resource department plays a central role in

establishing and implementing policies designed to reduce the friction between

organizational demands and family responsibilities.

7.2 Increased complexity of the Manager’s jobManagement has become an increasingly complex and demanding job for many reasons,

including foreign competition, new technology, expanding scientific information, and rapid

change. Therefore, organizations frequently ask human resource managers for assistance in

making strategic business decisions and in matching the distinctive competencies of the

firm's human resources to the mission of the organization. Executives need assistance from

the human resource department in matters of recruitment, performance evaluation,

compensation, and discipline.

7.3 Legislation and litigationThe enactment of state laws has contributed enormously to the proliferation and importance

of human resource functions. The record keeping and reporting requirements of the laws are

so extensive that to comply with them, many human resource departments must work

countless hours and often must hire additional staff. Four areas that have been influenced

most by legislation include equal employment, Compensation, safety, and labor relations. An

organization's failure to comply with laws regulating these areas can result in extremely

costly back-pay awards, class action suits, and penalties.

7.4 ConsistencyHuman resource policies help to maintain consistency and equity within an organization.

Consistency is particularly important in compensation and promotion decisions. When

managers make compensation decisions without consulting the human resource department

the salary structure tends to become very uneven and unfair promotion decisions also may be

handled unfairly when the HR department does not coordinate the decision of individual

manger.

7.5 ExpertiseNow days there exist sophisticated personnel activities that require special expertise. For

example, researchers have developed complex procedures for making employee-selection

decisions; statistical formulas that combine interviews, test scores, and application-blank

information have replaced the subjective interviews traditionally used in making selection

decisions. Similarly, many organizations have developed compensation systems with

elaborate benefits packages to replace simple hourly pay or piece rate incentive system

7.6 Cost of Human ResourceHuman resource activities have become increasingly important because of the high cost of

personal problem. The largest single expense in most organizations is labor cost, which is

often considerably higher than the necessary because of such problems as absenteeism

tardiness and discrimination.

8.0 The New EnvironmentThe 1990s have been called the era of Employee Empowerment. This means the management

delegates as much power and authority as possible to low level employees to enable them to

make their own decisions and participate in the managerial decision-making as well. This way,

the employees will be more motivated and productive (Biyani Girls College, 2009).

The empowerment process is effective under the following conditions:

The employee must be given adequate training and knowledge regarding his job and

responsibilities, which includes technical knowledge, decision-making skills and group

process skills.

Both employees and management share a common vision and goals, and are really

committed to achieve them.

both employees and management possess common values, in term of job implementation,

behavior standards and ethics.

Benefits and profits are to be shared together (shares, bonuses...)

Management should show and have trust in lower level employees.

9.0 Reshaping HRThe changes which affect the HR performance are:

HR should not act as a therapy clinic

HR must measure their outcomes

HR practices must create value by increasing the organization’s intellectual capital

HR must attempt to make employees committed to achieving organizational goals,

and not merely to make employees happy

HR practices must be aligned with company strategies

HR must champion the needs and development of employees and yet become partners

in the business

HR should receive corporate priority. Business firms should be ready to boost their

investment in staff development; this is rewarding on the long run if its properly

implemented

HR should focus on the skills to be acquired taking into consideration the

understanding of the international dimensions of political, economic and social

development

HR should promote the collaboration between public training institutions, the

universities and the public sector in terms of planning an effective training program.

10. HR Management ActivitiesThe central focus for HR management must be on contributing to organizational success. The

key to enhancing organizational performance is ensuring that human resources activities support

organizational efforts focusing on productivity, service, and quality (Tyson, 2006).

Productivity: As measured by the amount of output per employee, continuous improvement of

productivity has become even more important as global competition has increased. The

productivity of the human resources in an organization is affected significantly by management

efforts, programs, and systems.

The amount of output per unit of input (labor, equipment, and capital). There are many different

ways of measuring productivity. For example, in a factory productivity might be measured based

on the number of hours it takes to produce a good, while in the service sector productivity might

be measured based on the revenue generated by an employee divided by his/her salary. E.G

number of cars over a specified period. example: productivity = (number of cars produced) ÷

(man-hours to produce these).

Quality: The quality of products and services delivered significantly affects organizational

success over the long term. If an organization gains a reputation for providing poor-quality

products and services, it reduces its organizational growth and performance. An emphasis on

quality requires continuous changes aimed at improving work processes. That need opens the

door for reengineering the organizational work done by people. Customer value received and

satisfaction become the bases for judging success, along with more traditional HR measures of

performance and efficiency.

Service: Because people frequently produce the products or services offered by an organization,

HR management considerations must be included when identifying service blockages and

redesigning operational processes. Involving all employees, not just managers, in problem

solving often requires changes in corporate culture, leadership styles, and HR policies and

practices.

11. Summery and ConclusionTo conclude that it can be said that HR practice is becoming more and more challenging day by

day, they have to face lot of problems like retention, attraction of employee, dealing with

different cultural people, managing work force diversity, technological and informational

changes to overcome with these challenges training (Cross cultural training and technological

and informational training) is necessary of HR people.

To reduce mobility of professional personnel HR people have to motivate them from monetary

and non-monetary techniques. Proper performance evaluation system and proper career

development plans should be used in the organization to reduce professional mobility.

Following the challenges posed by globalization, it is hoped that the HR professionals will not

only destroy the stereotype routine methods of doing job but would launch HR full potentials for

more positive contributions to employees’ wellbeing and organization building.

References Biyani Girls College, J. (2009). Concept Based Notes Human Resource Management. Sector-3, Vidhyadhar

Nagar,: Deptt,of Management.

C.Anyin.Ph.D, F. (2011). HRM challenges in Nigeria under a globalised Economy. International Journal Economics and Management Science, Vol1.No,4.

Shahi Raz Akhtar, U. (2012, 08 13). The environment faced by HR management is a challenging one; changes are occurring rapidly across a wide range of issues. A study by the Hudson Institute, entitled Workforce 2020, has highlighted some of the most important workforce issues. From that and . Retrieved 02 28, 2014, from WWW.Google.Com.

Srivastva, M. E. (6, July 2012). The Emergining Challenges in HRM. International Journal of Scentific Technology Research, volume 1.

Tannir, E. (2007). Training Manager . O.G.E.R.O, 3-5.

Tyson, S. (2006). Essential of Human Resource Management. New Yourk: Elsevier Ltd.