Technology is transforming the way employees work in an organization and helping business leaders solve their perennial challenges. But, is it truly keeping the HR teams on track with the overall business requirements? HR teams are constantly striving hard to match the expectations of their top management regarding talent acquisition, retention, leadership development, and DEI initiatives. And, then, there is also a constant battle against the spurt of technologies that could take away so many roles from the organizations, including those of HR teams that handle admin work such as employee verification, document processing, and leave management. It can’t be denied that the rise of AI, Computing, and Digital Communications has led to a massive shift in the HR industry. While some industries such as IT, Entertainment, and Data Management are leading in the race to acquire and retain high-skilled talent, others such as healthcare, manufacturing, and hospitality are still lagging in their ability to come up with innovative HR practices. Post-pandemic, this gap between the leaders and laggards has opened up significantly. It is important to identify the critical challenges that bother the HR teams in 2023.
In this article, we are focusing on the top challenges faced by HR leaders and how technology enablement can empower these business groups in 2023.
Latest HRtech Interview: HRTech Interview with Victoria Myers, Global Head of Talent Attraction at Amdocs
Challenges for the HRs: A Snapshot
A majority of the HR managers explained that there are a number of challenges while recruiting suitable talents. Right from lack of time to plan an interview, the quality of new hires being recruited does make a great impact. Above all, a majority of recruitment managers face a stringent budget. Getting accession to a strong pool of skilled candidates sometimes becomes a great challenge to manage.
Let us look into the challenges that are generally faced by HR managers in the tech industry.
Volatile HR Budgeting on Technology Investments
HR budgeting is a critical operation in any modern organization from an effectiveness point of view. It could involve 10+ different processes within an organization, such as recruitment budgets, compensation and payroll, training costs, rewards and benefits, reimbursements, and HRIS management.
When done right, budgeting can reduce employee turnover rates, and reduce the cost of hiring.
After briefly resuming HR technology investments in 2o21 and 2022, a majority of people-focused organizations are cutting down on their spending this year due to volatile economic conditions and constricted business growth. The HR tech spending is expected to drop to 1.8% in 2023, compared to 8.7% in 2022. With monies hard to come by, HR leaders have a strong reason to believe that hiring, retention, and career development would take a big hit this year. The budgetary limitations can be very well understood, but can these justify the ever-growing demands from human managers? With technology getting pricier due to the infusion of new-age tools such as AI, no-code automation, and business analytics, choosing to work with older versions of the HR software could derail your organization very quickly.
Not forgetting to mention that HR managers could find themselves fighting newer challenges with little or no support from their existing HR technology stacks.
All these could overwhelm your current workforce in the HR department, as well as put your technology stack under immense pressure.
Results: Over-staffing and understaffing, poorly-defined job roles, below-average productivity, and rising people management costs.
Tapping Best Talent from a Scarce Pool
HR managers, during the post-pandemic era, are facing Goliath-sized challenges related to making quality talent acquisition. Scarcity of talent impacts all industries, irrespective of their size and scope of business operations. However, sourcing and acquiring tech talent is the hardest of all trades in the HR industry. It takes a totally different mindset and an entirely innovative HR approach to create a steady stream of tech talent that can be hired and retained in the organization.
The IT and software development industries are the worst affected in terms of talent acquisition from a scarce pool of qualified candidates.
Why?
Recruiters could be lacking the skills required to source the right candidates from a relevant talent pool. Today, the hiring industry relies on real-time candidate information, social media networking, technical knowledge, intuition, and above all, digital communications.
The difficulties faced by HR managers across diverse markets are to recruit, retain and recreate the best professionals in this field. In the contemporary context, HR managers need to be strategic leaders, who should learn relevant technology interventions to facilitate recruitment on a large scale. Almost 86 percent of the HR managers surveyed through professional techniques acknowledged that the role of HR leadership has evolved to be more strategic in the contemporary context.
According to a survey conducted by Indeed, 86 percent of IT firms have pointed out that recruiting skillful talent has been a major challenge for HR. Managers who had been surveyed, also added that within the years 2016-2019, IT companies recruited only six people for every 10 open IT positions. But, how do some of the great organizations do it? Google, for example, increased software engineer hiring by 12% in 2020, the pandemic year. Even after increased hiring, 41% of IT hiring managers believe sourcing tech talent is growing to be difficult each year.
Below is given the frequency of job postings in the US job market with respect to a skill in demand. ( Exhibit I)
Exhibit I
Although tech hiring remains to be a difficult proposition, HR managers can do away with challenges through careful documentation and embracing a fresh hiring approach with a systematic skills-building narrative. On the other hand, using the right tools for recruitment can help to reduce the challenges of recruitment in the long run.
Missing Out on Candidate Experiences
Despite knowing the benefits of delivering a great candidate experience, HR teams are losing the plot when it actually comes to action. 80% of candidates abandon the selection process if they have even one “below par” experience.
A relatable, personalized candidate experience is a stepping stone toward building a happier, professional relationship with humans at work or elsewhere. Candidates, especially when they are not selected for the next round, seek a valid reason from the organization and what they can do next to apply again. Sadly, 2 out of 3 candidates never hear back from the company where they have applied. The painful experience continues — a majority of the hiring groups do not inform candidates about their interview rounds. 60% of candidates never receive a callback or feedback message stating the outcome of their interview rounds! The problems magnify when an organization could be recruiting for multiple roles at different levels and locations, reporting to multiple managers or team leads. Sending a personalized response to each candidate can take too much time. To solve such problems, HR leaders could use automated candidate experience management tools such as Beamery or Pyjama HR.
Dealing With Multi-generational Workforce
Building a multi-generational workforce isn’t that easy. Managing them is even harder.
The working age criterion is applicable to people that are aged between 15 and 65 years. The aging of the US workforce is having a significant impact on the hiring industry. For HR groups, this is creating a challenge.
Hiring managers are given a mandate to improve diversity in their candidate search, ensuring that the organization has a fair policy toward the aging population. Likewise, hiring teams are on the lookout for candidates with less than two years of work experience or complete freshers passing out straight from their grad schools. Fitting the groups from two ends of the age bracket, with the middle-aged professionals, into an organization is a huge cultural dilemma. The age gaps between the hired employees can have both positive as well as negative impacts on the overall productivity and efficiency of the organization.
Surveys have revealed that in 2022, at least 54 percent of all employees were in need of new training in digital skills. While new-generation leaders encourage the reskilling of existing employees, recruitment of skilled professionals requires HR managers to do careful homework. Managing differences of opinion, in recruiting selected skilled professionals, remain to be a major challenge for workplace HR.
Managing the Remote Onboarding Processes
Managing an onboarding process is another big challenge faced by HR managers, especially in industries such as IT. In order to meet this challenge initially a standardized process must be created and followed for the onboarding of new recruits on a large scale. Industry experts suggest that setting up email addresses for new employees, introducing them to the HR policies and protocols, and providing access to various company resources and documents related to the onboarding process can solve certain issues. Strategic tie-ups with HR support services can help professional managers to do a quality job while onboarding remotely
High Employee Turnover Rates
According to data available from authentic sources, the employee turnover rate (Exhibit II) in certain industries remains as high as 18.3 percent worldwide. Tech-driven industries have faced a high turnover, post the pandemic wave and this remained to be a matter of concern for HR. Working on retention holds good as high levels of attrition need to be curbed sincerely. Veterans from the industry, however, state that retention remains difficult to work upon with the nature and pattern of the industry operation. HR managers need to comply with competitive job market indicators while working consciously towards helping the employees to reach work-life balance.
Read More About HRtech Interview: HR Tech Interview with Kim Curley, Managing Director, Workforce Readiness Consulting at NTT DATA
Exhibit II
Employee Work-Life Balance
Work-Life balance in service industries remains to be a challenge, and HR managers need to work in collaboration with the employees in the given regard. Helping the staff to remain engaged can fructify business outcomes, while HR managers can implement technology successfully to keep the stakeholders’ connected. Putting up flexible work schedules can be engaging while telecommuting can help the staff to stay connected. Generous vacation times can be a contextual reward for employee performance, while majorities of the HRs suggest that encouraging staff with paid parental leaves can be sometimes overwhelming! Promoting health and wellness policies should be considered to be a priority as contemporary HRs should be well versed in crisis management, especially when it comes to the health crisis of staff.
Gender Diversity and Equal Pay Opportunities
Exhibit III
Gender diversity remains to be an issue amongst contemporary HRs. A higher number of women entering the job market globally in recent years has brought up serious threats for HR managers. Managing inclusion within tech-dominated workplaces remains easy while practicing HR managers claim that reducing the involvement of women in risky roles like that of the logistics industry, calls for revising HR policies. Improving the gender ratio at work can solve issues to a large extent, while a majority of HR managers do agree that policy barriers should be eliminated first.
Can Technology Help HR Managers Overcome Challenges?
Technology intervention remains to be the key, especially, when contemporary HRs have modern-day facilities to drive tech-based recruitments. The first and foremost step is working on automation, helping the HR department to generate accurate job descriptions to maintain role clarity. Rejection of candidates should be automated to a certain extent, wherein experience and exposure of the new recruits in the given contexts gain priority, followed by educational qualifications. Rushing the hire should not be encouraged, while automated follow-up mechanisms can be devised periodically to get hold of quality talents. Leveraging recruitment data perfectly needs to be done, while HR managers should get trained on understanding the relevant data metrics to take a prompt decision.
Conclusion
A strategic HR transformation approach is the need of the hour. It enables an organization to quickly adapt to new norms and gradually evolve to be the key driving force in the competition. Diversity of job applications, while employee turnover management coupled with reskilling of existing workforce remains to be some of the key strategies for contemporary managers. Protocols of recruitment need to be diverse, while discrepancies in recruitment criteria should be mapped regularly. On the other hand, gender biases need to be wiped out to attract new talents across work roles. Inclusion remains to be the major criterion, while strategic alliances with support recruitment services can help managers crack difficult positions on the go. As mentioned in our numerous HR Tech interviews and articles, HR leaders must take proactive actions on their existing people management gaps, leverage HR Technologies, and speak openly about the challenges they face in the organization, or in the industry, due to unforeseen crises. With predictive intelligence powered by AI, and human intuitiveness, any organization can revive growth and plan long-term sustainability with people-centric strategies.
Browse The Complete Interview About HRtech: HRTech Interview with Ryan Packer, Chief Technology Officer at BambooHR
[To share your insights with us, please write to sghosh@martechseries.com]