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7 common HR problems in companies (and how to solve them)

If you’ve ever worked in HR, you know that it requires you to juggle many different tasks and responsibilities. This can sometimes be overwhelming for smaller teams or companies with limited resources and manpower. 

The good news is that many of the most prevalent HR problems in companies are common across industries and companies. As such, there’s a wealth of information about how to solve them. 

This article will focus on 7 of the most common HR problems in companies and provide a solution for each one. 

But first, let’s back up to look at what an HR department, or HR Management, actually does.

What does HR Management involve?

HR managers may be responsible for a wide range of activities related to hiring and managing employees at a company. 

Responsibilities found under the HR umbrella might include:

In the largest organizations, these responsibilities are usually split across an HR organization. Smaller companies, however, often don’t have that luxury, and one or two people may have to juggle these priorities. 

This lack of resources or manpower is at the core of many of the HR problems that companies face. There are many jobs to be done – all of which are important – but it may not be possible to do all of them with the limited resources available. 

The rest of this article will focus on these challenges and offers possible solutions to consider.

Common HR problems in companies and their solutions

HR problems in companies come in many shapes and forms. They also vary in seriousness and complexity, depending on the challenge and where the company is located and operates. 

Consider the solutions to these problems to be guidelines. It might be necessary to seek outside help, depending on the resources available to you at your company.

1. Compliance with laws and regulations 

The first common HR problem in companies is a big one: making sure you’re adhering to all relevant laws in your operation area. This can be a huge challenge for small HR organizations, especially if no one on the team has experience dealing with local labor laws and regulations. 

Challenges

Key challenges that arise include:

  • The tediousness of keeping tracking of all employment laws in all areas in which the company operates 
  • Ensuring that all operations, recruiting, and employment processes adhere to local laws
  • A lack of time and expertise to understand the issues and nuances of the laws

Failure to fully comply with laws and regulations can lead to serious consequences for a small company, including audits, lawsuits, and even bankruptcy. 

Solutions

Potential solutions to this challenge include:

  • Ensuring that at least one person on your management team is in charge of understanding local employment laws and regulations
  • Giving that person the time and resources needed to study and understand those laws and regulations
  • Consulting a legal expert with questions about the laws and regulations
  • Auditing your existing processes to ensure that everything is above board 

While these solutions will require more time and money, it’s critically important to get them right to ensure your company’s health and future success.

2. Health and safety

Like with laws and regulations, HR organizations are often in charge of ensuring all health and safety requirements are being met at the company.

Challenges

Key challenges that arise include: 

  • Creating and enforcing health and safety processes at the company
  • Providing employee training and documentation of course completion to prove compliance with health and safety measures
  • Monitoring and adapting to local health and safety laws 
  • Tracking instances of workplace injuries or safety violations to protect against potential workplace compensation lawsuits 

Like with employment laws and regulations, failure to execute a thorough health and safety program can expose the company to costly lawsuits and injury claims. 

Solutions

Potential solutions to this challenge include:

  • Designating a health and safety person or committee at your organization
  • Giving them the tools and training needed to study and understand local health and safety laws
  • Empowering them with absolute control over health and safety at the organization, including the power to make changes, upgrades, or even shut down operations temporarily if needed 

Health and safety should be a top priority for any company. As such, this challenge should be on your shortlist to tackle as soon as possible. 

3. Change management 

Managing change can be a big headache for both HR departments and the employees they serve. This is especially true for fast-growing organizations experiencing rapid evolution in their processes or onboarding new employees at a high clip. Unfortunately, HR often bears the brunt of this frustration. 

Challenges

Key challenges that arise include: 

  • Adapting HR processes and policies to match the company’s growth and ambitions
  • Balancing the needs and wants of legacy employees with those of new employees and management
  • Ensuring open communication before, during, and after changes are made
  • Dealing with negative feedback or frustrations from employees

When done poorly, change management can have an adverse effect on performance, staff engagement, and morale. It often falls on the HR department to find ways to ensure people-centric change doesn’t affect productivity and output.

Solutions

Potential solutions to this challenge include:

  • Clearly communicating the benefits of change to all employees
  • Implementing a change management process that outlines how, when, and where employees are informed of process changes
  • Encouraging open and honest feedback from employees when a change is made
  • Making it crystal clear why you are making a change and what the benefits are to the company and employees

It’s not possible to please everyone all the time. But a few simple change management best practices can make your life a lot easier when scaling or altering your processes.

4. Compensation management

Compensation and benefits are one issue that no HR organization is able to get around. This is the core concern for all employees and has an immense impact on everything from performance to engagement to productivity. 

Challenges

Key challenges that arise include: 

  • Knowing how to structure compensation packages to stay competitive in your industry
  • Monitoring the recruitment landscape to see what others are offering 
  • Matching compensation demand in the market, especially if you’re trying to compete against larger competitors 
  • Providing competitive perks, employee benefits, and bonuses that align with what your ideal candidates want

It takes a lot of time and money to ensure that your total compensation packages are appealing and competitive. In reality, small companies will struggle to compete against large corporations and their limitless budgets. 

Solutions

Potential solutions to this challenge include:

  • Looking for free tools like Payscale and Glassdoor to create benchmark salaries that are based on aggregated real data
  • Shortlisting competitors to watch and analyze what they promote on their careers sites in terms of perks, benefits, and compensation
  • Focusing on employer branding and culture messaging to create intangible benefits for candidates 
  • Being creative with compensation to make up for less-than-competitive salaries 

The bottom line is that larger companies can and likely will outspend smaller ones to land the best talent. To combat that reality, smaller companies should look to pitch what’s unique and appealing about their company.

5. Landing top talent

Like with compensation, smaller HR organizations often get muscled out in the fight for top talent. This is another major HR problem in companies that don’t have the resources to go after the best candidates aggressively.

Challenges

Key challenges that arise include: 

  • Being overtaken by a large amount of competition for top talent in skilled roles
  • Having to spend lots of time, money, and effort to find top talent, all of which are in short supply
  • Devoting the time that’s needed to hire top talent while also juggling all of the other requirements of an HR manager
  • Spending lots of resources to court a top candidate, only to have them leave early in their term with you, or get scooped up by a competitor during the hiring process

Competition for top talent is fierce. Large organizations use every resource at their disposal to find and hire the best in the industry. Unfortunately, that means that smaller organizations are often at a financial disadvantage when hiring. 

Solutions

Potential solutions to this challenge include:

  • Getting creative with how and who you hire
  • Beefing up your employer brand to stand out from other companies
  • Recruiting directly from colleges and universities to give new and hungry employees a chance to shine
  • Leveraging networks and social channels to directly pitch candidates at no cost
  • Hiring the best recruiter possible and letting them do their jobs

Smaller organizations will need to pick and choose their battles when competing for top talent. If budget and resources are limited, then it might make sense to only go after the best candidates for strategically critical roles or ones that are going to drive long term success. 

6. Retention 

Landing top talent is one thing, but retaining them long term comes with a new set of HR challenges for companies. 

Challenges

Key challenges that arise include: 

  • Focussing the bulk of your time and energy on employee retention 
  • Balancing the cost of hiring top talent, with the risk of them leaving prematurely 
  • Accounting for the variety of factors that might cause retention issues, including:
    • External poaching
    • Lack of engagement
    • Lack of career development
    • Lack of growth opportunities
    • Non-competitive salaries or benefits
  • Monitoring and adapting to issues that are leading to increased employee departures
  • Maintaining productivity levels while balancing all of the above

Solutions

Potential solutions to this challenge include:

  • Finding a fine balance between culture, compensation, and incentives that boosts loyalty and retention: this will require some experimentation and lots of honest feedback
  • Continuously monitoring employee sentiment via pulse surveys, 1:1 meetings, anonymous surveys, town halls, etc.
  • Keeping an eye on the market to ensure that your compensation packages are competitive
  • Monitoring employee churn rates and retention rates and adapting to what the data is telling you
  • Addressing red flags before they become major issues 

If you break down a month-to-month workload for most HR managers, employee retention is likely one of if not their most important priority. 

Keeping employees happy and performing at a high level is incredibly important for a company’s success and comes with many challenges for HR professionals. 

7. Monitoring productivity and performance

Productivity and performance is a shared responsibility between managers and the HR department. Managers are ultimately responsible for their team’s performance, but it will fall on the HR department to make tough decisions if certain departments or teams aren’t performing at the level they need to be. 

Challenges

Key challenges that arise include: 

  • Monitoring performance and productivity levels to ensure that the business is operating efficiently and hitting output goals
  • Identifying problems areas and taking necessary actions to turn things around 
  • Working cross-functionally to find root causes for low performance and identifying potential solutions 
  • Reporting human resource issues back to the executive team who will then make strategic decisions

Keeping an eye on productivity and performance involves monitoring key indicators, engaging in candid conversations with managers and employees, and generally acting like a detective to find problems. While part of the job, it’s a time-consuming responsibility and a common HR problem in companies. 

Solutions

Potential solutions to this challenge include:

  • Using HR platforms that integrate performance management, goal management, and engagement tracking 
  • Looking for teams who are hitting their goals, studying what they do right, and presenting those processes as potential changes to the executive team
  • Keeping clear lines of communication open with all managers to ensure that issues are addressed before they snowball 

The HR department is often one of the busiest in most companies. That becomes even more apparent in smaller companies that have fewer employees dedicated to these mission-critical tasks. This is a very multifaceted role that brings with it many unique problems and challenges.

Like with most business challenges, focussing on strong communication, technology, processes, and goal tracking can help you overcome these common HR problems in companies. 

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