Challenges and Issues of Human Resource Management in
the 21st century


Lenin Karthikeyan
Assistant Professor - Senior Scale
Manipal University

Companies that desire to maintain a competitive edge, both now and in the future require human force well equipped to face the ever increasing pace of technological changes and techniques. This is the accountability of the human force manager to properly train the work force to accomplish the competitive advantages of business in the 21st century. HRM managers have moved from handling simple personal issues to making a strategic implementation through supporting the long term strategies with the necessary employee qualifications and developing the cultural and technical capabilities required for the strategies of the organization. In recent years there has been considerable debate regarding human resource management (Bal, 2011, p- 2). One has to rise the question here what should be the priorities for human resource in future? Though we believe that human plays  a vital role in an organization but due to rapidly transforming business landscape, globalization, changing nature of consumer taste and habits, a new techniques of production, HR managers are facing a variety of issues and challenges like retention of the employees, multicultural work force, retrenchment of the employees. Armstrong (2004) defined Human Resource Management (HRM) as the function within an organization that focuses on recruitment of management of, and providing direction for the people who work in the organization. Human resource manager will have to build or develop a frame work that allows flexibility to develop a workforce for tomorrow (Andries du plessis, 2008, p-167). The primary focus of the paper is to explore HR issues and challenges and to provide practical solutions.

Review of Literature:

The world federation of personnel management association (WFPMA, 2009) survey pointed out the most important top ten HR challenges are leadership development, organizational effectiveness, change management, compensation, health and safety, staff retention, learning and development, succession planning, staffing: recruitment and skill labour. In the view point of Decenzo and Robins (2001) the most important challenges of HRM, are technology, E commerce, and work force diversity, and globalization, ethical consideration of the organization which may directly or indirectly affect the organization competitive advantages, especially with technological advancement the affect on recruitment, training and development and job performance with great extent can be study in organization.

Factors affecting the role of HRM


Greengard (1995) defined globalization as the system of interaction among the countries of the world in order to develop the global economy. Globalization refers to the amalgamation of economics and societies around the world which 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 (Srivastava & Agarwal). Globalization has an effect on employment patterns worldwide. It has contributed to a great deal of outsourcing which is one of the greatest organizational and industry structure shifts that change the way business operates (Drucker, 1998). Globalization is also seen as changing organizational structures where expenses can move up or down as the business climate dictates (Garr, 2001).  As a result HR managers have to confront with more heterogeneous functions and more involvement in employee's personal life.

Technological advances

Technological advances have a significant impact on HR business practices. Due to the advancements in the technology there has been a drastic change in the approach to the various projects and the scenarios that guide to the organizational regulations.

Firstly, the need of skilled personals is mentionable. In order to survive in a competitive environment the organization definitely in need of the skilled personals in substantial number to handle the situations and technical equipments. In an organization there are "hot" sectors which require a high of technical experts like telecommunications, hospitality, retailing, banking, insurance, bio-technology etc.  Next head which is worth mentioning is the downsizing. New technologies have decimated many lower-end jobs with frustrating regularity. The increased automation also has reduced the employee head counts everywhere. The pressure of remaining cost-effective in every aspect has also compelled many a firm to go lean, and thereby cutting down extra fat at each and every managerial level (Anurag, 2011).  Managing the expectations of knowledge workers is also going to be a major area of concern for all HR managers in the years ahead.

Other aspect is telecommuting where the employees started to work remotely from a place other than their primary office. Telecommuting became a popular alternative to avoid the daily commute where the employees use phones and internet to transmit their office works.

This has been a powerful cost effective tool in the sense that companies have been successful in increasing their applicant pool through this mode and staffs also may live far away from cities and gain considerably due to savings in rents, transportation, etc.

The biggest issue due to technological advancement is adaptability, with companies looking at tools which can integrate with the internet, while other issues of concern include data privacy, security and business continuity/disaster recovery.

Workforce Diversity

Diversity by definition for the business world means having a workforce that represents many different viewpoints, backgrounds and cultures. Diversity affects all areas of organizations from recruitment to compensation, to the affect it has on the corporate culture, morale and competitiveness. Diversity in the workplace is an increasingly topical theme in management. Diversity within HRM, termed as workforce diversity, is a multifaceted phenomenon that can be defined as any visible or invisible difference between organisational members. Diversity can be labelled into two distinct aspects: observable differences (e.g. nationality, age) and underlying differences (e.g. values, sexual orientation). Workforce diversity becomes a particular issue in HRM as it has legal, moral and business implications for an organization.

There are a number of ways in which people respond to diversity. Behavioural and emotional reactions to diversity are explained largely by three theories: the similarity attraction paradigm, social identity theory and social categorisation theory (Pearson, 1995). Workplace diversity has its positive effects (e.g. innovation, flexibility) as well as negative effects (e.g. high turnover, decreased job satisfaction). However, diversity management can help mitigate the adverse effects of diversity and capitalise on the positive effects.

With the fusion of talents of diverse cultural backgrounds, genders, ages and lifestyles, an organization can respond to business prospects more vividly and creatively, especially in the global arena, which must be one of the main organizational goals to be attained. The risks of losing talents to competitors occur when an organizational environment does not support diversity. This is especially factual for a multinational company (MNCs) who have ventures on a global scale and employ people with varies ethical and cultural backgrounds. Thus, a HR manager needs to be mindful and may employ a Think Global, Act Local approach in most circumstances.

Changes in political and legal environment

If there are Changes in political and legal environment, then almost all aspects of HRM will be affected by the legal and regulatory environment. The key drivers of a political climate include the extent of external regulations, nature of work contracts, various labour legislations and case laws etc. Such factors remain ever changing, and as such, the political atmosphere of human resource management remains in a constant change of flux.  It is the duty of  human resource and industrial relations executives to anticipate the changes and fully  examine the implication, of these changes and brings about  necessary adjustment within the organization so that they can face any changes without any  breakdown in its normal functioning (Srivastava & Agarwal, p-47)

Changes in the Economic Environment

In an economic situation companies suffer both internal and external pressures. The external competitive pressure stemming from the economic crisis produces a drop in demand and an increase in unemployment, which in turn affects the global competition in the market. On the other hand the internal management of the company focuses on efficiency. This leads to pressure to reduce costs and fringe expenditure, as well as to the need to justify the need for each and the total amount of all expenditure to be incurred. High unemployment and layoffs are clearly HRM and managerial issues. Without a doubt, these matters influence the strategic HR function. 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.


While considering the challenges of human resources there is a need to discuss about ethics. The discussion about ethics happened during mid 2000s when several companies were found to have engaged in gross unethical and illegal conduct, resulting in the loss of billions of dollars from shareholders. Companies are seeing the value of implementing ethics codes within the business. Many human resource departments have the responsibility of designing codes of ethics and developing policies for ethical decision making.  According to Steve Miranda, chief human resources officer for the Society for Human Resource Management (SHRM), "[the presence of an ethics officer] provides a high-level individual with positional authority who can ensure that policies, practices, and guidelines are effectively communicated across the organization"( McGraw, 2011).  Developing policies, monitoring behaviour, and informing people of ethics are necessary to ensure a fair and legal business.

In the present era most of the organizations are competing globally for their best reputation, by keeping in view the above issues and challenges the HR mangers are responsible to train all the young workers, to provide them best rewards as a result they will show their commitment and loyalty.

- Technology has changed each and everything with great extent, the methods of production, the process of recruitment, the training techniques, new equipment and technology should be introduced and purchase by the organization and training should be provided to young and educated workers.

- To cope up with the issue of Globalization HR manager should adopt the concept of Globalize Human Resource Management (GHRM) where it prepares the skill people or manager worldwide. This way the trend of globalization can be minimized with some extent.

- Human resource manager should develop such a HR system which consistent with other organization elements such as organization strategies, goals and organization style, and organization planning.

- Regarding the debate on work force diversity, the HR manager accountable to make such a broad strategies which help to adjust employees in global organization, HR must increase the ability to compete in the international market.

- Organization culture is also another important element which must be consider by the HR manager, the culture must be like to shape their behavior and beliefs to observe to what is imperative.

- To provide more and more talent people into the organization the HR manager must re-decide and re-arrange the staffing functions, for recruitment selection, training and transfer, promotion, dismissals, placement, demotion and layoffs of the employees separate strategies should be developed and implemented.


As we have discussed the dominant issues and challenges which are facing by HR mangers and organization. The foremost work by the HR is to develop sound organizational structure with strong interpersonal skill to employees. Training employees by familiarize them with the concept of globalize human resource management to perform better in the global organization context. All these issues and challenges like, work force diversity, leadership development. organizational effectiveness, Globalization, E- Commerce, etc, can be best manage by HR manager where they have to adopt a HR practice which encourages rigid recruitment and selection policy, division of jobs, empowerment, encouraging diversity in the workplace, training and development of the work force, fostering innovation, proper assigning of duties and responsibilities, managing knowledge. By enthusiastically following all the above aspects the value of human resource can be improved, organization efficiency can be enhanced, and the organization will sustain to survive.


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Andries J du Plessis &  Beaver Bob (2008), "The Changing Role of Human Resource Managers for International Assignments " International Review of Business Research Papers,  Vol.4.No.5 Pp.166-181

Decenzo and Robbins, (2001), "Human Resource Management", 6th edition, Wilsey.

Greengard, S. (1995). " When HRMs Goes Global: Managing the Data Highway". Personnel Journal 76(6), 90-106.

Srivastava Ekta & Agarwal Nisha, (2012), "The Emerging Challenges in HRM", International Journal Of Scientific & Technology Research Volume 1, Issue 6.

Drucker, P. (1998). Peter Drucker on the Profession of Management. Cambridge, MA: Harvard Business School Press.

Anurag (2011), "How the technological advancements effect the HRM", , retrieved on 12/9/2013.

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McGraw Mark(2011), The HR-Ethics Alliance, LRP publications.

Lenin Karthikeyan
Assistant Professor - Senior Scale
Manipal University

Source: E-mail February 12, 2014


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