How to Solve These 8 Human Capital Management Challenges


HR Insights for ProfessionalsThe latest thought leadership for HR pros

Wednesday, June 21, 2023

Optimizing human capital management can make a big contribution to business success, so it's a good idea to prepare for some of the challenges you're likely to encounter in this space.

Article 8 Minutes
How to Solve These 8 Human Capital Management Challenges

Human capital management (HCM) is a vital element in the success of any business. Finding the right methods and strategies in this space can drive you to greater results thanks to an efficient, productive and engaged workforce.

But as well as focusing on the benefits and opportunities of HCM, you need to be prepared to overcome the common challenges that today's businesses face in this area.

8 common human capital management challenges

1. Talent acquisition and onboarding

Identifying and acquiring the right talent is a constant priority for many businesses, particularly those that are feeling the effects of growing skills shortages.

Devising an effective HCM strategy can help you improve your talent acquisition in various ways. Dedicated software can offer benefits like:

  • Automatic filtering of applications based on certain criteria, such as skills and experience
  • Identification of the recruitment and hiring process channels most likely to provide engagement with valuable candidates
  • Tools to measure and analyze candidate and employee engagement

Onboarding is another essential step in successful talent acquisition, since you want new arrivals to make a positive start to their role and become loyal, productive employees.

One of the most valuable steps you can take in improving the onboarding process is to collect feedback from employees, which will give you a frontline view of procedures that work well and ones that need to improve.

2. Strategic workforce planning

It's important to incorporate a strategic element into your workforce planning. The HR department needs to track metrics such as turnover, time-to-hire and headcount, but it should also take a long-term view to help the business prepare for potential future challenges and opportunities.

You can improve your strategic workforce planning by looking at your human capital in the context of the long-term goals of the organization as a whole. Is the labor force designed and equipped to help the business reach these objectives?

It can also prove highly beneficial to visualize, anticipate and prepare for certain scenarios before they become a reality. Analyzing data and studying trends in your industry will help you make informed forecasts and get your workforce ready for the future.

3. Leveraging workforce analytics

Effective workforce analytics is a critical part of HCM that can significantly contribute to the company's understanding of its human resources. However, for many businesses - particularly smaller firms with limited budget and time to dedicate to these sorts of activities - getting to grips with complex data sets is a daunting challenge.

Introducing specialist HCM software will put you in a stronger position to realize the many benefits of analytics, which can range from quicker hiring times to a more detailed understanding of how your people are performing and where additional training is required.

To get the best out of analytics, first you need to have a clear idea of what data is available to you and whether the information is accurate and up to date. A data audit can help you make these conclusions with maximum speed and efficiency.

4. Training and development

There are various advantages to be gained from ensuring your training and development programs are fit for purpose.

Employees who are constantly learning new things and expanding their skill sets will feel more engaged and committed to their employer, which supports productivity and reduces turnover. The business, meanwhile, benefits from a more diverse talent pool and could also save money by upskilling existing staff rather than recruiting.

Like many aspects of HCM, training and skills development can pose a big challenge to the HR department, which needs to show that investment in this area is delivering returns.

One of the key success factors is a data-driven, targeted approach to training, taking into account:

  • The skills that already exist in the workforce
  • Staff interests and the things people want to learn
  • Where the business has the greatest need for additional skills and expertise

It's also vital to have metrics and follow-up procedures in place to gauge the effectiveness of your development and training programs.

5. Change management

Mismanagement of change is a common hazard that HR teams and business leaders need to be particularly wary of, seeing as the individuals that make up the workforce are often the ones most affected by decisions and strategy changes dictated by the C-Suite.

If a new HCM platform is introduced, for example, preparing people for the impact this change will have on them and their day-to-day work should be one of the key priorities of the project management team.

There are many other types of organizational change that can have a big impact on the workforce and its productivity, particularly where new technologies and concepts like automation are concerned.

Being proactive and anticipating change, rather than simply reacting to it, is an invaluable quality that can raise your HCM standards to the next level.

6. Multi-generational workforces

Catering to a multi-generational workforce has emerged as one of the biggest challenges in human capital management. The diverse needs, expectations, and work styles of employees across different generations make it increasingly difficult for organizations to strike the right balance in terms of employee retention, engagement and turnover.

One key reason why managing a multi-generational workforce is challenging lies in the vastly different work experiences and perspectives held by employees belonging to different age groups. For instance, baby boomers may value job security and a traditional work hierarchy, while millennials and Generation Z employees often prioritize flexibility, work-life balance and opportunities for growth. Consequently, organizations must develop tailored employee engagement and retention strategies that cater to the unique needs of each generation, ensuring that all employees feel valued and supported.

Additionally, navigating the inherent communication and collaboration challenges that arise within a diverse workforce can prove to be quite complex. Each generation tends to have its own preferred communication style, ranging from face-to-face interactions, emails or instant messaging. Creating a cohesive work environment where everyone can effectively communicate and collaborate requires organizations to invest in training and development programs that promote intergenerational understanding and bridge generational gaps.

Furthermore, employee turnover rates can be significantly impacted by an organization's ability to create an inclusive workplace culture that fosters mutual respect, understanding and appreciation for each generation's unique strengths and contributions.

7. The skills gap and training issues

Addressing training issues and skills gaps is undeniably one of the key challenges in human capital management today. Today, the need for continuous development and improvement of employee skills is paramount to ensuring both superior employee performance and organizational success. By proactively identifying and addressing these gaps, organizations can unlock new opportunities for growth, development, and overall employee satisfaction.

One major aspect of this challenge is the ever-changing nature of technology and industry dynamics. Companies must keep pace with these changes and ensure that their employees are equipped with the necessary knowledge and competencies to thrive in the modern workplace. This requires a robust learning and development strategy that not only addresses current needs but also anticipates future requirements, keeping employees engaged and motivated to learn.

Another critical element is understanding the unique skill sets and leadership development needs of each individual within the organization. By adopting a personalized approach to training and development, companies can ensure that employees receive targeted support and resources that align with their career goals and aspirations. This keeps employees happy and loyal, as they feel valued and supported in their pursuit of professional growth.

Moreover, addressing skills gaps and training issues can also have a significant impact on an organization's bottom line. A well-trained workforce is more likely to deliver high-quality work, leading to increased productivity and profitability. Additionally, investing in employee development can help companies attract and retain top talent, as professionals are increasingly seeking out development opportunities that offer personal and professional growth.

8. Fostering a culture of high-performance

Fostering a high-performance organizational culture is undeniably one of the key challenges in human capital management. The reason behind this is the intricate interplay of various factors, such as performance management, job roles and employee morale, which contribute to the overall success of an organization. To establish a culture of excellence, organizations need to focus on continuous improvement and adapt to evolving market demands while ensuring that their workforce remains motivated and committed.

Performance management plays a crucial role in driving a high-performance culture. It involves setting clear expectations, providing timely feedback, recognizing achievements and investing in employee development. A robust performance management system helps align individual goals with organizational objectives, ensuring that everyone is working towards a common vision. This alignment not only boosts productivity but also fosters a sense of ownership and responsibility among employees, making them feel valued and engaged in their job roles.

Job roles, on the other hand, need to be well-defined and aligned with the organization's strategic objectives. Ensuring that employees are placed in roles that match their skills, interests and aspirations is vital for maintaining high-performance standards.

HR Insights for Professionals

Insights for Professionals provide free access to the latest thought leadership from global brands. We deliver subscriber value by creating and gathering specialist content for senior professionals.


Join the conversation...