Contemporary Challenges Faced by Organizations Managing People Today

Analysis of The Contemporary Challenges that organisations face when managing people today

1.0  Introduction

The organisations role of managing people has changed significantly over the last decade, and no more so than in the 21^st Century.  The situation used to be, that people employed by organisations were predominantly required to provide manual labour (Torrington et al 2017)

Relatively little amount of skill, or intelligence was needed to do the jobs required, and finding people to do them was easy as there were no restrictions for hiring and firing people who didn’t perform at their jobs or management did not like. In industrialised, developed countries like the UK and USA, this tends not to happen anymore. The majority of jobs today, require the employees to have mastered some sort of skill, or to possess desirable attributes. The demand for higher-level skills has grown quickly and there is a need for more people to fill professional and managerial jobs than was the case twenty years ago. (Kapoor 2015)

Almost all informed commentators believe that these established trends will grow in the future (UKCES 2012; Ross 2016) According to numerous reputable sources, there has been a strong emphasis on the challenges of Globalisation, technological advancement, diversity and the shortage of skilled human capital. Therefore, this analysis will predominantly be focusing on these challenges faced by organisations in an ever changing and modern environment.

2.0  Globalisation

Organisations in the 21^st Century must adapt and keep up with the constant changes happening all over the world and analyse and compare themselves to the competition. Globalisation has allowed organisations access to a much larger and more diverse potential workforce (Natter 2018)

Globalisation is incredibly important for a post-industrial society, Daniel Bell (1960) referred to the structure of employment as the main empirical indicator of the transition from one phase to the other. When the number of employees in the service sector outgrows the number of employees in the industry, the country enters into the post-industrial phase. This is an adequate way of describing the situation most developed countries are facing now. Rapid development of technology and methods of organisation has increased the necessity for organisations to manage their workforce. (Rodinova 2014)

The increasing prevalence of Globalisation is driven by many factors; Shortage of talent in developed countries, availability of low labour cost and growing consumers in developing countries as well as technological progress. Despite the current economic downturn and unemployment, most developed countries will face long term talent shortages due to an ageing population and the retirement of the baby boomer. There are more workers retiring than workers entering the workforce in most developing countries. (Kapoor 2015) Challenges faced by organisations regarding this shrinking workforce are being addressed by organisations but also by the governments. The UK are implementing measures to combat this and from 2019 the state pension age will increase for men and women to reach the age to 66 by October 2020, with the government planning further increases from 66 to 67 between 2026 and 2028 (Age UK).

According to the Future of Jobs Report (2018) challenges faced by organisations now, need to be addressed, to include talent and skills shortages, mass unemployment and growing inequality. Re-skilling and up-skilling and a need to recognise the importance of human capital investment as an asset rather than a liability will be necessary to enable a diverse and capable work force to grow and adapt in an age where technology dominates many jobs that were originally done manually (Shwabb 2018) The majority of those surveyed by the report expect the skills needed, brought about by advancing technological trends , will have changed significantly by 2022, emphasising the need for organisations to address these challenges by developing the workforce they have and attracting new talent.

3.0  Brexit

According to the UK Gov guidance papers, workplace rights will see relatively few changes following Brexit, even with a no-deal scenario. In the last quarter of 2018, the number of EU nationals working in the UK has dropped by 61,000, according to the Office of national Statistics, although there was a rise of 130,000 from non EU countries. The Brexit scenario poses significant challenges for organisations in terms of attracting much needed talent in an already dwindling and limited pool of resources (Holmes 2019)

In the period since June 2016, the combination of strong labour demand, low unemployment and a dramatic 95% fall in EU nationals joining the workforce between 2016 and 2018, this has posed significant challenges for organisations regarding labour force recruitment, which is predicted to be made worse by the end to free movement if that happens to be the outcome (CIPD 2018)

Recent data shows that 44% of employers experienced greater difficulty in recruitment during 2018 and 34% faced a similar challenge in retaining staff. (CIPD 2018) The resource and Talent Planning survey in 2017 reported that around a fifth of organisations saw an increased cautiousness in prospective candidates since the referendum vote.

A study by Wills Towers Watson (2017) also highlights similar concerns. The study, which was based on 100 responses from senior HR and reward executives confirmed that talent management, attraction, retention and engagement were the main challenges that organisations are now facing from a human resource perspective. For 36% of the survey, attracting and retaining EU nationals with specific skills in the UK has become more of a challenge and priority since the result of the referendum (Wills Towers Watson 2017)

With Brexit threatening to take away the free movement of talent across borders from central location positions in the UK and the potential end to free movement of attractive talent, there has been what many call a ‘War on talent’ (Keeridge 2019) Employee rights will also be under threat with Brexit looming,. The challenge faced by organisations in the UK is that not only will it potentially be harder post-Brexit to access talent in Europe, but that the UK is already presenting as a less attractive place to work, with uncertainty significantly reducing migration. (Ibid)

4.0  Technology

The impact of the industrial and digital revolution has been substantial on all aspects of society and has had a huge impact on organisations and how they manage people. The greatest challenge to organisations will be adapting to enable them to utilise the benefits of the availing Artificial intelligence technology whilst at the same time avoiding the disadvantages of increased unemployment and widening wealth inequalities (Spyros 2017)

AI is defined as anything man-made that learns from experience and mimics human intelligence (Digiday et al 2017; Houptfleish 2016; Marr 2016; Clauson 2018)

Barat (2013) suggests that the artificial intelligence revolution brings a new set of challenges for organisations; As it aims to substitute, supplement and amplify practically all tasks currently performed by human, becoming in effect for the first time, a real competitor for them (Barat 2013)

A trend towards smaller workforce will continue as AI increases the number of tasks completed by robots and machines. The more jobs automated, the more skills that would be required to perform the remaining tasks, which would require organisations to face a greater challenge than they already do, in attracting and retaining candidates with specialised skills and attributes enabling them to perform specialist roles (Cappelli et al 2018) This would require that organisations attract candidates talented in innovation and strategy to help the business gain advantage over competitors.

A large majority of critics and supporters of AI agree that its impact will overshadow that of computerisation and the internet (Cava 2018; Daugherty et al 2018) Machine learning represents the latest techniques in statistical analysis, pattern recognition and predictive analysis (Theodorius 2015)

Although AI creates challenges for organisations in that they will need to attract a more diverse and skilled workforce, it is at the same time set to revolutionise an employee’s immersive experience within the workplace (Ulrich 2016) The new era of ‘big data’ predictive analysis and machine learning promises to change the uninspiring management practices faced by a typical employee (Segal et al 2014)

Use of advanced analytics which help to attract and hire better talent, assist with performance management and provide insights into how to incentivise and reward  staff are useful, as well as the algorithms which seek to shortlist and mainstream the recruitment process (Taska 2018)

Despite the positive impact of AI in the workplace, it poses challenges to organisations in a few different ways. Firstly; few organisations have entered the big data stage yet, with only 22 per cent saying they have adopted analytics in HR (LinkedIn 2018) Aside from that, a lot of those organisations who have entered the stage, do not have large sets of data, meaning they may not be large enough to develop an accurate predictive algorithm in order to determine correct causal relationship (Cappelli et al 2018)

Organisations also need to consider what constitutes an overall adequate employee. Using AI to assess performance can be tricky with so many aspects to construct, measuring accurately for most jobs is challenging. Any complex role is interdependent with other jobs and therefore individual performance is hard to distinguish from group performance (Pfeffer et al 2006)

Using AI to make decisions regarding hiring and firing is also another challenge, as they can have serious repercussions for all involved (Cappelli et al 2018) Causation is absent from algorithm based analytics which presents ethical challenges for organisations who use them to make major decisions about who should be fired or recruited.

Then finally, one of the most important challenges of using AI relates to using algorithms based on personal attributes of employees and their performance in the workplace. Trying to look at causal relationships when it comes to performance is complex and can easily discriminate inadvertently, referring to historical and inaccurate data. (Cappelli et al 2018) Amazon in 2018 faced the same challenge when they discovered their algorithm for selecting and recruiting candidates was biased against women and subsequently took it down. (Meyer 2018)

5.0  Diversity

Diversity can be another challenge for organisations, particularly in a globalised society. Managing diversity is more than acknowledging differences in people, it involves recognising the value of those differences, eliminating discrimination and promoting inclusiveness. Organisations also face the challenge of losing employees and work productivity due to prejudice and discrimination, as well as having to deal with complaints and legal actions (Devoe 1999)

The workforce has undoubtedly become more diverse over the past fifty or so years in terms of age, gender, race and ethnicity, sexual orientation and political as well as religious beliefs. (CIPD 2018)

According to CIPD research into diversity and inclusion in work, conducted in 2018. Despite equality legislation and recognition by organisations that equality and diversity is important, inequality still exists in the workplace. This inequality has been recently demonstrated by the recording and publishing of figures relating to the gender pay gap, which has shone a light on structural barriers to progression for women in the workplace, including a lack of senior role models and flexible working (CIPD 2018)

Even though there has been a considerable rise in the proportion of women in employment up from 57% in 1975 to 78% in 2017, organisations are now facing increasing challenge in addressing the gap in pay between male and female employees.

More than 100,000 firms so far have provided details of their pay gap (BBC 2018) Three quarters of them paying men more than women, even though it is based on an overall evaluation of pay rather than men and women being paid differently for the exact same job, it has still highlighted an obvious gap related to career progression and the type of roles women do.

It is not only gender diversity that can present challenges for organisations. Challenges are evident regarding recruitment of all types of people from diverse backgrounds. According to Robinson et al (1997) The constantly changing dynamics of global business requires that companies encourage inclusion in the face of diversity.  Gender and lifestyle choices have become important issues, in particular LGBT and intersex employees can suffer hostility, disrespect and discrimination from colleagues (Hewlett et al 2013) Behavioural attitudes as such can present several challenges for organisations, such as an uncomfortable atmosphere and poor productivity in the workplace (Dhuppar 2015) The issues affecting gender inequality such as archaic notions that women are the weaker sex and hence only fit for temporary or part-time lower paid jobs with minimum responsibility exist to date, (Speroni et al 2016) Similarly these type of prejudices that affect women, can affect other diverse groups also.

With diversity creating a multi-racial and multicultural atmosphere in many organisations (Mckinsey et al 2018) Some individuals will not only harbour negative prejudices but also demonstrate inherent bias, anger and frustration on to others considered different from themselves. Such behaviour presents challenges to organisations in that they foster an environment where poor cohesion; team work; bullying; scapegoating and harassment can impact the working environment. Amaliyah (2015) suggests that these issues severely and negatively affect organisations in a diversified work environment and cannot be permitted to thrive.

6.0  Human capital

In management sciences, the concept of human potential is closely linked with the theory of human capital. It was developed by G.S Becker in the 70’s and quickly gained in importance. It assumes that human beings are the most valuable asset in an any organisation. Money spent on raising professional qualifications with employees is now treated as an investment rather than a cost.

Moczydlowska (2008) said that human potential is above all, the potential lying in the broadly defined competencies of an employee. Not only are knowledge and skills integral, but also personality traits and predispositions.

C.Woodruffe (2010) says that the division of competencies are separated into two groups ‘Input’ and ‘Output’ Input is primarily attributes, valuable from the perspective of the employer, output relates to the specific standards of performance reflected in the results of work an employee does (Rakowska 2007)

The challenge for organisations in the 21^st century is how to find this talent and the competencies they require. The need for educated, skilled and technically savvy employees continues to create recruitment difficulties in organisations. The Society for Human Resource Management (2018) conducted a survey of HR professionals, to learn more about issues associated with Human Capital that shaped the workforce. Retaining talent, engaging employees and providing strong benefits and compensations were among the top challenges listed. The survey was presented to both HR professionals and top executives. Maintaining high levels of employee engagement was cited as the greatest challenge by 38% of respondents, followed by developing the next generation of organisational leaders 31%, and retaining employees (highest earning) 26% ( employees overall) 25%

The recession, as well as Brexit uncertainty, have no doubt represented a challenging environment for managers and HR departments across the world. It is widely accepted that human capital is integral to the competitiveness of employers and economies (Alonso 2018) The World Economic Forum (2018) contends that ‘Human capital is critical not only to the productivity of society. But also to the functioning of its political, social and civic institutions’

The demand for high-skilled labour is growing faster than supply, with 38 to 40 million fewer workers with advance education than employers will need worldwide (Shrannm 2018)

7.0  Conclusion

Through engaging with many sources, it became apparent that the most important challenges to organisations were those that related to fast moving globalised society such as; Artificial Intelligence, Globalisation; Managing a diverse workforce, and the apparent skills gaps and shortages that governments and organisations are seeking to address. Technology has become a major catalyst in changing the way in which employees work and interact, and yet at the same time employers are finding new ways to attract and retain staff through use of technologies, as well as engage a workforce that is becoming more concerned with work-life balance than ever before.(Ulrich 2016)  Organisations need to find a way to train, educate and retain talented employees now, more than ever before, and try to manoeuvre the restrictions placed on them which prevent the migration of a steady stream of talented and skilled workers, who will inevitably contribute to their success.

Bibliography

• Andrew Patrick, H. and Raj Kumar, V. (2012). Managing Workplace Diversity: Issues and Challenges. [online]. Available from: https://journals.sagepub.com/doi/pdf/10.1177/2158244012444615. 
• Anon. (2016). Brexit- A Key Role for HR – People and Organisation issues to consider following the referendum. [online]. Available from: https://www.pwc.co.uk/the-eu-referendum/brexit-what-are-implications-for-hr.html. 
• Anon. (2018). Predictive Analytics And Artificial Intelligence in People Management. [online]. Available from: http://theirf.org/research/predictive-analytics-and-artificial-intelligence-in-people-management/2527/. 
• Anon. (2019). Guide on gender pay gap reporting | CIPD. [online]. Available from: https://www.cipd.co.uk/knowledge/fundamentals/relations/gender-pay-gap-reporting/guide. 
• Anon. (2019). Why the gender pay gap is an enduring challenge for many organisations. [online]. Available from: https://workplaceinsight.net/why-the-gender-pay-gap-is-an-enduring-challenge-for-many-organisations/. 
• Barnett, J. (2016). The role of AI in People Management. [online]. Available from: https://www.bizjournals.com/bizjournals/how-to/human-resources/2016/06/the-role-of-artificial-intelligence-in-people.html. 
• Canals, J. (2018). 10 Ways Artificial Intelligence Is Transforming Management | IESE. [online]. Available from: https://www.iese.edu/stories/10-ways-artificial-intelligence-is-transforming-management/. 
• Cappelli, P., Tambe, P. and Yakubovich, V. (2018). Artificial Intelligence in Human Resources Challenges and a Path Forward. [online]. Available from: https://www.researchgate.net/publication/327510297_Prospects_and_Challenges_of_Workplace_Diversity_in_Modern_Day_Organizations_A_Critical_Review. 
• Choroszewicz, M. and L., T. (2019). Gender, Age and Inequality in the Professions. US: Routledge. 
• Cletus, H., Mahmood, N., Umar, A. and Ibraham, A. (2018). Prospects and Challenges of Workforce
• Diversity in Modern Day Organisations. [online]. Available from: https://www.researchgate.net/publication/327510297_Prospects_and_Challenges_of_Workplace_Diversity_in_Modern_Day_Organizations_A_Critical_Review. 
• Guiborg, C. (2018). Gender pay gap: Six things we’ve learnt – BBC News. [online]. Available from: https://www.bbc.co.uk/news/business-43668187. 
• Holmes, D. (2019). Human Capital Risk and Brexit. [online]. Available from: https://www.marsh.com/uk/insights/risk-in-context/human-capital-risk-and-brexit.html. 
• Kapoor, B. (2014). Impact of Globalisation on Human Research Management. [online]. Available from: Jims Journal. 
• Kerridge, C. (2019). How will Brexit change the game for Human Resources?. [online]. Available from: https://www.openaccessgovernment.org/brexit-change-the-game/58873/. 
• Kilduff, J. (2017). Brexit – Implications for human resources, employment regulations, employment policies and benefits programmes. – Willis Towers Watson. [online]. Available from: https://www.willistowerswatson.com/en-GB/insights/2016/06/the-eu-referendum-implications-on-human-resources. 
• Leonard, K. and Seidel, M. (2019). Contemporary Issues Faced by Human Resource Managers Today | Chron.com. [online]. Available from: https://smallbusiness.chron.com/contemporary-issues-faced-human-resource-managers-today-1875.html. 
• Leroy, H., Segers, J., Van Dierendonk, D. and Den Hartog, D. (2018). Managing people in organizations: Integrating the study of HRM and leadership – ScienceDirect. [online]. Available from: https://www.sciencedirect.com/science/article/abs/pii/S1053482218300883. 
• Mohammed, A. (2015). The Impact of Talent Management on Employee Engagement, Retention and Value Addition in Achieving Organisational Performance. [online]. Available from: ResearchGate. 
• Natter, E. (2018). Effects of Globalization on Human Resources Management | Chron.com. [online]. Available from: https://smallbusiness.chron.com/effects-globalization-human-resources-management-61611.html. 
• Nicastro, D. (2018). 7 Ways Artificial Intelligence is Reinventing Human Resources. [online]. Available from: https://www.cmswire.com/digital-workplace/7-ways-artificial-intelligence-is-reinventing-human-resources/. 
• Schiemann, W., Seibert, J. and Blankenship, M. (2017). Putting Human Capital Analytics to Work: Predicting and Driving Business Success. [online]. Available from: https://onlinelibrary.wiley.com/doi/abs/10.1002/hrm.21843. 
• Shwab, K. (2018). The Future of Jobs Report . [online]. Available from: http://www3.weforum.org/docs/WEF_Future_of_Jobs_2018.pdf. 
• Spyros, M. (2017). The Forthcoming Artificial (AI) Revolution: It’s impact on society and firms. [online]. Available from: http://hephaestus.nup.ac.cy/bitstream/handle/11728/9254/THE_FORTHCOMING.2017_Full.pdf?sequence=1&isAllowed=y. 
• Torrington, D., Hall, L., Taylor, S. and Atkinson, C. (2017). Human Research Management. Great Britain: Pearson.