6 Biggest HR Challenges in 2021: Looking Ahead

Learn what are the major HR challenges that have emerged across industries and organizations in 2021 and how to address them.

August 20, 2021 By Sara Ana Cemazar Share on Twitter! Share on Facebook! Share on LinkedIn!

HR challenges

In HR, challenges are a constant. It can sometimes feel overwhelming trying to stay on top of trends in the world of work. However, the world of work is constantly changing, and the challenges emerge from this dynamic.

In this article, we will focus on the biggest HR challenges in 2021 and upcoming years. Moreover, we will discuss how you can resolve these challenges, and where you can look for help.

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HR Challenges According to Research

PwC’s annual research reveals that there are six big issues driving HR Technology decisions. Here is what over 600 HR and IT leaders across six continents believe:

  • Finding, attracting, and retaining talent (58%)
  • Developing people to reach their full potential (43%)
  • Improving employee experience (42%)
  • Creating collaborative work environments (40%)
  • Workforce planning (38%)
  • Ensuring well-being, diversity and inclusivity (34%).

Moreover, Gartner’s research reveals similar trends. These are the top HR Challenges that are a priority in 2021 according to HR leaders in their research:

  • Building critical skills and competencies (68%)
  • Organizational design and change management (46%)
  • Current and future leadership bench (44%)
  • Future of work (32%)
  • Employee experience (28%).

HR challenges

According to these two researches, we have devised a list of 6 biggest HR challenges in 2021 and upcoming years, and tips on how to start addressing them.

HR Challenge #1: Finding and Attracting Talent

Finding and attracting talent has, indeed, never been harder. There is a huge gap between supply and demand of highly educated and specialized workforce. This has led companies not only to look for new sources of candidates – for example, specialized social networks like LinkedIn – but also to change their complete approach to attracting talent.

This HR challenge has prompted professionals to invest more in employer branding, but also to create a better employee experience for their employees. Why? Because 88% of employers say their best source of hire are referrals. However, employees are not going to refer their friends or former colleagues to work for a company they are not happy at!

Therefore, the resolution to one of the major HR challenges lies in providing overall better employee experience. With websites such as Glassdoor, employers can no longer risk providing a poor experience to their employees.

What can you do about it?

  • Strengthen your employer brand
  • Ask for referrals from your employees
  • Adopt remote work policies and search for talent worldwide
  • Reevaluate your Total Rewards package to make sure you are offering competitive pay and benefits
  • Take a deep dive at your employee experience, identify its pain points, and work on improving them

HR Challenge #2: Developing Employees to Become Experts and Leaders

One of the major HR challenges in the upcoming years will be to identify potential in employees and help them develop it. Moreover, the challenge lies in matching the potential for development with the company’s future needs.

At the moment, 74% of employees feel like they are not reaching their full potential. Indeed, the employee development initiatives are not always a success, and they boil down to companies offering their employees to choose from the catalogue of courses, conferences, and books they want to learn from.

HR challenges

Moreover, the lack of employee development plans corresponds to poor leadership skills in newly elected managers and leaders. Ultimately, the lack of development initiatives or their poor implementation leads to increased employee turnover.

What can you do about it?

HR Challenge #3: Employee Retention

Improving employee retention is by all means not a new HR challenge – but it is growing more serious. Many industries today are experiencing more turnover than ever. Although every industry and organization have their specific reasons for decreasing retention, there are some commonalities related to this phenomenon.

As we mentioned before, the candidate and employee market is more transparent than ever. There is a myriad of information about other employers’ out there, and workers can apply for jobs more easily than ever.

Therefore, the HR challenge lies in making sure your company is the best employer on the market. As in the case of finding and attracting talent, the secret lies in improving overall employee experience.

This is especially true for Millennials and Gen Z, generations that are disrupting the old workplace habits. For example, they value the opportunity to learn and advance in their roles more than anything – and they are willing to quit their jobs if they are not given chances to grow.

HR challenges

What can you do about it?

  • Find out why your employees are leaving in exit interviews to find out your pain points 
  • Focus on optimizing employee experience in general, but especially in areas you detect issues in (from your exit surveys)

HR Challenge #4: Improving Employee Experience

Optimizing employee experience will positively affect many of the HR challenges that today’s organizations face. However – this is the most complex HR challenge that professionals encounter, as it encompasses the total experience employees are having with every aspect of their work.

Employee experience is not only good for preventing retention – it also helps companies bring in bigger revenue. According to research, companies with best employee experience scores have double the return on sales compared to companies with worst scores.

HR challenges

Employee experience stretches along several areas, such as leadership, company culture, employee recognition, internal communications, and more. All in all – it takes vision, strategy, and strong collaboration to deliver the best employee experience to your employees.

What can you do about it ?

HR Challenge #5: Enhancing Employee Wellbeing

Employee wellbeing was possibly one of the biggest HR challenges during the pandemic. Workers experienced stress levels like never before. From dealing with the fear of catching the virus to the stress of working from home with children, many people’s anxiety went through the roof.

The usual approach to employee wellbeing focused on physical health of employees – offering health insurance, healthy meals for lunch, gym reimbursements and so on. However, as one of the major employees’ mental health suddenly became one of major HR challenges, the wellbeing benefits turned more to address the rising mental health issues.

However, the challenge also lies in making the wellbeing programs effective. Although they can prove to have big ROI – like in the case of Johnson & Johnson that reportedly saved more than $250 million over 10 years of wellbeing programs – only 24% of employees at enterprise companies that offer a wellness program participate in it.

HR challenges

What can you do about it?

HR Challenge #6: Future of Work

There has been a steady increase of fully remote companies even before the pandemic. However, the mass work-from-home experiment that it turned out to be prompted many organizations to adopt more hybrid work policies.

As it seems, employees seem happy about it. Working remotely or hybridly gives them the opportunity to achieve better work-life balance and increase their productivity by working from wherever they feel most comfortable at.

So, what seems to be the HR challenge? For one, not all employers are still fully convinced of the benefits of hybrid work. Some HR professionals are also worried about the impact of dispersed workforce on workplace culture.

Secondly, digital transformation is still challenging for many organizations that struggle with change management. Big enterprises are less likely to change the way they operate – however, they must adapt to the new HR trends in order to stay competitive.

What can you do about it?

  • Talk to your leaders and about the vision for the future of work; utilize employee communication best practices to communicate the new work policies to employees
  • Let employees have their say about where they want to work from
  • Include managers in the decision making progress: what do they believe is the best way to go?
  • Be transparent, fast, and clear in communicating new workplace policies related to mitigating disease risks.

HR challenges