Top 10 Human Resource Management Challenges That You Need To Look After

Human Resource Management Challenges

From handling competition to managing the cash flow of the organization, revenue is always the top priority of every small and medium enterprise. However, when human resource management becomes difficult, companies struggle to keep up with other strategic tasks of the organization.

Let’s first see what human resource management includes:

    • Planning of the workforce
    • Job analysis and design
    • Training and development
    • Compensation and benefits
    • Performance management
    • Legal issues

These responsibilities are not easy to manage, especially for small and medium organizations. Small business doesn’t practically have an HR team to rely on.

Think about it, how would you manage HR responsibilities with just one HR manager or even two employees.

This is why small business owners should understand the challenges that you may face at the starting of the business. This would help you mitigate these challenges and focus on the strategic roles of the business.

Let’s analyze the challenges of human resource management and how you can eliminate these challenges are.

Top 10 Human Resource Management Challenges

When your organization finally has 200-300 employees, it is easier to hire an experienced HR manager and hand over the responsibility. However, when you are progressing towards this stage, the employee or person handling HR often has to deal with various issues. Sometimes, taxes go wrong, and at other times, there are leadership issues.

Below we have discussed most of these challenges. Have a look at human resource management challenges and find a solution.

1. Compliance

Let’s roughly get an idea of the laws that the HR team needs to take care of:

    • Employment laws
    • Salary based regulations
    • Tax regulations
    • Audit regulations

Now, these seem like just 4 important factors. However, these factors are multiple other requirements. For example, in employment laws, you need to offer a minimum salary to the employee. The same law may also require you to provide a proper working environment for the employee.

Now, do you think you can manage all these requirements single-handedly?

It is not possible. Mistakes are often made, and that is not good. Not only you may have to pay fines and penalties, but also you put your organization at reputational risks.

2. Changes

Any growing business is actually a business that is changing. From internal processes to strategies, everything evolves and things change. Keeping a tab on these changes and making your employees adjust to these changes is a difficult task. You may even observe reduced productivity and motivation during these phases of the business.

This is because your organization might require employees to change their personal schedules or working pattern. This is something that can often attract criticism as it is not possible for every individual to accept change easily.

3. Leadership Issues

One of the major requirements of an organization during growth years is to develop leadership qualities in employees. While it is a common notion that leaders are born that way, you can instill leadership qualities in individuals. This leadership is necessary for the employees who are working with you for multiple years.

By encouraging these employees to take a leadership position, you can not only improve their morale but also improve the retention of the organization.

4. Training and Development

Small businesses frequently face issues while finding training and development resources for every type of employee. Although it is easier to find resources for training of mid-level employees, the same is a herculean task for high-level and low-level employees. This means that when you fail to provide these employees with the optimum training material, you fail to motivate, encourage, and groom your hard-working employees.

5. Compensation

Almost every small organization struggles to keep up with the compensation requirements of the organization. The challenge here is to compete with similar companies and also look after the industry giants, who can attract your employees.

Now, add on to this the cost of managing employees, training, development, travel expenses, and taxes that the organization needs to consider.

As a result, this challenge is more likely an issue, which may occur due to the limitation of the cash flow.

6. Recruitment

Let’s be honest, hiring one of the costliest affairs of small and medium organizations. They need to spend time and money in this activity, which, of course, eats away various productivity hours and puts a dent on the cash flow as well.

Even when you somehow manage to accomplish that within the lowest possible budget, you always stand the chance of hiring the wrong employee. If that happens, you need to start again, and we all know, that’s not good.

If we further analyze the same condition, then think of the pressure you would face while hiring the new employee after one failed recruitment. This is because you need one employee at the earliest so that the project requirements are met. If this task is delayed, more burden is put on other employees, who may leave under the pressure of working extra hours. When you can’t put the responsibility of this employee on any other employee, then the client of the organization consistently receives delayed work, which may put your reputation at risk.

Simply put, it is a vicious cycle that clearly defines the importance of recruitment.

7. Retention

There’s just too much competition out there.

It is truly an employee’s market.

Do you understand what that means?

This means that 4 other employers are running towards your employee. If you fail to retain this employee, then you may have to reach the above pointer again and go through all the hassle.

However, our challenge here is that startups don’t have this much revenue and cash flow to offer extreme benefits to the HR employee. This means that a larger organization can easily lure away your employee with that retirement plan or expensive insurance.

Another issue that is directly related to retention is the HR team hiring. As you hire a new employee for the HR team, you also need to manage this employee. While the HR team would manage everything else, you have the responsibility of paying this employee, providing them benefits, and training them.

But, do you have the bandwidth, time, money, and strength to deal with this?

Can you spare this much money for an HR employee or a team?

Can you spare this time to focus on the HR employee?

Most of the time, you can’t.

8. Culture

The culture of the organization is imperative.


When your business finally makes the transition from a startup employing 5 employees to an established small organization, you need to go down the slope. It is not possible to get involved in everything. This indicates that you can’t strategize, ideate, and also handle HR single-handedly. Instead, you need to become the leader your people need.

As the owner, you may still want to keep control of everything. But, that’s not possible as your organization grows. You need to handover the responsibility and lead.

Here, one thing that should be clearly understood is that HR needs to complete the job they are expected to do. You can’t move away from the culture on which your organization was built.

When owners of the organization find it hard to adjust to this need, the HR team finds it hard to take control and evaluate the culture. They are restricted by various things, which also restricts them to help other employees adapt to organizational culture.

That poses a challenge because the environment demands change but the employees are unable to adjust to the culture. This leads to conflicts, mismanagement, and finally, low retention.

9. Admin Tasks

If you have 100 employees in your organization and you are still achieving manual processes, then you are practically beating yourself or your HR employee. You are achieving the highest level of admin tasks manually. This includes preparing expenses, managing employee holidays, making timesheets, and securing employee data. Then, when payroll time comes, calculating payroll manually.

Using the appropriate technology to achieve these administrative tasks is another major issue of human resource management.

10. Diversity

With cultural and workplace diversity, you can create a full-fledged productive team. This is because people of different cultures and workplaces have different experiences that contribute to the manner in which employees work in the office.

Creating this diverse culture is not possible without an HR team. This task can’t be achieved even with one HR employee. You need a skilled employee who understands the intricacies and challenges related to a diverse culture.

The Solution: Outsourcing Payroll for Small Businesses

Outsourcing payroll is the best solution for small and medium organizations. Each and every issue discussed above, whether related to the HR team or related to a process executed by the HR team, can be solved with outsourcing.

Some benefits of outsourcing payroll for small businesses:

    • You don’t have to hire and manage HR employees
    • You don’t have to purchase tech and then upgrade it regularly
    • You don’t have to spend too much on outsourcing. Simply pay for your services
    • You can gain access to expert employees
    • You can support every possible payroll task

If you are interested in outsourcing payroll, reach out to Paysqaure for support. With expertise in human resource management, we can help you mitigate every challenge discussed above. Just visit our website to contact us directly.


When you are surrounded by an array of manual functions, which are becoming hard to handle, you know it is time to look for solutions. One of the possible, most feasible solutions is outsourcing payroll. So, without wasting time, check out the above challenges. If you are facing 6-10 issues, then it may be time to look for an outsourcing payroll provider.