HRM and Labour Market: Challenges and Solutions

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The labour market is a complex system that can be changed by various internal and external factors. This market also has a supply and demand structure, on which the employment of the population and the efficient operation of the economy depend. The main challenges of the world employment market are globalisation processes, which bring benefits or harm to countries depending on their level of development and internal opportunities for the population. However, Britain also faces many specific challenges, such as the Brexit process, as well as low social and geographical mobility. For this reason, human resources management faces the problem of high demand and low supply of workforce and is forced to create and adapt new strategies to attract, retain and increase labour productivity.

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Globalisation today is one of the most visible challenges for human resource management as labour migration across borders has become more accessible for residents of almost all countries. For some states, this feature means the outflow of the workforce and intellectual resources, and for others, the attraction of cheaper labour. For this reason, HR managers must adapt to working conditions and wages in such a way as to obtain qualified employees but save company profit. In the case of jobs that do not require special skills, globalisation brings significant benefits as organisations can offer significantly lower salaries for labour migrants than for citizens.

However, in the case of highly qualified employees, or talent in certain areas, the company needs to offer better conditions than a competitive country. For example, the IT sectors of the United Kingdom and the United States are at a high level of organisational development and have many resources. In contrast, IT specialists from some low-income countries have a high level of skills and small capabilities in their country. Consequently, companies from both countries will benefit from having a skilled employee in their company. At the same time, if the domestic labour market has a high supply, then such actions will harm the country’s economy, since most of its citizens will be left without work.

Nevertheless, the UK’s current challenges are related to labour shortages, which could worsen soon. At the moment, it is difficult to accurately predict changes in the labour market, since the state will no longer be part of the European Union, and the government will introduce legislative changes (Cheary, 2017). These measures will most likely affect migration policies, and therefore the labour market as it will be more difficult for residents of other countries to obtain a visa.

Parry and Devereux (2018) note that these changes may cause a “skills crisis” in the coming decade due to the outflow of skilled foreign labour (p.9). Consequently, HR managers have to develop strategies for recruiting, retaining and developing the skills of employees to ensure that the company will be active even in the event of a significant reduction in the supply on the labour market.

In addition, currently, human resources managers are faced with the problem of a lack of skilled employees, especially in less populated regions of the country. This feature is associated with low social and geographical mobility of the population. The first aspect is related to the fact that the British with low income and skills need five generations to reach a new level, and a quarter of British workers have low basic skills (Parry and Devereux, 2018, p. 9).

Therefore, these facts mean that the labour market of the UK takes more time to get qualified personnel in a new field, for example, Geographical mobility, or replacement of people to another region in search of work, is also relatively low, although this indicator has begun to grow among young people (Parry and Devereux, 2018, p.9). However, in general, this situation creates a problem in the lack of labour in some regions, especially if a business is faced with new challenges requiring specific professional skills. Thus, many HR managers and companies face a shortage of skilled workers, so their primary interest is to attract and retain them, or train staff on their own.

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Consequently, companies create new ways or use proven strategies for attracting, training and retaining employees. One of the main tasks is to find employees with work experience and abilities that meet the company’s needs, or in other words, talent recruitment. For this reason, many organisations use the HR branding strategy to attract talented employees on an ongoing basis. HR brand works as a marketing brand by making employees more inclined to accept offers because of the popularity of the company and the working conditions that it offers. Heder, Szabo and Dajnoki (2018) note that many factors influence the image and the formation of the company name.

However, the most important of them are the personality of managers, a safe working environment, attractive wages, career opportunities and colleagues (Heder, Szabo and Dajnoki, 2018, p. 126). For example, many IT specialists want to work in Google, despite rigid process of selection and competition because this company has many career opportunities, and also offers various bonuses for entertainment and routine needs (Krapivin, 2018; Goleman, 2015, p. 142). In addition, HR branding, at the same time, not only attracts new employees but also retain the current ones.

However, if a company does not have broad financial capabilities to compete with large companies in the working environment, then they can apply other strategies. For example, one of the options is a referral system for accruing bonuses to employees who will attract their friends or acquaintances for the vacancy. This method can be called as modified from “word-of-mouth” recommendation to more proficient and accurate level (Wilton, 2016). Most often, bonuses are awarded to current employee if his or her candidate got a job and passed a probationary period to verify his or her competencies. Thus, practically without efforts from the side of recruiters, the company receives talented employees.

Moreover, globalisation also bring some advantages for recruitment, since small companies with limited opportunities for searching can use the services of outsourcing organisations that can find talent by using their search base. Also, modern technology allows HR managers to find employees in other countries who can work remotely, and receive high salaries for their countries but low for the state of the company that hires them (Sparrow, Brewster and Chŏng Chŏl, 2016, p.167). Thus, the organisation that needs an employee can save time and money to find the best candidate.

Another method of obtaining talent for work in certain positions is their training. There are such ways as attracting students or graduates to internships or training during work. In the first case, companies are offered to students or recent graduates with no work experience unpaid or low-paid internships during which they gain the necessary skills for work. Also, these internships may include a contest during which the best participants get a job. This practice is typical of Thomson Reuters (“Internship” n.d.).

Another method is the recruitment of employees with little work experience to educate and train them and also hone their skills in the course of work (Sissons and Green, 2017). This approach is more natural and widespread as each employee goes through several stages of growth during career. Thus, after some time, the company has an experienced employee who knows all the nuances of the organisation and can fulfil his or her duties as efficiently as possible.

Nonetheless, the most important challenge is employee retention because efforts to train and attract a worker require much more time and money than introducing additional benefits. As noted above, all steps to retain employees basically are the same as HR branding. These measures can include financial incentives, such as high salaries, or non-financial motivation. Each company uses its own methods; however, the most common ones are providing a benefits package, free non-working opportunities, such as a gym or language courses, and corporate events.

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However, such incentives are ineffective if the employee is not loyal to his or her company and does not share its values. For example, Netflix insists that the work of managers to built effective team is the most important in their company, as well as the attitude towards their employees as adults (Kim, Mauborgne and Christensen, 2015, p.86). At the same time, Amazon is often a subject of discussion in the press as its policies and working conditions force employees to exist in an atmosphere of mistrust because of denunciations as a way of moving up the career ladder (DeMers, 2018, para 4.). Disrespectful attitude to employees and working conditions cause a significant turnover of staff even with high salaries; therefore, HR managers are interested in knowing and fulfilling the needs of their workers.

In conclusion, the greatest challenge to human resource management is the lack of skilled labour because of globalisation, or specific reasons, such as Brexit. Companies are forced to develop new, more effective strategies for attracting, training and retaining talented employees in conditions of low supply and high demand. The most common approaches are HR branding, providing the most comfortable working conditions, using remote employees and educating. The main task of HR managers in such circumstances is to choose the most optimal strategy and tools for getting employees who can ensure the work and development of their companies.

Reference List

Cheary, M. (2017) ‘Brexit Britain: five ways leaving the EU could affect your job searchReed. Web.

DeMers, J. (2018) ‘Amazon’s allegedly harsh work culture has made headlines: here’s what you can learn‘, Enterprenuer. Web.

Goleman, D. (2015) HBRs 10 must reads 2015 the definitive management ideas of the year from Harvard Business Review. Boston: Harvard Business Review Press.

Heder, M., Szilvia, S. and Dajnoki, K. (2018) ‘Effect of labour market changes on HR functions’, Anali Ekonomskog fakulteta u Subotici, 54(39), pp.123-138.

Internship (no date). Web.

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Krapivin, P. (2018) ‘How Google’s strategy for happy employees boosts its bottom line‘, Forbes. Web.

Parry, J, and Devereux, H. (2018) The UK’s experience with labour market and vocational training. Web.

Sissons, P. and Green, A. E. (2017) ‘More than a match? Assessing the HRM challenge of engaging employers to support retention and progression’, Human Resource Management Journal, 27(4), pp. 565–580.

Sparrow, P., Brewster, C. and Chŏng Chŏl. (2016) Globalizing human resource management. London: Routledge.

Wilton, N. (2016) An introduction to human resource management. London: Sage.

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