Human resources departments serve a variety of functions, but recruitment remains one of the biggest challenges. With the increasingly competitive market for skilled talent, finding (and retaining) employees talent is arguably the most difficult task facing HR departments and recruiter. In fact, a study by the Society for Human Resource Management determined that by 2022, employee retention will be HR’s dominant challenge.

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Challenge 1: Managing higher compensation demands

Employees will always feel pressure to provide well for themselves and their families. As the cost of living rises steadily, so will employees’ expectations regarding compensation. When employees feel their compensation isn’t fair, they will speak up or start looking outward for more competitive opportunities. According to research from the Randstad Employer Brand Research (REBR), employee compensation is the top contributing factor when it comes to determining job satisfaction. This poses a challenge for human resources teams tasked with keeping employees happy, while also maintaining low operating costs.

At the end of the day, it falls to HR to decide how to best retain employees, while simultaneously serving the needs of the company they work for. Sometimes this means going above and beyond to retain difficult-to-hire skilled talent. Sometimes it means knowing when to let employees move on to another opportunity that’s a better fit. The experience and intuition of talented human resources professionals is invaluable in this regard.

Challenge 2: Finding talent in a candidate-driven market

When the unemployment rate skyrocketed in the late 2000s following the great recession, employers had no trouble finding talented new recruits. The talent pool was large and diverse, allowing recruiters to swoop in and find excellent talent across a wide variety of specialties and industries. The unemployment rate in Canada has been in steady decline as the economy has recovered over the last decade, recently dropping below 7%.

With fewer talented individuals seeking work, it falls to HR teams to fill in the gaps and find the personnel their organizations need. Doing so means working harder to find talent of equal skill level. It also means carefully considering compensation, benefits and other perks (like flexible hours or remote working) that’ll lure talent in an increasingly competitive market.

Challenge 3: Appealing to workers looking for cultural fit

Younger employees (Millennials, most of all) have different expectations of their work environment than previous generations. Millennials (the cohort aged 23 to 37) aren’t content sitting at a desk 9 to 5 and completing a set of routine tasks, as their baby boomer parents did. They’re putting more emphasis on cultural fit and finding a company that fits their ideal. They’re looking for perks like flexible schedules, opportunities to work remotely, casual dress codes, and open-concept offices. More important than perks, however, they’re looking for meaningful jobs with clear objectives. Millennials want work that they feel fulfilled by and enjoy doing.

Companies that aren’t able to meet these demands will find they’re at a disadvantage when it comes to hiring talent from the fastest-growing segment of Canada’s workforce (Millennials now make up over a third of the workforce, higher than Gen Xers and Baby Boomers). In fact, according to Pew Research Millennials are now the largest generation, period.

Not sure how to shape your employer brand to appeal to your ideal workforce? Check out Randstad’s Employer Branding Centre for tips from experts.

Challenge 4: Overcoming high employee turnover rates

Employee retention has always been an issue for HR managers, however, it’s one that’s growing larger. The average length of time employees stick around a job has been steadily decreasing. Currently, the average employee sticks with a job for 4.4 years, however, the trend among younger employees is even shorter, with Millennials and Gen Z sticking around for less than 3 years, on average. Short-term and contract work are becoming a new normal, and HR managers and recruiters must adjust their hiring strategies to reflect this reality. The practice of writing off employees with short-tenure can lead to companies missing out on much-needed talent. Yet, there’s also the issue of the costs of finding replacements – The Center for American Progress states that it costs 20% of an employee’s salary, on average, to find their replacement. That number can climb much higher in more specialized roles that require a lot of experience or education.

As a result, developing robust employee retention strategies that prioritize employee needs are a must. Making an effort to keep top-performing employees satisfied will reduce the considerable expenses associated with high turnover.

Challenge 5: Lack of leadership planning

According to the Society for Human Resource Management, executive roles are currently experiencing a high level of turnover. This can lead to a big problem for HR professionals: a leadership void. Worse, such a void can lead to a ripple effect that leaves managers and employees of all levels in a state of confusion. To combat this issue, HR managers need to have tough discussions with current leaders. Developing a contingency plan, and training up-and-coming leaders who can replace current executive should they retire or leave the company is not just a smart business strategy, it’s essential to ensure smooth transitions and ensure companies always has strong, effective leadership at the helm.

Looking for more insights and trends in the field of human resources? Check out Randstad’s Workforce 360 blog to keep up with what’s happening in the world of human resources.