5 key challenges facing HR professionals in 2024

Paydata run regular HR Workshops to connect HR professionals. Together, these provide HR professionals with the opportunity to discuss how they are navigating issues they face across each sector.

Recent conversations have highlighted five key areas of concern for HR professionals that are shared across different sectors, including:

• Professional Associations and Institutes
• Construction
• Electricity Generation
• Facilities Management (FM)
• Mechanical and Electrical (M&E)
• Housing Associations
• Private Healthcare
• Renewable Energy
• Residential Care
• Property and Construction Consulting?(PACCs)
• Purpose Built Student Accommodation Providers (PBSA)
• Media, Gaming and Technology
• Water Companies
• Channel Islands
• Charities

Here we outline five common issues that emerged from our most recent HR Workshops.

1.????? Pay negotiations

Balancing affordability with meaningful pay awards that engage employees and recognising the role they play in the organisation is a key challenge across all sectors. The increase in the National Living Wage that came into effect in April 2024 is impacting employers who have had to budget for an additional one per cent increase as a direct result of the increase, particularly for private healthcare, housing associations, FM/M&E and residential care sectors where they have a high population of roles at this level of pay. Many are having to deal with the National Living Wage increase and the compression analysis required to maintain competitive pay levels.

The difference between residential care and other sectors such as private healthcare, is that their own customers are often local authorities, who are not increasing their rates at the same level as the NLW, which puts huge pressures on care providers.

Unions affect certain sectors, with employers highlighting how pay negotiations have been a different experience as a result of newly unionised staff.? For others, pay negotiations involving unions have proceeded as they do on an annual basis, with few facing heightened scrutiny compared to previous years.

Out of cycle pay awards, excluding those automatically given for those promoted, highlight how requests are being driven by external relativities. The use of pay ranges has cut down the number of out of cycle requests for many. Others highlighted that moving their pay requests from a monthly to quarterly basis and running any changes by senior management had enabled them to better manage out of cycle pay increases, giving HR a greater level of budgetary certainty than responding to ad hoc pay requests.

Agency spend is high in some sectors, particularly in the private healthcare and FM/M&E sectors, with a focus on Bank work to overcome higher spending levels on agencies. For those operating internationally, such as media, gaming and technology companies, the EU Pay Transparency Directive will be an important factor when designing their approach to pay as one organisation.

2.????? Recruitment and retention challenges

The war for talent continues to affect employers. This is driven by the skills shortage, which means that the calibre of applications in terms of skills and experience is not being met. Initiatives to tackle this challenge focus on making job adverts clearer about what is on offer and making them more attractive to a diverse workforce. Promoting internal talent from other areas of the business can drive down recruitment costs, and in some circumstances, can deal with a lack of pay progression by promoting from within.

Paying a premium to recruit, or awarding out of pay cycles to retain top talent, is a concern for those struggling to find the right people. While some are reviewing their employee value proposition, many are using data to drive decisions and uncover insights into how to attract and retain high performing people. Sectors such as construction who have had strong business performance are reviewing their HR Information Systems to ensure they can sustain a data-led approach to decisions they make that affect their people.

Pay equity is important, with employers recognising the role of robust and consistent performance management systems in having a pay structure that drives employee engagement and upholds fairness. This is particularly the case for sectors with a lot of mergers and acquisitions, such as housing associations, where aligning terms and conditions among employees is an important consideration.

3.????? Total reward package

As many employers are in a position where they cannot afford to do a significant amount with pay awards, their focus is on the full total reward strategy, particularly around benefits. Benefits providers are being reviewed, with employers exploring the possibility of introducing flexible benefits and achieving differentiation as an employer with their benefits packages. Many are looking to optimise and align arrangements across different countries and encourage take-up. Total Reward Statements are one way to highlight the range of options on offer.

Some employers are turning to longer-term planning around the overall HR strategy, which takes up time and resource in the interim while these plans are written and agreed. Organisational design that looks at job families and reviewing the fundamental framework currently in place is a priority of some employers, particularly in the renewables and water sectors. Across the board, employers cited policies and contracts as a key area of focus, to ensure employers are achieving parity of pay across their organisation and upholding a system of fair remuneration.

Other employers are in the process of reviewing their approach to total reward. In the charities sector, several organisations completed extensive pay and grading projects last year. This may be driven by vigilance over the debate of the extent to which managing and rewarding performance fits with the voluntary, not for profit sector. Cutting edge talent and skills are arguably of the utmost importance for a sector that faces such tight margins. They are now focusing on benefits arrangements, and how to engage with their employees.

4.????? Hybrid and flexible working arrangements

Hybrid working has become a crucial factor in retaining and attracting top talent, where less flexibility jeopardises certain roles. Some employers feel that more people are open to the possibility of coming in two days a week, but companies are reporting that they are receiving complaints from employees who feel obliged to come in. HR professionals in the Channel Islands reported success in recruiting from certain sectors such as financial services, because they were able to offer greater work / life balance with less stress and more flexibility.

Organisations face delicate decision-making when it comes to defining a policy around hybrid and flexible working. With some team leaders who do not want to come in, this raises the question of whether employers can and should compel them to do so and set up ‘anchor’ days, where the team comes in on a designated day of the week to see one another. The risk of isolation and the impact on building robust teams is a concern for many employers. The implication on the culture of the firm when people cannot have spontaneous catch ups is something HR is grappling with, in terms of how they facilitate greater collaboration and achieve a better culture.

However, the benefits of flexibility are widespread. From giving people autonomy on how they use their time, to giving them the option to swap their train commute for a workout before work, the school drop off, or a walk in the sunshine, there is the opportunity for people to shape their own working day. It facilitates greater equality, diversity and inclusion (EDI) as employees can balance their personal commitments with their working day and opens up a wider talent pool with unique and valuable perspectives for employers. With EDI being a core focus for many employees, it is increasingly critical for employers to take the right approach when it comes to defining flexible working arrangements.

5.????? Upskilling and career progression

With restructures and organisation reviews being prevalent in some industries at the moment, the focus on skills and experience has never been more important for employers and employees alike. While employers will be facing this issue when recruiting, employees are increasingly wanting to know what learning and development opportunities will be available to them.

With multi-generational workforces and people increasingly being expected to upskill, employers can train their current staff to deliver the work they require. This also drives employee engagement, as employees have greater exposure to the business, deepening their knowledge to serve clients, while learning new skills and being open to growth. Employers in the Channel Islands reported greater challenges with recruiting leaders, highlighting how leadership needs to be cultivated from the outset of people’s careers, from the graduate schemes they offer.

The focus on building an inclusive workforce that welcomes diversity of thought and experience is one way of overcoming ageism and unconscious bias in the workplace. Skills shortages and long-term sickness absence can be better tackled by having a greater focus on wellbeing for all staff and clear support measures in place for everyone at each lifetime milestone they may have to navigate.

Have your say

If you would like to join our HR Workshops dedicated to specific sectors and regions, contact us to meet and learn from fellow HR professionals. Thank you to all those involved in our HR Workshops so far this year.

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