Top 5 Challenges Employers Are Likely to Face in 2024

Top 5 Challenges Employers Are Likely to Face in 2024

After surviving a difficult pandemic btween 2020 and 2021, adjusting to a consequently high employee turnover over rate, and adapting to the remote/hybrid work model and unprecedented labor shortage in 2022, the coast may still not be clear for some employers. 

2024 and the years beyond come with their own unique challenges, plus some from the previous years, and business must find ways to adapt as quickly as possible to thrive in an evolving work environment.

"There are times when there is a major disruption that suddenly implies what worked so far is not going to work anymore, and you need a new playbook." - Retsef Levi's, Professor MIT.

Today, we have the growing concerns of AI’s impact on productivity and job loss, balancing inflation and talent needs, keeping employee engagement high, and more. When business are able to identify and address these issues quickly, they are better able to adapt, stay productive, and continue to grow with minimal disruptions. 

So here are the top 5 challenges that employers will likely face in 2024:

Balancing Inflation and Talent Needs

The 2023-24 SHRM State of the Workplace Report highlights that almost three-quarters (74%) of executives identified inflation as a concern for their organization in 2024, more than any other issue. Despite recent moderation, the cumulative effects of inflation between 2021 and 2023 will continue to impact workers and businesses. The labor market remains tight, with more job openings than available workers, compelling companies to offer competitive salaries to attract and retain talent. 

However, rising costs and the need to hedge against potential economic downturns make this a challenging balancing endeavor. Approximately 68% of HR executives identified finding ways to reduce costs and improve efficiency as a priority for 2024, and 51% expect budget constraints to be a barrier to meeting organizational goals. This places business leaders in a delicate position, as fair compensation is a top priority for 87% of U.S. workers. 

Addressing this challenge requires regularly reviewing and adjusting compensation packages to ensure they remain competitive, enhancing flexibility and leave policies to meet employee needs, and investing in technologies and processes that improve efficiency and reduce costs, allowing for better allocation of resources toward employee compensation.

Training an Evolving Workforce

Training and development are essential as the workforce evolves, especially with the increasing number of Baby Boomers retiring and AI reshaping job functions. The report SHRM indicates that 37% of organizations plan to invest more in training and development, making it the most common investment area for 2024. Upskilling or reskilling the current workforce is a top priority for 53% of organizations, yet only 21% were very or extremely effective at upskilling or reskilling in 2023. 

HR executives rated their organizations’ training and development programs a B- on average, while U.S. workers would only give them a C. Leadership development also requires attention, with HR executives giving their organizations a C+ and U.S. workers rating them a D+. 

Organizations need to allocate resources toward comprehensive training programs that focus on both technical skills and leadership development. Emphasizing training for leaders and people managers can improve organizational effectiveness and retention. Adopting modern training methodologies, such as e-learning and AI-powered training tools, can enhance engagement and effectiveness.

Equity in the Workplace

Since 2019, the calls for implementing a Diversity, Equity, and Inclusion (DEI) initiative have gained awareness. And as expected, the Biden administration emphasizes equity in the workplace, causing more employers to give underserved groups the right amount of attention and privileges.

The new administration revokes restrictions on diversity training and is taking a more active approach to address the challenges faced by diverse groups for equity and equality. This means that employers need to take a stand against racism, xenophobia, discrimination, and unlawful deprivation in the workplace.

It is expected that DEI programs will become more embedded in the way we work. Employers' implementation of diversity, equity, and management of inclusion will help discontinue social justice movements across the country.

Integrating and Realizing the Full Potential of AI

Artificial Intelligence (AI) presents significant opportunities for efficiency and innovation, but many organizations struggle to integrate it effectively. Currently, 25% of HR departments use AI, primarily for talent acquisition (42%), employee training and development (36%), and people analytics (21%). 

However, only 12% of HR professionals and 15% of U.S. employees believe their organization uses AI effectively. Shadow AI use is also a concern, with 75% of organizations lacking guidelines or policies about using generative AI. Despite AI’s potential, only 20% of HR professionals report that integrating it into the workplace is a high priority for 2024. There is also the need to train workers to work smarter using AI to automate tasks, especially in sales, marketing, healthcare, and engineering.

To address this, organizations must develop a clear strategy for AI integration that aligns with organizational goals. Establishing guidelines for the use of AI tools, including generative AI, ensures consistent and ethical use. Training employees to work effectively alongside AI technologies is also crucial.

Flexible Work Arrangements for Hybrid/Remote Workers

In today's corporate business environment, working from home or remote work is the new normal. Large organizations have been more successful at managing this shift than small organizations. Small and medium-sized businesses have been less successful in the implementation of working from home. 

However, establsihng flexible work arrangements for employees, especially those with kids, will help in maintaining employee morale and engagement. The report reveals that 81% of HR professionals believe their organizations will prioritize maintaining employee morale and engagement, and 78% will focus on retaining top talent. 

In the preceding years, many organizations have fully adjusted to the change by providing the facilities, equipment, and resources that workers need to work remotely and effectively. Studies have also shown that remote work benefits both employees and business owners. Those who are yet to implement this structure fully will need to find a way to take advantage of remote work by maximizing employee engagement and productivity while working remotely.

Closing Thoughts

Navigating the challenges of 2024 requires a strategic approach that balances immediate needs with long-term goals. By addressing compensation, training, AI integration, DEI, employee engagement, mental health programs, businesses can create a resilient and thriving work environment. Take a moment to find out more about improving your growth strategies and HR with our tips on building an enduring business in 2024 and betond.  

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