Top 5 HR Issues and How You Can Solve Them

HR professionals must manage many tasks: hiring the right people, keeping employees engaged, managing payroll solutions, and ensuring regulatory compliance. This balancing act can feel like you're constantly putting out fires instead of building your envisioned thriving workplace.

As an HR professional, are you struggling with outdated processes, handling performance reviews, or making sense of workforce data? These common HR challenges can drain your time and energy. Let’s explore the five key HR issues and discuss effective solutions.

Top 5 HR Issues Businesses Face Today

Businesses face various HR issues impacting productivity, morale, and compliance. Addressing these challenges proactively can help streamline operations, reduce turnover, and ensure a healthier work environment. Here are the top 5 HR issues companies are dealing with today:

1. Retaining Top Talent

Company leaders realize retaining their best employees isn’t as simple as offering a paycheck. HR leaders are always looking for ways to boost employee retention and satisfaction. The pressure is on, with a significant portion of Generation Z employees planning to job-hop within the next year. Why are they leaving? Here are the key reasons:

• Disengaged leaders

• Inadequate compensation

• Lack of meaningful work

• Limited career advancement

If companies don't address these issues, they risk creating a revolving door of talent.

Solution: Start With a Strong Onboarding Process

Employee retention starts with onboarding and implementing effective employee retention strategies. A welcoming, well-structured hiring and onboarding process helps new hires feel connected to the company culture and their work from day one. Instead of a paper-heavy first day, create an experience that immerses employees in your mission, values, and team dynamics.

Compensation and career growth also play a key role in employee retention. Employees stay where they feel valued, both financially and professionally. A competitive salary paired with clear career advancement opportunities helps retain top talent and keeps them engaged for the long haul.

2. Ineffective Employee Performance Management System

Managing employee performance is most effective when employees receive clear expectations and regular feedback. Often, there’s a disconnect. While 50% of managers believe they give weekly feedback, only 20% of employees say they receive it.

Furthermore, just 47% of employees clearly understand what’s expected of them, making it difficult to meet goals or improve performance. Without clear guidance, employees can feel lost, demotivated, or undervalued.

Solution: Set Clear Expectations and Check in Regularly

Employees perform better when they know exactly what success looks like. Establishing clear expectations—through goal setting, structured performance metrics, a robust performance management system, and transparent communication—strengthens the performance review process and drives accountability.

Consistent check-ins are equally important. Instead of waiting for annual reviews, schedule quarterly performance conversations. Employees participating in these regular discussions are likely to be engaged, improving productivity and job satisfaction. When feedback is timely and meaningful, employees stay motivated and aligned with company goals.

3. Lack of Employee Development

Employees seek more than just a job; they desire growth opportunities. This is especially true for Generation Z, 53% of whom prioritize employee development. Many see learning as a way to explore different career paths within their company, but they'll look elsewhere if development opportunities aren't available. Engagement drops, and turnover rises without a clear path for skill-building and career progression.

Solution: Invest in Employee Growth

Instead of viewing employee development as a perk, consider it a crucial factor in driving improved performance and retention. Companies that invest in employee development experience a 25% increase in performance, and 94% of employees say they’d stay longer if learning opportunities were available.

Consider offering mentorship programs, tuition assistance, or on-the-job training. This approach will boost employee engagement, enhance their skills, and strengthen their connection with your company.

4. Lack of Data and Analytics for Decision-making

Data should drive HR and business decisions, yet many companies still operate without relying on valuable insights. Businesses often do not leverage people analytics, leading to inefficiencies, missed opportunities, and costly mistakes.

Failing to use data effectively costs organizations significantly every year. Companies struggle to optimize hiring, retention, and employee engagement strategies without tracking the right metrics.

Solution: Use Data to Drive Smarter Decisions

Data and analytics provide valuable insights into workforce trends, helping leaders make informed decisions. By tracking turnover rates, employee engagement, performance trends, and other metrics, businesses can identify problems before they become significant.

Using the right HR tools, like Justworks PEO, to collect and analyze data boosts efficiency, reduces costs, and improves workforce planning. For instance, you could track your turnover rates to check for a pattern. Once you identify the problem, you can come up with an effective solution.

5. Payroll Errors and Compliance Risks

Payroll is a key HR function, yet many companies still rely on outdated methods. More than half of all businesses manage payroll using spreadsheets, and 19% are still paper-based, leaving room for errors. The consequences? One in two employers has faced penalties for payroll non-compliance. Whether it's classifying employees incorrectly, missing deadlines, or failing to track overtime correctly, traditional payroll processes increase the risks of misclassification and costly errors

Solution: Automate Payroll for Accuracy and Compliance

Switching to payroll automation or outsourcing to a payroll provider reduces errors, saves time, ensures compliance, and minimizes the risks of costly payroll mistakes. Automated systems handle tax calculations, deductions, and filings, ensuring federal and state regulations compliance. By modernizing payroll, companies can save time and money.

Justworks: A Solution to Common HR Challenges

The most common HR issues businesses face can be solved with the right tools and support. A robust payroll system can streamline tax filings, automate payments, and reduce costly errors. If you're seeking comprehensive HR support, a Professional Employer Organization (PEO) provides payroll, benefits administration, and seamless onboarding.

Justworks' PEO is an all-in-one platform for payroll, compliance, and HR. It also offers access to enhanced benefits through the PEO's collective bargaining power. Ready to solve your HR issues, streamline payroll, and offer attractive benefits that will impress your candidates? Get started with Justworks today.