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Unlocking HR’s Full Potential: Navigating the Top 5 Limitations of Human Resource Management

Human resource management (HRM) is one of the essential topics of workforce management. Irrespective of the department a manager belongs to; they must have a basic knowledge of the principles of HRM. As a manager, you will have to deal with employees one way or the other, which is why you must understand the limitations of HRM.

While human resource management systems are becoming common, they still have a long way to truly encapsulate the innate requirements of the people at the workplace. In this article, we list the limitations of human resource management that you must consider while making a decision.

Human resource management (HRM) is the practice of recruiting, hiring, onboarding, and managing workers in a company. Often, HRM is used interchangeably with human resources (HR). The HR department in the company is responsible for creating, implementing, and overseeing the governance policies for the workers and maintaining the organization’s relationship with its employees.

Simply put, HRM is employee management emphasizing the workers who are an asset to the business, such as skilled employees. In HRM, employees are also referred to as human capital. The HRM’s primary goal is to effectively use the workforce, reduce risks to the business, and maximize the return on investment (ROI).

Five limitations of human resource management

1. Recent origin

Compared to other social sciences, HRM is of recent origin. It is the reason why it lacks a universally approved academic base. As a result, different people have different definitions of the term HRM. Some managers consider it a new name for personnel management because some enterprises have renamed their traditional personnel management department to the human resource management department.

A misplaced understanding of HRM results in wasted efforts. To truly benefit from the HRM, companies need a fundamental change in their very management philosophy, attitudes, and approaches. Superficial actions will not get the required results. Lack of understanding among the managers is a significant limitation of HRM that can only be overcome by changing the top management philosophy.

2. Cost of setting it up and installation

HRM systems have a huge setup cost. If you are a small business, installing an HRM system can cost you thousands of dollars. Several expenses are involved in its setup, such as training staff to use it, software costs, consulting, and intensive time commitment to install and get the system running.

There are several ways to cut this cost. You can use Software as a Service or SaaS HRM systems, but you will be spending hours on customer support, affecting productivity. You can also use automation software like Truein that can simplify some tasks of HRM. 

Truein is a hardware-less, cloud-based employee time and attendance tracking system with HR features such as overtime calculation, shift scheduling, leave management, attendance policy support, and integration with most payroll software. Schedule a free demo today and see how Truein can help your organization to overcome human resource management’s limitations.

3. Time to train to use it

HRM should be implemented only after assessing the training the development requirements of the employees. As such, an implementation causes a significant shift in responsibilities, and the aspirations and needs of the workers should be considered before creating human resource policies.

Organizations have to make a proper training program to ensure that the implementation of HRM is successful. The time to train employees to use HRM causes disturbance in management’s productivity and the profitability of the organizations.

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4. It is for regular employees and not for the contractual workforce

The human resource management system is designed around the regular workforce and has little accommodation for the requirements of the contractual workforce. In most industries, contractual workers make up a significant part of the workforce, and no dedicated provisions for them are one of the considerable limitations of HRM.

As the work, attendance, and overtime policies for contractual workers are different; they must be maintained at a different level than HRM manages policies for full-time workers. Additionally, there are no features for contract worker overtime calculation, advanced shift management, and training programs.

Temorary Worker Daily Attendance
Screenshot Showing Temporary Workers Daily Attendance With In and Out Times
Daily Attendance Data of All Employees
Daily Attendance Data of All Employees
Customized Attendance Report of Employee
Detailed Attendance Report of Employee Over Specified Time Periods

Truein features a tracking option for temporary workers for faster onsite onboarding. Contract workers can onboard themselves with a single selfie. It also allows managers to have separate overtime calculation rules for contractual workers. Schedule a free demo today and see how Truein can automate the attendance tracking of your employees!

5. Problematic if you have a surplus of staff

HRM’s go-to approach for dealing with over-staffing problems is to terminate employees, offer a voluntary retirement scheme, etc. It can adversely affect the relationship between the organization and its employees. Workers cannot focus on productivity as the threat of termination always looms over them. This creates a hostile work environment and can harm workers’ mental health by putting negative psychological pressures.


HRM takes work to implement. Even some professionals need to understand its difference from regular human resources. While the limitations of human resource management we listed here are a concern, HRM has a spectacular impact on managerial effectiveness whenever it is implemented correctly. As a manager, you must find ways to overcome such limitations in your organization.

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