HRM has evolved from operational to strategic field in past few years. Globalization, competition, and information technology have created an agile environment for the organizations which has forced them to align their human resource management strategies with the organization goals. Looking at the current market space, the focus is shifting from volume to value. The companies now want to reward the employees on the basis of the value they created for their customers. But there is also a need to approach innovation and change in pertinent way. 
For every organization, human capital is a valuable and inimitable resource and this resource can create a competitive advantage. Retention of manpower and recruitment of suitable personnel has become a heavy-duty challenge for HRM in the ever emerging markets. The concept of ‘Head Hunting’ has become both, a best way to find out the best professionals in the market and, a challenge to retain their best talent. The employers need to give a certain level of service to their employees such that they have trouble going to other companies. Employees and potential candidates must have the image of the organization as a great place to work. And when that happens then the organization has an effective employer brand. Employees significantly spend their day hours in workplace and the companies need to provide a healthy workplace environment to ensure the effective productivity and satisfaction of the employees.
In this era of Gen-Y (born between 1980 and 1990), attracting top candidates who have a strong preference for innovation is sometimes a challenge to many organizations. Employer branding is based on a number of factors like firm culture, training, mentorship, fairness and respect, recognition, career growth opportunities, innovation, variety of work, and for some Gen-Y candidates, even  ‘fun at work’.  Before joining a company, candidates now find out how well the company is doing, and whether the company is right for them based upon their interests, personality, growth and career path. Payouts based on performance are now becoming popular in this era of Gen-Y as these can lead up to 50% of the salary. HRM has to find out ways to create an ‘Employer Brand’ that is in line with the business and operational strategies and methods of the Employer.
The employers now have to think more creatively about work-life balance to get young talent in the door amidst the stiff competition in the market. HR professionals are struggling to retain and satisfy their employees and attract young talent. The employers have to provide flexibility in work and individually tailored compensation packages based on performance and the value that the employees are creating rather than a fixed based pay package. For this, HRM has to follow a more proactive approach and shift from the more traditional view of hiring, firing, satisfying, and monitoring. While on one hand, an employer with the hand of technology like telecommunicating and video conferencing is giving the option of ‘work from home’ to the employee; at the same time it is essential to maintain teamwork, morale and connection.
Numbers of organizations with international operations are increasing. HRM has to maintain the flow of workforce and direct national and international workforce towards a common purpose maintaining a cultural perspective keeping in mind geographic location, physical and mental abilities, sexual orientation, education and even corruption. A diversity of customization in HR policies is needed especially in regions of huge potential market like Asia-Pacific and Africa where cultural diversities vary on a large scale.
Demand of skilled workers is increasing and so is the shortage. This poses a challenge for the human resource managers especially of sectors like manufacturing, construction, automobiles, drilling and mining.  In the new era, the type of worker that is being sought is more skilled and higher educated than in the past. Job crisis is not a product of economic downturn alone. Instead in many regions, labour markets are failing to match demand and supply for skilled workers.
One of the biggest challenges of 21st century is how to fundamentally shift the business model for both intrinsic and extrinsic environment besides being an effective Employer Brand. And so, strategic HR planning and strategic business planning must go together. In a time when companies are inviting consumers to participate in its development of products and communications, in this interlinked economy it has become vital for the organizations to collaborate with their employees also apart from other stakeholders, in order to effectively connect with their customers.
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