Invest in your people to protect your business
Asked to identify the biggest risks related to their workforce, HR and Risk professionals view increasing health and benefits costs as their most pressing concern, according to Mercer’s People Risk 2024 report. The report is based on a survey of more than 4,500 HR and Risk professionals in 26 markets across eight regions.
The survey asked HR and Risk professionals about the likelihood and severity of 25 people risks, which were divided into five categories:
- Technological change & disruption
- Talent, leadership & workforce practices
- Health, well-being & safety
- Governance, compliance & financial
- Environment, sustainability & protection
For HR professionals, many of the top 10 people risks fall in the second category (talent, leadership and workforce practices). Their second biggest concern, after health and benefit cost, is labor shortages. Risk professionals are more likely to cite risks related to technological change and disruption.
The top 10 rankings reveal some key blind spots for both HR and Risk professionals, such as the deepening impact of weather-related events and natural disasters on parts of the workforce, as well as the relationship between health concerns such as chronic illnesses and increased health and benefit costs. Chronic illness was the lowest-ranked risk in the survey.
An analysis of results for US employers found they were most concerned about these three risks:
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Ineffective leadershipWhen asked about this risk, about a third (34%) of HR and Risk managers were concerned about key person dependencies, and this, paired with weak succession planning, can leave an organization unable to function when leaders leave. A new generation of leadership needs to be nurtured with strategies that build trust for long-term career growth, create a unifying purpose, and sustain organizational resilience.
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Improper rewards decision-makingHealth plan transparency requirements, high profile lawsuits, and an increase in Department of Labor health plan audit activity, may heighten fiduciary risk for ERISA plan sponsors. Additionally, compliance with pay transparency rules continues to be an area of risk for as more states and local municipalities introduce new legislation. Often, pay equity failures occur when rewards decisions are made on a one-off basis. Organizations can set themselves up for success by strengthening oversight controls and decision-making structures.
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Increasing health and benefit costsWhile increasing health benefit costs isn't new, inflationary pressures persist. Organizations should reassess their benefit programs for long-term cost containment without passing expense onto employees. Approaching cost containment through a lens of health risk (e.g., improving employee health outcomes), utilization risks (e.g., consumer-centric plan designs), and supplier risk (e.g., vendor management and effective financing) is critical for optimizing investments.
