What's next for investors - Insights from Mercer's Global Talent Trends 2024
Investors are taking an organization’s approach to people management into account in their investment decisions – scrutinizing engagement, talent retention and culture.
A robust labor market in 2023 presented a paradox; while central banks embarked on a concerted campaign of monetary tightening — a headwind for the jobs market — global labor markets seemed to hum along undisturbed. Yet throughout the year, labor market tightness ramped up the focus on companies’ people strategies.
Overwhelmingly, investors are zeroing in on people and talent factors in the context of their investment decision-making and broader risk assessment. In fact, 85% of investors take an organization’s approach to people management into account in their investment decisions.
Investors are scrutinizing workforce engagement, talent retention and culture. In comparison, the C-suite highlights the importance of the macroeconomic environment, digital acceleration and the rise of alternative work models as the key priorities within their decision-making.
How do investors view short-term people strategy risks?
Investor and C-suite priorities clearly diverge when it comes to assessing the short-term risks that elements of people strategy present to a company:
- Investors believe shortcomings or failures in a company’s people strategy could pose a risk, ranking leadership and workforce practices as the top short-term threat to businesses, whereas the C-suite puts this at #5.
- Investors’ focus on talent reflects a fundamental recognition of people management as a driver of revenue growth for companies, an intangible value that may not be reflected in a balance sheet.
- The vast majority (92%) of investors believe business leaders must take a longer-term view of their people given recent talent scarcity, which contrasts with executives, who prioritize this factor to a lesser degree (63%). This divergence between the views of investors and company management could be further exacerbated by the disruptive effects of AI on the workplace.
- More than eight in 10 (84%) investors view short-term hiring and firing as destructive to business value. Sixty-nine percent view successive layoffs as an indication that a business does not have a sustainable people strategy, yet HR leaders predict that 20% of the workforce will be impacted by reductions in force (RIFs) in 2024.
The differences in executive and investor views prompt a refocus on organizational resilience in business models and talent processes. The former is key to anticipating and reacting to disruption, while the latter is critical to long-term business success.
What do investors consider important for people strategy?
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Drive human-centric productivity
81% of investors believe the use of AI in work redesign has the power to improve productivity.
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Anchor to trust and equity
96% of investors believe it’s important for a company to have transparent commitments to all stakeholders (customers, employees, investors) and not just shareholders.
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Boost the corporate immune system
79% of investors believe the “health” of an organization can be inferred from an organization’s approach to employee health, well-being and risk. -
Cultivate a digital-first culture
Poor planning around cyber, climate and other risks is the number-two factor that would negatively impact investors’ perceptions of a business, but cyber risk has dropped from #1 last year to #7 in 2024 on the C-suite list of midterm enterprise priorities.
What do investors see as the biggest short-term threat to business?
Investors believe that the biggest short-term threats to business include:
- Leadership and workforce practices (#5 of 7 for executives)
- Technology change and disruption (#1 of 7 for executives)
- Health and well-being (#6 of 7 for executives)
For comparison, executives believe these factors pose the biggest short-term threat to their business:
- Technology change and disruption
- Governance, compliance and financial (#5 of 7 for investors)
- Environment, sustainability and protection (#7 of 7 for investors)
What areas of business operations do investors analyze?
- People sustainability
Turnover, brand attraction, internal-to-external hiring, talent pipeline strength (70%)
- Social sustainability commitments
Actions to ensure equity, social inclusion and a positive impact on society (55%)
- Governance practices
Actions to manage risks and commitments (54%)
- Environmental and sustainability commitments
Actions to mitigate climate risk, net zero, energy transition, etc. (44%)
Which talent priorities do investors expect firms to focus on?
- Enhancing the employee experience/EVP to attract and retain top talent (26%)
- Improving people managers’ skills for talent development/coaching (24%)
- Putting sustainability/environmental, social and governance (ESG) considerations at the heart of the business agenda (17%)
- Improving workforce planning to better inform buy/build talent decisions (17%)
- Redesigning work to incorporate AI and automation (17%)
How do investors think of AI in terms of people strategy?
- 74% say they are interested in organizations that balance human–machine teaming.
- 68% say the degree to which an organization is digital-first impacts their investment decisions.
- 64% expect to see plans for talent reskilling/redeployment given the impact of AI.
What factors harm an investor’s perception of a firm?
- Successive headcount cuts/RIFs (37%)
- Poor planning around cyber, climate and other risks (36%)
- Unsustainable talent pipeline (e.g., key person dependency, poor succession planning) (33%)
- Retention issues/an uncompetitive value proposition/failing to improve the employee experience (32%)
- Struggling to transition to more agile, skills-based work models (30%)
Explore more Global Talent Trends insights
These insights are based on Mercer's 2024 Global Talent Trends study. The study draws on the voices of 845 C-suite executives, 1920 HR leaders, 9449 employees and 84 investors from across 17 geographies and 16 industries.
Download a PDF copy of the insights on this page, or explore the full report below.
