This article was first published in Brink on May 4, 2022
The people agenda has become a prominent piece of every boardroom discussion. How could it not? Organizations large and small are simultaneously navigating the future of work — and the necessary work and HR transformations required — responding to an exhausted workforce, and navigating high inflation, tight labor markets and slow supply chains. Such navigation requires not just a map for directions but also an understanding of the priority “destinations.”
Mercer’s 2022 Global Talent Trends study — which collected the thoughts of 11,000 executives, HR leaders and workers across 16 countries and 13 industries — sheds light on what is keeping executives up a night (spoiler alert: cyber risk and inflation), where HR is placing their bets (spoiler alert: skills, skills, skills) and what employees around the world really want from work (no surprise: flexibility).
Marsh McLennan’s Richard Smith-Bingham sat down with Kate Bravery, the study’s author, and Ilya Bonic, head of strategy at Mercer, to discuss talent risks and opportunities in 2022.
SMITH-BINGHAM: Kate, Ilya, welcome. A lot has changed since you last ran the Global Talent Trends survey in 2019, just prior to the pandemic. I’m excited to speak with you both about those changes, the trends you believe are set to stay and to get an inside track on what companies that are outpacing their competitors are doing differently. Kate, what are the big messages from this year’s data?
BRAVERY: The big headline is that the people and business agendas have never been more intertwined. The pandemic saw most employees re-evaluate their lives, and companies are responding, with four in 10 reassessing what is most important to their employees and nine in 10 saying they aim to share risks and rewards across all stakeholders.
High-growth companies are redefining how they interact with their workforce and contribute to society. We call this the “Rise of the Relatable Organization,” and these relatable orgs have five things in common: They are constantly resetting and adapting for relevance, figuring out new ways to work in partnership, working hard to deliver on total well-being, building for employability, and harnessing collective energy in ever more intelligent ways.
Risk Concerns Differ Across the Globe
SMITH-BINGHAM: Kate, global risk issues are near and dear to me, so it wasn’t a surprise to see executives call out cyber risk as major concern.
BRAVERY: Yes, cyber risk is a significant concern globally — 96% of executives say data security and practices are a threat to their organizations. No surprise, really. But here’s where it gets interesting. When we asked executives “what keeps you up at night,” they said the number one concern related to remote working was the lack of a data security mindset at home. In fact, this response just edged out external hacking as a cyber risk. Retail and technology executives put this at the top of their list, ahead of business resilience and digital acceleration.
There are also interesting regional differences showing up in the data. Executives in North America cite cyber risk and data security as the top social and economic forces influencing their business plans, while Europe says digital acceleration; Asia puts business resilience in the face of another lockdown as a priority; South Africa is most concerned by supply chain disruptions; and Latin America says embracing new work models is their greatest priority. Bottom line, we see regional splits in terms of their biggest risk, with respondents in all regions concerned about the convergence of multiple risks such as technology, increased disclosure rules and new work models.
Your Business Depends on Your People
SMITH-BINGHAM: Ilya, cyber risk aside, what other big concerns stood out for you?
BONIC: This year, companies will struggle most with the fundamental issue of retaining and attracting the talent that they need to be successful. Since the onset of COVID, labor markets have tightened more rapidly than anyone predicted, demand for new skills (particularly digital skills) has skyrocketed, and we have a new appreciation (and competition) for the value of service jobs, manufacturing jobs and others that have long been overshadowed by a focus on people strategy for knowledge workers.
Employees have experienced a more flexible world of work, and their expectations of what they want for work have changed. We’ve never seen higher “quit rates.” And, of course, we are seeing salary and wage inflation as a result of this tight labor market and in line with inflation trends in the general economy.
If this isn’t challenge enough, we also have recession fears rising — experts are estimating a 50% chance in North America and up to 60% likelihood in Europe. It’s interesting to note the shift in how executives say they will handle an economic downturn if it occurs over the next 12 months compared to how they planned to back in 2019. When we asked this back in 2019, they responded with a freeze in operational costs and discretionary expenditure, along with a focus to increase strategic partnerships.
This year, executives are saying they will not pull back on investments in their people. Spend on health and well-being and learning and development are the last things executives say they will pull back on. And, at the top of the list for continued investment, even in the case of difficult economic times, will be increased investment in AI, automation and reskilling. This shows the lessons learned from the pandemic. First, your people are your business and, second, the future of work is top of the agenda.
Altogether, this data shows the continuing traction of multi-stakeholder capitalism. An emerging challenge will be how to get the balance right between these different stakeholders for short-term success and long-term sustainability. We see employers responding to today’s acute talent challenges by increasing levels of compensation, increasing flexibility, investing in learning and development, enhancing benefits, focusing on mental health and well-being — listening more than ever before to what employees want.
The thing is, all of these interventions increase costs. How do employers deliver on what employees want, while also delivering on the economics of the business? This is where companies need to turn to innovations in ways of working and managing talent. This year’s Global Talent Trends is full of data, case studies and ideas on exactly how to do this.
The Need for New Work Models
SMITH-BINGHAM: You talk about partnering equitably in the report, why is that so critical? What are we not getting right today?
BRAVERY: First, let me say that many companies are getting this right and we have great examples in the report. But the data is worrying on a number of fronts. Hybrid working is one area where employers, HR and employees are expressing different concerns, and then subpopulations of these groups carve out even more nuances in how they see flexible working playing out.
Male executives are more likely than female executives to see value when everyone is in the office. HR is more likely to have concerns about productivity and culture stemming from remote working, compared to employees. Employees, for the most part, are more reluctant than HR and executives to return to the office full time — again this is more true for women than men, as females found themselves more productive with a hybrid model. When asked what would bring them back — the opportunity to work with peers and, for men, to get face time with the boss prevailed.
Issues around inequity and fairness stemming from these new work models remain central concerns as companies grapple with internal/external equity and paying by location and/or skills. This is true for frontline workers, for workers of color, for older workers. So many populations that have different definitions of fairness are considering matters of equality. This demands more transparency by managers on the work deal and its trade-offs. If you want to be fully remote, these are the best roles.
Partnerships only work when you are clear on the deal. More work needs to be done to bring people together productively under these different models — especially given the fact that some workers have never experienced working physically together in their work lives or with their present firm. The future of work is going to require a much more personalized approach and organizations want to be careful to not let their return to work plans overly influence their future of work goals.