By: George Waggott, founder, and Roberto Fonseca-Velazquez, summer law student, George Waggott Law
Amidst all of the disruption and tumult which ensued from global post-COVID economic recovery, firms are facing a multitude of challenges relating to their workforces. The HR consulting firm Mercer released its 2024 “People Risk” report which discusses the current top issues that HR leaders are concerned with.
The top five identified concerns for Canadian and international HR and risk professionals are as follows:
1. Increasing health and benefit costs
2. Tech skills shortages
3. Suboptimal HR technology
4. Inadequate personal catastrophe coverage
5. Pandemics
Health and benefit cost increases are the number one concern in most countries surveyed by the Mercer report. This concern seems well founded because the costs of claims under employer-sponsored medical plans (outside the U.S.) are projected by the report to increase by 11.7% in 2024. Furthermore, costs have been increasing by double digits every year since 2021. While cost increases in 2021 could arguably be ascribed to COVID, the fact that we’ve continued to see significant increases in the years after the end of the pandemic suggests that there may be some long-term structural factors causing the increases in health and benefits costs. One potential bright spot is that while these costs are very likely to continue increasing, the severity of those cost increases is expected to be comparatively lower in the near term.
Items 4 and 5 on the Mercer list of top concerns are also related to issues of health care benefits and employee wellbeing. Inadequate personal catastrophe coverage is an obvious corollary of increased health and benefit costs because increased costs may pose a threat to the ability of employers to offer health care and benefits coverage to employees. The global COVID pandemic demonstrated how much of a threat future pandemics might be. In addition, HR leaders ought to consider that concrete threats to employee health and wellbeing may come from issues of mental health or work injuries that may strain employees’ financial resources.
As financial resources across organizations continue to be strained, HR leaders surveyed continue to identify skills shortages and technology gaps. The primary technology skills which HR professionals are concerned with include cases where their employees lack cybersecurity expertise and AI competency. On the cybersecurity question, managers are concerned that their employees’ lack of cybersecurity awareness will leave their organization exposed to cyberattacks. AI skills are naturally an area of concern for HR leaders because as AI rapidly becomes ubiquitous across the economy, firms that effectively embrace AI will have a clear competitive advantage over firms who do not.
The concern with suboptimal HR technology also relates to HR leaders being concerned with cybersecurity as the use of outdated HR technology may increasingly create risks for firms. An example which the Mercer report highlights is that many firms still share unencrypted employee data with other parts of the firm or with vendors for administrative purposes. Outdated HR technologies are also an issue of concern because interacting with suboptimal technology worsens the employee experience.
Overall, the concerns that are most salient for HR and risk leaders in 2024 reflect a global economy in a period of transition. HR leaders are faced with choices that will determine how their firms will address a wide range of risks, and the related questions associated with how to best take advantage of current opportunities in the second half of this decade.
For more information about George Waggott Law, please see: www.georgewaggott.com, or contact: george@georgewaggott.com
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