Mercer study: AI, HR leaders, talent and the ‘art of the possible’

Artificial intelligence, employee skills and workforce wellbeing are three themes headlining Mercer’s recently released Global Talent Trends 2024 report, which captures compelling, future-focused perspectives from over 12,200 C-suite executives, HR leaders, employees and investors.

Kate Bravery, Mercer’s global insights leader and report author, told HRE that while these themes are interconnected, executives and employees aren’t always motivationally aligned. To ease this disconnect, she says HR leadership is essential in 2024.

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Business leaders right now are engaged in the “art of the possible” regarding artificial intelligence, Bravery says, and the biggest possibility of all is increased productivity. “This is such a momentous ball that’s rolling,” she says.

More than half of executives expect AI and automation to deliver a 10%-30% boost to their organization’s productivity by 2027, according to the report, and many business leaders are counting on even more.

Talent, trust challenges ahead for HR leaders

However, fewer than half of executives are confident their organization can meet customer demand with its current talent model, and inflation and capital concerns are shaping business plans. To address these concerns, many in the C-suite expect to double down on AI investment, reskill the workforce and push digital transformation this year.

Meanwhile, intersecting with these leadership priorities, two in five workers perceive the world of work as fundamentally broken. Alarmingly, according to the report, one in four individuals would prefer not to work at all, underscoring the need for meaningful changes in how organizations appeal to talent. The Mercer team says HR leaders should pay increased attention to capacity planning, eliminate busy work and use AI tools to improve skills matching.

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Another concerning trend identified in the study is the declining trust in employers to do the right thing for society and employees. This erosion of faith highlights a call for organizations and HR leadership to prioritize transparency, fairness and employee wellbeing. Bravery warns that organizations that choose to flow productivity gains straight to the bottom line rather than investing in the workforce will further aggravate distrust.

People practitioners, however, can bridge the gap between aggressive transformation plans and the wellbeing of employees. Many CHROs are focused on enhancing the employee value proposition and employee experience to attract and retain top talent. Improving workforce planning is also a leading priority for HR leaders, who predict (on average) nearly 20% turnover in 2024.

Shifting employee value proposition

Bravery describes the workplace in 2024 as being built around a “different mental model.” Previous generations of workers would flex to fit in with their employer, she says, but today’s employees want their values to shape the company. Now, people want to be valued for what they bring to the job on day one and to be viewed as “contributors, not employees,” according to Bravery.

Skills-based approach to the talent pipeline

Kate Bravery, Mercer
Kate Bravery, Mercer

The report indicates that many in the younger generation believe their employer will reskill them for a new role if needed, but managers and organizations aren’t necessarily primed to make that happen.

Bravery points out that HR has spent decades building an infrastructure around jobs, not skills, and many organizations lack agility around upskilling and reskilling.

Some employers are leaning toward new tech to enable a skills-based environment. AI-powered platforms have made internal talent marketplaces easier to operationalize, but only 26% of organizations use them today. Bravery says it takes a culture shift to allow for side gigs and inter-departmental projects, yet that sort of adjustment is necessary before marketplaces become more widespread.

Bravery warns that buying a new platform isn’t the solution. A skills-based workplace requires a fundamental reset and a leadership mindset to challenge norms. However, Bravery says that the maturity of skill-based functionality for talent insights has increased.

“The approach to the skills gap used to be hiring, but this year, for the first time, the world began to incentivize skills development and adopt more sophisticated reward and talent levers,” she told HRE. Interestingly, that is true everywhere except for the U.S., where the dominant approach is still to hire from the outside.

Wellbeing benefits

According to the report, 46% of employees said they would be willing to forgo a 10% pay increase in exchange for additional wellbeing benefits and increased employer contributions to retirement/savings programs.

Employees also voiced a priority toward sustainable investment options in retirement plans. Notably, this approach was rated by HR leadership as one of the most effective ways to make progress on organizational ESG outcomes.

Employee sentiment about the brand

People want to take pride in their workplace, says Bravery. This year, employee respondents around the world said that working for an organization with a purpose they can be proud of ranked first among factors that help them thrive at work.

Bravery notes this aspect shot up from ninth place last year to the top spot, followed by a sense of belonging and feeling valued for their contributions to round out the top three.

Overall, employees want to work for an organization that provides a connection to their values and has a positive external reputation, Bravery says. “Relationships with the brand are very intimate,” she says. When this relationship is positive, it drives retention.

Artificial intelligence

There’s a disparity between executives and the broader workforce regarding the benefits of AI and automation, the report shows. More than half of executives believe that without widespread adoption of AI, their businesses will not endure beyond 2030.

While executives recognize the potential for AI to drive productivity gains, employees are more “nonchalant,” according to Bravery. Overall, only 27% of employees expect that AI and/or automation will improve how their job is done over the next three years.

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AI, skills and HR leaders' vital role highlight 2024 Mercer study

HR leadership in 2024

HR professionals play a crucial role in navigating the balance between AI-driven productivity and workplace wellbeing, which presses CHROs to develop a team with an awareness of digital transformation. “HR needs to lead the conversation about AI, or at least be intimately included,” says Bravery.

According to the report, many executives perceive that advancements in AI and automation are altering the requirements for a successful HR professional. Ongoing analysis of global market data indicates that tech skills are now the top-ranking requirement across nine HR specializations.

However, attracting and retaining HR talent equipped with digital literacy remains a challenge. In a 2023 webinar, Alex Zea, HR transformation services leader at Mercer, discussed the essential skills for digitally focused HR leaders. Among these, she highlighted the importance of mastering generative AI, expertise in data governance, experience management, and the ability to design for change.

Jason Averbook, Mercer, transformation; AI, skills and HR leaders' vital role highlight 2024 Mercer study
Jason Averbook

Mercer analyst and HRE expert Jason Averbook, who contributed to the report, spoke to a webinar audience shortly after the Global Talent Report was released about the evolution of HR with AI. He said that AI-driven advancements are going to impact human resources significantly. He put it to HR leaders this way: “It’s our time to make the function better” by taking advantage of new technology.

The Mercer team offers a compelling final suggestion to HR professionals seeking to enact meaningful change this year: Use human-centered design to create transformative experiences tailored to the demands of the digital era. It won’t happen overnight, says Averbook: “It’s a muscle to build.”

Jill Barth
Jill Barth is HR Tech Editor of Human Resource Executive. She is an award-winning journalist with bylines in Forbes, USA Today and other international publications. With a background in communications, media, B2B ecommerce and the workplace, she also served as a consultant with Gallagher Benefit Services for nearly a decade. Reach out at [email protected].