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 are not always motivationally aligned. To ease this disconnect, she said HR leadership is essential in 2024.

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

More than half of executives expect AI and automation to deliver a 10%-30% boost to their organisation’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 organisation 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 employees 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 organisations appeal to talent. The Mercer team said HR leaders should pay increased attention to capacity planning, eliminate busy work, and use AI tools to improve skills matching.

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 organisations and HR leadership to prioritise transparency, fairness, and employee wellbeing. Bravery warns that organisations 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 employees would flex to fit in with their employer, she said, 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.

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

Bravery has pointed out that HR has spent decades building an infrastructure around jobs, not skills, and many organisations 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 operationalise, but only 26% of organisations 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 has warned that buying a new platform is not the solution. A skills-based workplace requires a fundamental reset and a leadership mindset to challenge norms. However, Bravery has said 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 incentivise skills development and adopt more sophisticated reward and talent levers,” she told HRE. Interestingly, that is true everywhere except for the US, 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 forego a 10% pay increase in exchange for additional wellbeing benefits and increased employer contributions to retirement/savings programmes.

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 organisational ESG outcomes.

Employee sentiment about the brand

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

Bravery noted 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 organisation that provides a connection to their values and has a positive external reputation, Bravery said. “Relationships with the brand are very intimate,” she said. When this relationship is positive, it drives retention.

Artificial intelligence

There is 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 recognise 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.

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 specialisations.

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.

READ MORE: Fearful of AI in HR? How to work better with the tech

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 is 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-centred design to create transformative experiences tailored to the demands of the digital era. It would not happen overnight, said Averbook: “It is a muscle to build.”

About the author: Jill Barth is HR Tech Editor of Human Resource Executive, where this article was first published.