Challenges with attracting and retaining talent have reached their highest ranking ever, according to a survey conducted by Aon.
Aon plc, a global professional services firm, announced the results of its 2023 Global Risk Management Survey, which gathered input from almost 3,000 risk managers, C-suite leaders, and executives from 61 countries and territories to identify their most pressing business challenges.
The survey revealed that human capital issues are no longer simply a “people problem,” but a key business risk fuelled by tight economic conditions, paired with rising health care costs, the competition for talent, workforce shortages, and a lack of retirement preparedness.
According to the survey, in 2023, “attracting and retaining top talent” ranked fourth globally, after not breaking the top 10 in 2021, demonstrating a shift in how risk managers are viewing human capital today, the company says.
Aon’s survey found that two key trends had a significant impact on talent strategy: pay and inflation, and employee experience.
Salaries have risen over the past two years. For example, in the U.S., wages and salaries increased 5.3 percent year over year in June 2022 and an additional 4.6 percent in June 2023. In Canada, Canadian workers are forecasted to receive an average salary increase of 3.6 per cent in 2024.
The global rise in inflation since early 2022 has spurred employees to seek higher pay. In addition, many countries are implementing regulations around pay equity and transparency, giving employees visibility into salaries.
The second trend, employee experience, stems from changes made during the pandemic. Many employees were able to work from home, and have expressed a preference for the added convenience and flexibility. Aon reported that the end of 2022, nearly three-quarters of companies offered hybrid work arrangements. The focus on what employees want out of work has also elevated the focus on workplace wellbeing.
When it comes to the failure of retaining employees and attracting talent, 74 per cent of respondents stated their organizations were prepared for the risks. However, 32 per cent of respondents still suffered a loss from these risks in the 12 months prior to the survey.
To help mitigate some of these challenges, Aon’s survey suggests that organizations focus on reimagining the Employee Value Proposition (EVP).
Previously, many companies took a “one-size-fits-all” approach, however, in today’s workplace, personalization should be a main focus. To meet the needs of a diverse workforce and ensure that workers have reason to join or stay with an organization, business leaders can take a data-driven approach to personalize employee benefits, the survey says.
For example, Human Resources data can provide insights into what different employees value, and support the development of tailored and targeted options that will drive return on investment for both employees and the organizations.
Apart from retaining talent, Aon’s survey identified other global business risks, some of which include security threats, businesses interruption, economic slowdown, supply chain or distribution failure, and damage to reputations or the brand.
Cyber attacks and data breaches remain the top risks in this year’s survey, both globally and in North America, and they have also climbed to the top spot in Europe and Asia Pacific.
Business interruption remains the number two risk since Aon’s 2021 survey, reflecting the reality that business interruption events are increasing and can affect multiple industries and companies at the same time.
“We are at a pivotal moment in time, when business leaders are recognizing the true cost of human capital challenges and the reality that people risk intensifies all other top business risks,” said Lambros Lambrou, CEO of human capital at Aon. “Shortfalls in talent, workforce or critical specialized skills can hamper innovation and competitiveness and increase exposure to cyberattacks, regulatory breaches, supply chain issues, business interruption, and reputational damage.”