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Great to have you with me today. And I thought this research showed up so many interesting bits of data that didn't always align, which I think we're going to get into, but also some really emergent trends.
And one of the ones that came up incredibly strongly was the fact that the vast majority of respondents to the research, almost 90%, said that developing key talent was an HR objective that they needed to meet in order for their organizations to be able to transform the way they needed to and to remain sustainable. But they also said that that market demand for skills is their top challenge.
So we can see a potential people risk here, that gap that could undermine them reaching that objective. So I wanted to come to you at this point and find out from you. Is this typical? What are the typical people risks you and your team are finding among your clients? And does this resonate?
Hi, Debi. Yeah, it's great to be back to do another one of these conversations. So the short answer is yes. Demand for talent, retention of talent, and developing existing talent is definitely a trend that we're seeing continue. But it's interesting.
We might come to some stats later in the conversation that make me a little concerned about whether employers are actually getting to that. So we might be seeing some lots of desire, but maybe not as much action as you might expect in that area. So we can come on to that.
So look, when looking at business transformation, I think there are a number of people risks that we are seeing. And, indeed, the data in the report backs this up. So typical risks that we see either in transformation, or integration, or mergers and acquisitions, the number one is actually around culture and purpose.
So our organizations, have they got the right culture and purpose to deliver what they're trying to deliver in the future? Are they bringing different organizations together that have different historical and legacy cultures? The second one is engagement.
So how are organizations engaging their employees to go on the transformation journey with them? Are they painting a clear picture, a clear vision, and are they connecting that to how individuals can make a difference in their own individual job roles? We talked about the development of key talent.
So educating, training, and kind of retaining key talent is definitely a number one priority for organizations during this time. And the other area I wanted to draw out, again, we might come back to this is the changing nature of employee expectations. So there is a much less--
And I say this advisedly. There's a much less control and command culture in many organizations now, where especially younger employees are not used to working in that environment. So and I wonder if our HR leaders and people leaders are with all good intentions struggling to keep pace with employee expectations.
So we might touch on that, too. But you're exactly right. Look, 70% of employers in the survey said that demand for skills was one of their key risks. Almost 60% said that aligning employee expectations versus HR and business objectives was also a key risk, as well. So it's clearly on HR leaders' radar.
So those are the big ones that are clearly on the radar. What's not on the radar? Or you starting to see the blips coming through to continue that analogy of the risks that might not be obvious or the risks that might still be emerging that you can't see yet, or maybe they're blind spots that you're seeing that people should be aware of?
Yeah, so a couple of things that I'd highlight. And anyone who's tuned in to our videos before will know I talk about CVP, so culture, value, and purpose. I still think there's a lack of alignment and potentially a blind spot in senior leaders' desire to get the culture value and purpose right versus employees and key talent expectations of working for an organization that aligns to their own personal brand and their own personal values.
So I think that's a potential blind spot. In the report, only 44% of organizations said that culture was a key business risk during business transformation. And that surprised me. So I wonder if, as a collective, if there's some work we can do on that.
The other thing that really surprised me is that only 15% saw a lack of alignment to corporate purpose being a key risk in the future. 15%, so that, again, really surprised me. So I wonder if this culture value purpose thing is still a blind spot for many.
And talking about it can seem, sometimes, a bit nebulous. But there are many clients and many organizations that have got this right. So there are definitely frameworks that organizations can put in place to help them move this forward.
And then the two other areas I thought might be-- that I haven't seen feature as strongly in the research is digitalization. So what is the future of work look like? What is job role design look like as a result of things like AI?
And it's a massively hot topic right now. My own view is that AI is moving far faster than we as humans and organizational leaders can keep up with. So that will be a fascinating area to watch.
3/4 of the respondents said that wage inflation is a risk to their business. 2/3 found the cost of recruiting skills is a risk. I think there was a fairly obvious big pressures on organizations trying to meet those needs of a transforming business.
But I'm interested to know what are the other budget lines that are coming under pressure at the moment that could be aligned to people risk, and making that judgment of when do you spend and invest? And when do you cut back to make sure that you're not damaging what that future business objective is?
Yeah, and I had drawn out a couple of the same stats as you. I was amazed to see 77% of respondents, saying that wage and reward was a key people risk right now. But it's interesting. Let's talk about that pivot piece again.
How long is that going to be a pressure for because inflation has started to fall? Interest rates will probably fall on the back of that as the economy softens. And the employment market becomes less tight. So this could be one of these whack-a-mole situations, which is for a two-year period.
There's a wage and reward pressure. But will that begin to fade in the future? I don't know the answer to that, obviously, because I don't have a crystal ball. But I'm just saying. It's one of those areas that could be important now.
Might be less important in 18 months' time. I think the cost of hiring and developing new talent, 64% said that was a key people risk. So what is being done to alleviate that pressure, to retain existing talent, to develop their skills and experiences, to make sure that they're in the right job role?
And the job role design is correct. So there are a number of ways that organizations can mitigate some of those costs, I think, by reducing people turnover, by using existing employees as advocates out in the market so that they can do word of mouth recruitment and that kind of thing. So there are a couple of surprises in there that I thought I might draw out if that would be helpful.
So fewer than 25% of respondents said that the cost of health care and insurance costs was a key people risk. So 3/4 of our respondents thought that wasn't a key risk. Now I'm really surprised by that. And this is one of the disconnects for me.
So we see wages going up. Clearly, lots of wage spiral. We also know that many benefits that organizations offer are salary related. So if salaries are going up, then so is the cost of providing benefits, right?
The other thing is we see, and I'll talk a little bit more about it in a moment, but the state of health care provision in the UK and globally means that there is a huge pressure on the cost of providing private health care. So I don't want to frighten any of our viewers.
But I think the cost of benefits, particularly health care, I'm surprised not to see that further up the cost pressure agenda. And then we've talked so much about people development. And yet, only 29% of our respondents said that people development was a key cost pressure in the future as a people risk.
So we know that attracting and retaining talent for 3/4 of respondents is the most important thing. And yet, only 29% say the covering the costs of developing people is a risk. There is a disconnect for me in there, which makes me wonder if, at the risk of upsetting anybody-- and I'm not trying to do that.
But are organizations spending enough money on people development? Because if they were, I would expect to see that as a significant cost pressure. And it's not showing up right now.
We saw in the research the risk that comes with misaligned benefits. And it was interesting when you talk about people risk benefits, most people automatically think about health and protection insurances. So focusing on core benefits for a moment, so really just thinking about pensions and insurances.
We found that quite big cohorts of employers, and I'm talking about 1/3, 4 in 10, were saying that they felt that their current core benefits don't actually align with their HR and business objectives. And they were planning to look to change that. And that's quite big.
It's not an area that's had massive change in recent years. But to flip that around the other way, if you were to be sitting there as a CHRO or HRD reward director, and you're thinking, what do I need to put in place now to actually mitigate people risk during this transformation that's going to be going on for quite some time? What do you think they should be thinking about.
So we talk a lot about employee listening. And we help a lot of clients with employee listening. And that is to use, really, good quantitative and qualitative data to inform future decision making around reward and benefits. We also know that the organizations that are the most closely aligned benefits to their business strategy are those that have a benefit strategy and a plan in place, that have good governance around that.
So a group within the organization meets regularly to review the benefits, who they're offered to, at what time, how much is it costing, who has access to them. And back to the digital piece, we also know that digitally offered benefits, it's easier to align them to colleague need, than it is if they're static, and traditional, and rolled out in the same way.
So that's a number of areas we see that are really important. How often are benefits reviewed? Who are they reviewed by? Do colleagues have an input to that?
And how regular is the employee listening? That is done by the organization. So they can really help to align. The other big factor is who ultimately makes the decision on how much and where investment is made in employee benefits.
And how closely does that decision making group reflect the wider needs of the colleague group? Again, we've seen in the past, with all good intentions organizations, have put benefits in place that are absolutely spot on for quite a narrow cohort of senior employees. And that, perhaps, doesn't meet the needs of the wider group.
So I think an interesting question to ask for organizations is who's advising the decision makers on which benefits should be offered and where? And just on that, I talked earlier about younger colleagues and younger employees. What they're telling us when we do listening exercises amongst younger employees are it's less about the pounds and pence that you give me as a reward package.
It's much more about the purpose of the organization that I'm going to be working for, the work life balance that I can have while I'm working there, how my mental health is looked after by my employer. And what support is there if I get into difficulty? How will my career development go?
Are there opportunities for me to try different roles and work with different projects? And is my financial well being looked after for sort of short, medium, and longer term by my employer? So it's really interesting.
And the speed of expectation of that group is rapid. And certainly for someone older like me, is quite mind blowing when you see their expectations and how quickly their thoughts evolve about the relationship they have with their employer.
