Organizations face a world economy that is complex, diverse and, to some degree, still volatile.
Today, many have returned to financial health and stability, while others are taking steps in that direction. Regardless of their current situation, employers around the world will realize greater future success if they are able to effectively confront the critical workforce challenges outlined here.
3. Four years after the global economic
downturn, organizations face a world
economy that is complex, diverse
and, to some degree, volatile. Despite
these challenges, many markets and
organizations are steadily gaining
footing, albeit in a roller coaster-like
environment with spurts and stalls,
talent supply and demand paradoxes,
and a push and pull between employee
and employer.
The future of the global economy teeters on a delicate
balance of these divergent forces. According to the
International Monetary Fund’s World Economic Outlook,
conditions remain uncertain: “Weak recovery will likely
resume in the major advanced economies, and activity
will remain relatively solid in most emerging and
developing economies.”1
CONFRONTING CRITICAL WORKFORCE CHALLENGES 3
4. World economic outlook World output
(% change)
Advanced economies
Emerging and
developing economies
6.2%
6.0%
5.7%
4.1%
3.9%
3.5%
2.0%
1.6%
1.4%
2011 2012 2013
Source: World Economic Outlook, International Monetary Fund, April 2012
The implications for organizations are immense. Those that get it right
– finding cost-effective ways to engage employees, drive business
strategy and solve a number of critical challenges in 2012 and beyond
– will be in a position to excel. Those that get it wrong will find their
performance and competitive position at greater risk.
Last year, Mercer surveyed nearly 30,000 workers worldwide to gauge
their thoughts on key elements of the employment deal, including
engagement, pay, careers, retirement, benefits, company, job and
work/life. Mercer’s What’s Working™ research revealed startling
findings, including a substantial increase in employees worldwide
who wanted to leave their current organizations. In markets hit hard
by the recession, company cutbacks had begun to affect employee
satisfaction and engagement levels. But even in emerging markets, in
which many organizations excelled during the downturn, employees
were looking to exit, in search of new opportunities.
4 INSIDE EMPLOYERS’ MINDS
5. Employee engagement, loyalty % of employees seriously
considering leaving
are eroding globally
Asia Pacific
North America
UK Europe
Canada Netherlands
Latin America
36%
36% Ireland
28%
Germany China
America
35% 33% 34%
Hong Kong
32% Mexico
Italy
56% 39%
Spain
France
40%
Brazil
30% 30% India
Australia
56% Argentina
54% Singapore
40%
40% 42%
Sources: Mercer’s What’s Working™ Survey, 2011
In the wake of these developments, human capital issues have
come more to the forefront, and workers and employers are poised to “Human capital is the second-ranked critical
try to discover common ground, for the common good. This challenge for CEOs. … The three top-ranked
sentiment is manifested through a number of sources, including an strategies (grow talent internally, improve
April 2012 Conference Board report, anecdotes from the field leadership development programs, and provide
and follow-up Mercer research with employers around the world employee training and development) involve
regarding the most pressing concerns on their minds in 2012. actions to develop and retain employees
within a company.”3
According to The Conference Board CEO Challenge 2012 report, – The Conference Board
based on a global study of 776 CEOs, presidents and board
chairs, human capital ranks second after innovation as a top CEO
challenge for 2012. The report states that “the world is a volatile place
that presents not only immense challenges but also an abundance of
opportunities” for organizations that search out unique solutions and
“possess an innovative mindset and corporate culture that
brings out the best in teams of diverse, talented, engaged, and
passionate people.” 2
CONFRONTING CRITICAL WORKFORCE CHALLENGES 5
6. “The global economy has had its rough spots and many challenges
await, but smart companies are seeing the opportunity to recalibrate
their businesses with an eye toward the future,” said Julio Portalatin,
who, since being named Mercer President and CEO in February 2012,
has traveled the globe for firsthand accounts of client forecasts and
concerns. “An important ingredient for success will be winning the new
talent war. This means understanding the dynamics of change, placing
human capital at the forefront, calibrating strategies based on differen-
tiation through people, and having a winning culture that attracts and
retains the brightest and most motivated workers.
“The traditional saying that with every challenge comes opportunity
certainly holds true today,” he added. “Executives I met in my travels
noted that these are tough times, but also confirmed that these
are exciting times for those who embrace the challenges and remain
focused on finding new solutions.”
6 INSIDE EMPLOYERS’ MINDS
7. WHAT
EMPLOYERS ARE
THINKING
While business leaders may have initially been taken aback by
the strength of employee sentiment expressed through Mercer’s
global survey on employee perceptions, Mercer’s more recent
research among employers worldwide shows that senior leaders
are aware of their workers’ concerns and the human capital issues
affecting the organization. Specifically, employers say that
they are deeply concerned about three issues in the coming year:
1.
Taking pension risk off
the table
Employers are increasingly concerned about matters of cost and
risk, especially risks related to their growing pension liabilities “The explicit financial risk posed by pensions
and the potential impact on corporate cash flow, P&L and balance has the power to make or break a company
sheets. With risks stemming from many sources – including stock by lowering its share price and undermining
market volatility, fluctuating interest rates, shifting demographics plans for expansion and growth.”
and more stringent pension funding, accounting and solvency – Simon O’Regan, Global Leader
requirements – it’s imperative for plan sponsors to understand Retirement, Risk & Finance
their own risk profiles and create long-term strategies for Mercer
taking pension risk off the table.
Of the three major risk categories – funding level, regulatory and
operational – pension financial risk emerges as a critical area due
to the potential for significant damage. Organizations have only just
begun to address this critical issue.
CONFRONTING CRITICAL WORKFORCE CHALLENGES 7
8. 2.
Making smart benefit
choices
Employers have asked employees to take greater accountability
for their retirement and health benefit decisions. Given these new “We have long been a society that
responsibilities and the range of options involved, employees don’t values choices, but when you think about
always make good choices. Sometimes, they do nothing at all. That’s it, those choices at times are really very
not good for employees or employers. To address this challenge, overwhelming.”
employers must first know which benefits their employees value and – Mindy Fox, Senior Partner
then offer the appropriate options and educate employees about US Region Leader
how to make the best choices. Mercer
Companies also are looking to develop attractive benefit packages
in their fight for talent globally, but they have encountered obstacles
due to a proliferation of diverse local plans, governance issues and
ongoing risk management. Overall, employers say they want greater
efficiency for both employees and employers; higher-quality investment
offerings aligned with employee needs and local expectations; simple
and effective governance and risk management frameworks; and
flexibility to expand plans to new markets or operating centers.
3.
Building high-impact
talent
Around the world, there’s a clear mismatch between the talent
that’s available and what’s needed to drive economic growth. This is “Most organizations around the world view
true within organizations and across organizations and geographies. talent as their most vital and sustainable
Despite global unemployment of 205 million people, 34% of competitive advantage. Right now, every
employers can’t fill their job openings. 4 single high-quality worker is an asset you
can’t afford to lose.”
Employers today must find new ways to build agile, world-class – Pat Milligan, President
workforces that are ready and able to respond to evolving business Talent, Rewards & Communication
needs and new opportunities. The solution is talent mobility in the Mercer
8 INSIDE EMPLOYERS’ MINDS
9. broadest sense. Employers – both multinational and domestic – are
involved in a global search to locate the right talent for the right
jobs at the right cost, and the next few years may very well go down
in history as the great migration of, and search for, workers.
FINDING THE RIGHT
BALANCE
Success in 2012 and beyond will require organizations to find the right balance between
employer needs and employee expectations and, in particular, to effectively address the
three critical workforce challenges outlined previously.
Mercer has developed a suite of resources and solutions to help employers do just this.
Visit www.mercer.com/insideemployersminds to take advantage of insights from
both Mercer experts and other respected thought leaders whose views and experiences
can help your organization define the right path forward.
1 World Economic Outlook, International
Monetary Fund, April 2012.
2 Risky Business: Focusing on Innovation
and Talent in a Volatile World, The
Conference Board CEO Challenge 2012,
RESEARCH REPORT TCB-R-1491-12-RR.
3 Ibid.
4 US Department of Labor – Bureau of
Labor Statistics; 2011 Gallup Employ ment
Survey; Manpower Group’s 2011 Talent
Shortage Survey.
CONFRONTING CRITICAL WORKFORCE CHALLENGES 9
10. For further information, please contact
your local Mercer office or visit our website at:
www.mercer.com
Argentina Mexico
Australia Netherlands
Austria New Zealand
Belgium Norway
Brazil Peru
Canada Philippines
Chile Poland
China Portugal
Colombia Saudi Arabia
Czech Republic Singapore
Denmark South Korea
Finland Spain
France Sweden
Germany Switzerland
Hong Kong Taiwan
India Thailand
Indonesia Turkey
Ireland United Arab Emirates
Italy United Kingdom
Japan United States
Malaysia Venezuela
Copyright 2012 Mercer LLC. All rights reserved. 10881B-EN