Top risks in 2024: What challenges HR leaders face?

To stay competitive, employers need to hire and develop the right talent and leadership, which requires understanding risk factors and what the workforce values. HR must grasp employee expectations, inspire loyalty, and support their teams through critical moments, while also acting decisively in challenging times to earn trust and create a culture of safety and preparedness. To strengthen the employee value proposition (EVP), HR leaders need to think beyond pay, aligning it with what truly resonates with people. Focusing on a positive employee experience is essential to building a stronger, more resilient team.

As the world of work evolves, so does the associated risks. Recently, Mercer-Marsh in its latest report highlighted top risks in 2024 for HR leaders in the Middle East and Africa region. The concerns include:

#1 Rising Health and Benefit Costs

In the post-COVID era, rising health and employee benefits costs have become a top concern for HR leaders. Global inflation has further strained organisational budgets, particularly in healthcare. To prioritise employee wellbeing, organisations must address these increasing expenses while offering benefits that meet the evolving and diverse needs of their workforce.

In addition to this, expanding organisation’s definition of workplace wellbeing by prioritising psychological safety alongside physical health. Take the opportunity to enhance employee health by supporting strained healthcare systems. Introduce innovations that foster inclusive benefits, create new care models, and meet employees’ evolving expectations.

#2 Natural disasters and Extreme Weather Risks

Climate change is increasingly impacting workforce health and productivity, with heat waves and air pollution posing serious risks, particularly in sectors like construction and agriculture. While many organisations assess climate risks for their sites, the direct effect on employees is often overlooked. Addressing these challenges requires both operational and people-centred approaches.

Organisations must treat climate risks as health risks, acknowledging their impact on employees, families, and communities. By addressing health, wealth, and opportunity gaps, businesses can promote long-term prosperity and protection for all.

HR leaders need to understand and acknowledge that environmental issues are people risks, as climate events can severely impact the health of employees, families, and communities. To mitigate these challenges, focus on narrowing health, wealth, and opportunity gaps, fostering greater prosperity and protection for everyone

#3 Mishandling of data

Failure to securely handle and protect sensitive information can result in data breaches, loss of proprietary information, litigation, and reputational damage. HR professionals rank 'mishandling of data and intellectual property' as the second highest technological risk, yet they still view outdated processes as a lower priority. This is despite the clear benefits of modern technology in enhancing employee experience.

Additionally, sharing unencrypted employee census data with vendors for administration remains a common practice in many markets, leaving organisations vulnerable to exploitation. Additionally, enterprise-wide HR systems often lack the capabilities needed for effective benefits administration, requiring niche technologies and automation for added protection. It's crucial for senior executives to understand these technical shortcomings. A major concern is the unrealistic expectation from senior leadership that broad HR platforms will solve all problems without the support of specialised tools. 

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#4 Tech skills shortages 

Tech skills shortages are a major concern for both HR and Risk professionals, especially as cybersecurity demand outpaces supply. Despite the global cybersecurity workforce growing by significantly in recent years, a record gap of 4 million professionals remains. While salary and cash incentives are limited, organisations must understand why these valuable employees join or stay, focusing on purpose, values, culture, and a comprehensive suite of rewards, career growth, and benefits to attract and retain top talent.

HR and talent leaders need to leverage the collective strength of their entire workforce to defend against cyber threats, data breaches, misinformation, and intellectual property theft. Partnering with top level executives across the organisation to assess the benefits and risks of Artificial Intelligence, explore uninsured scenarios, promote safe adoption, and create a digital-first people strategy.

#5 Disengaged workforce

Lack of enthusiasm, ambition, and a sense of purpose leads to low morale, decreased productivity, and stalled innovation. As workers’ expectations evolve, leaders must recognise and address these changing needs, inspire engagement, and take action during critical moments. Effective crisis leadership, built on trust and strong communication, is essential.

A strong employee value proposition (EVP) that aligns benefits, rewards, and culture with employees’ values is key to attracting and retaining talent. However, with limited budgets, creative pay and benefit strategies are needed. To sustain productivity, organisations must focus on meeting employee needs, optimising work design with AI, acquiring the right skills, and providing tools for long-term productivity.

Short-term pressures like labour shortages and burnout, alongside demographic trends such as an ageing population, strain skills availability and team effectiveness. To counter this, organisations need competitive attraction and retention strategies while maximising their current workforce’s productivity. Both employees and executives identify too much busy work, insufficient thinking time, and ineffective structures as key barriers to productivity.

#6 Uncompetitive talent strategies 

While technology skills gaps are critical, many sectors face broader labour shortages, from sales professionals to nurses, which HR and Risk practitioners rank as a top risk. Uncompetitive talent strategies for attraction and retention further complicate securing the specialised skills needed to drive innovation and deliver services.

With an insufficient pool of skilled candidates, employers must address vacancies by mapping skills needs and upskilling or reskilling their existing workforce. As current skills become outdated, fostering a learning culture is essential. Upskilling, reskilling, and career planning are priorities that will enhance productivity.

What HR leaders can start with is - breaking down the skills required for a job and identifying gaps within the organisation, and then determine if certain tasks can be shifted to more junior roles or assigned to full-time, part-time, or gig workers, optimising talent utilisation and filling skill gaps efficiently.

Other key risks that HR in the Middle East region face include weak benefits administration, as many still view the risk of suboptimal technology as a lower priority. This is despite modern technology’s ability to significantly enhance the employee experience and safeguard sensitive information. A recent report also highlights the ineffectiveness of current benefits systems, signalling the need for improvements across the board.

Additionally, the lack of DEI policies in the workplace, benefits, and opportunities leads to disengagement, limited diverse thinking, and poses a significant reputational risk with employees, customers, and other stakeholders. To foster a thriving environment, organisations must prioritise inclusivity and equitable opportunities for all. 

Some of the practices that HR leaders can adopt to navigate these risks include:

• Prioritise resilience at both personal and organisational levels by fostering strong leadership and implementing effective risk controls.
• Promote risk awareness through enterprise-wide collaboration and empower employees to actively participate in risk management, ensuring they feel comfortable speaking up. 
• Ensure employees' basic needs, such as healthcare and savings, are met by aligning reward and benefits strategies with both employee needs and business goals.
• Proactively map future skills to support organisational plans and foster a culture of continuous learning to keep talents relevant.
• Support employees through changes, including new technology adoption, to reduce stress and burnout.
• Finally, adapt risk management processes to address emerging risks effectively.

The path forward is clear: a people-first strategy that safeguards not only the business but the people who drive it forward.