A Workforce in Transition Prepares to Meet a Host of Challenges

A Workforce in Transition Prepares to Meet a Host of Challenges

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This insight is part 01 of 12 in this Collection.

A Workforce in Transition Prepares to Meet a Host of Challenges

A Workforce in Transition Prepares to Meet a Host of Challenges

Engaging a changing workforce requires data and innovation. Workers increasingly expect more than just a paycheck. In response, organizations are balancing costs with the ability to provide a compelling employee experience.

Key Takeaways
  1. The affordability of healthcare and benefits has never been more crucial, nor more difficult to achieve.
  2. New regulations on pay transparency may have effects beyond HR compliance.
  3. Rapidly advancing technology has employers concerned that upskilling may no longer be enough.

Managing total rewards spend, addressing pay transparency regulations and reskilling the workforce to prepare for AI are some of the top issues on the minds of human resources (HR) leaders and professionals. How employers lay the groundwork for managing these will determine how successful they are at attracting and retaining talent — which rose to the fourth highest global risk for the first time in 2024.1

Data and analytics will be crucial to addressing these challenges and ensuring a compelling employee experience.

“HR, now more than ever, has a seat at the strategic table. The function will have an impact in their organization by leading with data,” says Lambros Lambrou, CEO of Human Capital.

Workforce Trends: Today and Tomorrow

The workforce is the backbone of the organization. Whether it’s younger workers who want more flexibility and mission-driven work, workers fighting burnout and languishing, or employees who just want to be paid fairly for the work they do and be able to afford healthcare, the demands and burdens on employers are growing. Meanwhile, employers are struggling to find workers with the existing skills needed to compete, much less the skills needed in the not-too-distant future.


More than half of employees say they are watching for (or actively seeking) a new job.

Source: Gallup 2023 State of the Global Workplace report

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We’re in a more transitional workplace today than we have been in the past. We think employers are struggling with the balance of offering employees flexibility, but still demanding performance and productivity.

Byron Beebe
Global Chief Commercial Officer, Human Capital Capabilities

It’s more than employee expectations that are putting pressure on HR leaders. New regulatory actions around pay transparency, for example, will soon force a transformation at many firms concerning how pay is determined and communicated.

It’s no wonder that an inability to attract and retain talent rose on the threats list in Aon’s 2024 Global Risk Management Survey. Other risks that have a strong workforce component, like damage to reputation and increasing competition, also made the top 10.

Additional workforce-related emerging risks that businesses are facing today include:

  1. Healthcare affordability: Costs are rising steadily, and employers don’t feel as though they can or should continue to pass those increases along.
  2. Pay transparency and equity: Regulatory changes will cause a compliance headache for companies that don’t prepare. But the bigger challenge may be what comes next.
  3. The impact of new technology: AI has garnered headlines for how it might replace workers, but AI is as much a skills opportunity as a risk.
Outlook on Healthcare Affordability

Costs are consuming an increasing share of total rewards spend, and real costs are continuing to rise for both employers and employees. Our recent survey of U.S. health plan sponsors found that costs increased 6.5 percent in 2024, even after plan changes were made to help improve affordability. And this doesn’t include the 5 percent increase in employee contribution that employers passed along to their workers. A similar story applies outside the U.S. as well. The global trend rate is the highest in a decade, at 10.1 percent.2

These cost increases aren’t sustainable. Employers are paying more, and also adding more costs to employees. Total rewards budgets are being swallowed up just to maintain the status quo, leading firms to aim lower. The number of employers that said they are just looking to keep their benefit offerings on pace with the market doubled coming into 2024, and those looking to lead the market decreased accordingly.

Total rewards are about tradeoffs. A dollar spent on healthcare is a dollar that isn’t spent on retirement or wages. Aon is projecting total rewards spend to increase 22 percent in the U.S. over the next four years. More than one-third of that overall increase is expected to come from healthcare costs alone.


The global medical trend rate is the highest in a decade, at 10.1 percent.

Source: Aon Global Medical Trend Rates Report 2024

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As we’re moving into a higher global trend, companies must take more meaningful action. They have to make tradeoffs and they have to look at it holistically across all their people costs.

Farheen Dam
Head of Health, North America
Outlook on Pay Transparency and Pay Equity

Despite modest gains in recent decades, the gender pay gap remains a persistent issue — sitting at approximately 16 percent in the U.S.,3 13 percent in the European Union (EU)4 and 14 percent in the UK.5 Those gaps tend to be even larger for women with children. While progress has been made, it’s not nearly fast enough. Even a modest cumulative gap can create massive inequality into retirement.

Pay transparency and equity are about more than compliance with new regulations and laws across the globe — they get to the heart of the culture and fabric of an organization. Addressing these topics is also about accountability on several fronts. For example, are companies living up to their diversity, equity, inclusion and belonging (DEIB) commitments by paying their employees equitably?

The emerging regulatory frameworks around pay transparency — namely the EU Directive on Pay Transparency and the patchwork of U.S. state laws — are a first step toward reducing, if not eliminating, the gender pay gap. Public sentiment supports that goal, as do most employers.

Outlook on Technology

The share of highly skilled jobs has increased by 25 percent over the last two decades, according to the Organization for Economic Cooperation & Development.6 By far the most talked about issue in technology is AI. Companies large and small are beginning to find ways to use AI tools to increase efficiency. But when it comes to this emerging capability, there is much heat and little light, as companies try to get a handle on the massive opportunities AI presents, as well as its potential threats.

Not surprisingly, 50 percent of companies are not using — nor feel ready to use — generative AI capabilities within their HR organization. And another 30 percent consider themselves to be still learning how to use it within their HR role.7 Together with other business leaders, the HR function must be ready to embrace change and undertake challenges arising as AI continues to disrupt the workforce. And doing so starts with having the right skills in place.

Investment in improving and strengthening employee skills and competencies with AI tools will be key. This includes building data literacy, analytics and programming skills, as well as supporting soft skills like critical thinking, creativity, collaboration and emotional intelligence.


AI will affect almost 40 percent of jobs around the world, replacing some and complementing others.

Source: International Monetary Fund

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Rather than focus on how AI might eliminate jobs, companies should consider the ways that it will also add new jobs and create more demand for specific skills needed harness and manage the technology.

Lisa Patel
EMEA Head of Talent and UK Head of Health, Aon

However, many companies are concerned about their ability to reskill their current workforce to use these emerging technologies. “Clients are worried that they may not be able to reskill and upskill their workforce. They may need a new workforce,” says Byron Beebe, global chief commercial officer, human capital capabilities. The process will undoubtedly require a mix of hiring for new skills and upskilling and reskilling the current workforce. A good place to start is by first understanding where a company’s skills gaps exist.

How Aon Helped M&G Wealth Develop New Advisor Skills Image

Case Study

How Aon Helped M&G Wealth Develop New Advisor Skills

Everywhere across the financial services landscape, the outlook is changing quickly. People's needs and priorities are more diverse than they've ever been. UK financial advice firm M&G Wealth reached out to Aon's Talent Solutions with an objective to engage more people to seek advice and help them achieve long-term financial wellbeing. The client wanted to better understand the make-up of a highly successful advisor of the future, including the skills needed to achieve great client outcomes in a rapidly evolving world.

"The work we did to prepare our current workforce and recruit a new generation of advisors was all about making connections, building trust and maintaining long-lasting relationships with our clients," explained Ross Liston, CEO of M&G Wealth Advice.

How Businesses Can Prepare for Change

There are three opportunities businesses need to consider when approaching some of the biggest challenges facing their workforce.

Opportunity 1
Balance Health and Benefit Spend with Employee Value

To keep costs in check and provide competitive health and benefits to employees, companies are trying to reduce ineffective spend, mainly through value-based strategies. These include:

  • Steering employees to high quality providers
  • Using analytics to identify and potentially mitigate the effect of high-cost claimants
  • Investing in physical and emotional wellbeing to help mitigate high healthcare costs
Opportunity 2
Address Root Causes of Pay Gaps from Hire to Retire

To adequately address a potentially major disruptive event, companies need to start laying the groundwork now. One way to do so is through pay equity consulting. There are four main steps in the process:

  1. It starts with a pay equity audit, to determine the extent to which an equity gap exists, and whether it is statistically significant.
  2. Once that baseline data is determined, focusing on overall job architecture and skills-based criteria rather than market-based criteria or job titles, will identify the root causes of the gap and what problematic pay practices may have led to them.
  3. From there, remediation strategies and equity monitoring will help employers close the gap and keep it closed.
  4. Finally, focusing on financial wellbeing can have the knock-on effect of solving challenges like pay compression and close pay gaps.

The pay transparency movement isn’t slowing down. The earlier employers implement more equitable practices, the better positioned they’ll be when full transparency comes to fruition.

Opportunity 3
Manage Workforce Skills to Stay Ahead of New Technology

Many companies that aren’t typically concerned with technology are starting to notice the disruption of AI and other new technologies. “We have data around compensation for technology professionals, which only tech companies used to be interested in,” says Aon’s Beebe. “Now every company is a tech company. They all need to hire people with that skill set, and there’s a limited and highly competitive talent pool to choose from.”

Using a workforce skills framework allows organizations to develop a strategy to identify skills gaps and acquire the necessary digital skills that may be missing now and in the future. Additionally, employers are increasingly interested in assessing and hiring for transferable competencies, behaviors and abilities, which enable the workforce to operate in a more agile and resilient way.

AI and other emerging technologies have the potential to change the game on things like headcount, which can cause uncertainty and fear. It’s important for companies to partner with advisors to educate themselves from a talent, health and skills perspective. This will help create a roadmap for companies to explore what new technologies can do.

Workforce challenges are unique, in part because everyone — from the C-suite to the entry level line worker — is a part of the workforce. What companies did for their employees during and coming out of the pandemic was remarkable. But now, companies face an inflection point. Leaders are trying to find ways to get back in the driver’s seat, without alienating the wellbeing and needs of their workers. Achieving this takes considerable planning and well-thought-out communication.

How do companies balance the needs of their business with the needs of their people? Those who succeed will be those who find that balance, by listening to what their employees need and moving forward through compromise. Only then will companies effectively attract, retain and sustain their talent in today’s ever-evolving, complex world.

Workforce challenges aren’t going to go away. They will, like the workforce itself, change over time. But leaders who embrace those challenges and tackle them with compassion, resolve and confidence in their practices will be better informed and better advised. And they will be ready to meet the next set of challenges by making better decisions.

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No matter who you are and where you are on your life’s journey, you want a company that’s going to meet you where you are and support you. And companies that are concerned with hiring the very best talent are going to do that.

Farheen Dam
Head of Health, North America

Aon's Capabilities:

  • Health and Benefits

    As healthcare costs rise globally, employers face pressure to provide best-in-class benefits to attract and retain top talent.

    Employers are looking to optimize spend on what truly matters to their employees and build sustainable strategies that deliver personalized benefits.

    Aon’s consultative approach combines strategic insights with innovative solutions, allowing employers to navigate challenges through:

    • Data and analytics, including tools like Aon’s Health Risk Navigator
    • Consulting and broking, which includes voluntary benefits and pharmacy benefits consulting
    • Engagement and technology, including online benefits platforms and enrollment tools
  • Workplace Wellbeing

    With concerns around employee resilience growing and healthcare costs on the rise, employers are turning to wellbeing to help sustain their workforce. All five pillars of wellbeing – physical, emotional, career, social and financial – impact employee resilience, which in turn affects productivity, performance and cost.

    Aon uses a three-pronged approach to wellbeing:

    • Data and analytics, like benchmarking and performance analytics
    • Strategy, whether it is organization-wide, team strategy or individual strategies to implement programs
    • Interventions to maximize impact and financial efficiencies

    Having a trusted advisor that uses data to guide the creation and integration of wellbeing programs into overall business strategies is key.

  • Human Capital Analytics

    Improving workforce performance is central to ensuring strong business performance. By harnessing and understanding workforce data, organizations can make more informed decisions about where to invest. Aon’s human capital analytics provides companies with the insights they need to protect and grow their business by identifying areas of risk and opportunities for transformation. Importantly, it allows organizations to act quickly — whether that is data analysis to make the right decisions or identifying the practical steps to optimize workforce actions.

  • Talent and Rewards

    Defining and implementing a strong people strategy allows companies to hire and retain the workforce they need to navigate uncertainty and realize business goals.

    Aon's talent and rewards practice helps clients evaluate and optimize their people strategy by balancing three core perspectives:

    • Understanding and managing people risk
    • Optimizing people spend and investment
    • Empowering workforce agility and resilience

    With access to a wealth of data and insights from thousands of clients in multiple industries, Aon's team of experts provides tailored advice and solutions across talent consulting, diversity equity inclusion and belonging, mergers and acquisitions, total rewards, workforce skills, workplace wellbeing and employee value proposition.

Making Better Decisions

The road ahead will be filled with both challenges and opportunities, as organizations face a multitude of complexities in the areas of trade, technology, weather and workforce. These timely megatrends require new workforce strategies and a holistic approach to risk management.

By proactively harnessing the power of data, embracing new technologies and remaining ahead of growing risks — from the global supply chain and changing climate, to the current cyber landscape and retention of critical talent — organizations can navigate uncertainty, make better decisions, and transform challenges into opportunities. With the right tools and capabilities in place, business leaders can be confident in their decisions and ultimately open new doors in an increasingly interconnected world.

Aon’s Thought Leaders
  • Farheen_Dam_800x800
    Farheen Dam
    Head of Health, North America
  • Lisa_Patel_800x800
    Lisa Patel
    EMEA Head of Talent and UK Head of Health, Aon
  • Beebe_Byron_800x800
    Byron Beebe
    Global Chief Commercial Officer, Human Capital Capabilities

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.

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