Plan sponsors face a convergence of workforce risks that go beyond plan costs, says Marsh
Experts at Marsh (formerly Mercer) are ringing the alarm bell for Canadian plan sponsors, as they begin to stare down a convergence of workforce risks that go well beyond the usual concerns about plan costs and market positioning.
According to Marsh’s latest people risk survey, the workplace landscape has shifted from pandemic-era mental health worries and inflation-driven cost anxiety into something more complex: AI disruption, regulatory pressure, employee financial insecurity and a benefits system that many employees find frustrating to use.
But the top risk in Canada is uncompetitive talent strategies, and it threads through every other risk on the list, including unsafe working conditions and technology skills shortages.
Suresh Moorthy, Marsh's digital health leader, believes the core problem lies with traditional benefits design as the industry created programs around a cost-sharing model that no longer fits how employees consume information and services.
"We typically thought about that 80/20 rule when we built these benefit programs. But now with the age of personalization, Instagram, DM messages and everything, that's out the door,” he said at Wednesday’s forum. “So how is it that we can now build something that can really help with that disengagement that you're seeing? When we look at the different types of strategies that are happening around that rise of personalization, we have to now start thinking about how we start meeting employees based on their individual situation.”
According to Marsh’s findings, top concerns related to uncompetitive attraction, retention and engagement strategies include 33 per cent who cite limited work-related opportunities to foster relationships with peers and the community, 32 per cent of employees not understanding the full value of employer-sponsored benefits plans and 28 per cent cited benefits aren’t tailored to unique workforce needs.
Meanwhile, low-wage earners, who Marsh says are critical to product and service delivery, are struggling hardest as 35 per cent reported that their needs aren't being met, and they want more access to healthcare and career opportunities, not just a standard package.
Moorthy also flagged a gap that plan sponsors tend to gloss over, noting employee and family assistance programs carry utilization rates of three to five per cent, yet one in five Canadians experience a mental health challenge.
On the technology front, Moorthy noted that AI has not delivered the rapid transformation many expected. HR teams want to push it forward, but governance and implementation challenges have slowed adoption. Meanwhile, "almost 40 per cent of organizations all feel like they don't have the budget to invest in that technology for employees which is needed," he noted.
Canada's risk profile also notably diverges from global trends in a few striking ways. Globally, organizations worry about cyber literacy, barriers to AI adoption and mishandling of intellectual property but those don't make up Canada's top 10. What does appear is a changing regulatory environment — ranked second in Canada but only eighth globally.
Jennifer Schmidt, partner and innovation leader at Marsh, highlighted the growing complexity and regulatory pressure facing benefit plan sponsors. Misalignment between HR practices and regulatory requirements - spanning tax, labor, human rights, and employment law - can expose organizations to fines, penalties, and litigation risk.
Moreover, globally, organizations are grappling with rising expenses and cost concerns certainly aren't unique to Canada. But HR teams recognize that cost management alone isn't enough as benefit programs require both strategic and tactical oversight.
In Canada particularly, improved digital access to healthcare is driving higher utilization. Plan sponsors need to evaluate whether their spending aligns with employee needs and whether high-use programs are delivering organizational value.
“Our message today really is that HR and risk professionals have to work together to implement those workforce risk mitigators and provide a robust strategy around risk management,” said Schmidt, noting that the survey deliberately brings together HR professionals and risk professionals.
"We're bringing together two sides of a business that sometimes don't talk to each other," she said. "And we really want to see what they have in common and what they really are seeing very differently."
Notably, risk professionals for instance have zeroed in on rewards decision-making as a top concern — a domain traditionally owned by HR. About a third are worried about fiduciary controls, from “who's making benefits decisions? Are the right stakeholders in the room? Is there consistency in those decisions? Do your teams understand the short- and long-term impacts to your employees?” said Schmidt.
Furthermore, changes to a long-term disability program can take 18 to 24 months to show financial impact, accommodating a few assertive individuals can breed resentment among employees who are quieter about their needs and shifting costs to employees might help the budget but hurt the workforce, she noted.
"If you're going from an 80 per cent plan to a 70 or 100 to a 90 for your health expenses, it's going to help your budget, but is it going to help your employees?" she said. " What are the trade offs? Who's thinking about that? I'm not saying it's the wrong thing to do, but just really think about the impact overall."
To that end, Schmidt believes program delivery, everything from the value proposition, employee communication, ease of access, has moved to the forefront. Access, prevention, unmet needs, DEI, innovation, and digital health have joined cost and market position as top considerations. Underpinning it all is a more visible focus on fiduciary responsibilities, she noted.
“We need to start really thinking about how to invest in these processes. So where do you begin? It's time to regroup. Think about your reward strategy. Think about your risk exposure. Think about who your people are, what they do, where they work, what issues they're facing. Evaluate your spend,” emphasized Schmidt.
“Is your program delivering value? Are the offerings that are available today incorporated in your program? Or are you still working with a decades old model? What metrics do you need to show that you are improving risks? What metrics can we help you with to build business cases for a rebuild of a reward strategy?” she added.
