Ineffective leadership poses biggest people risk to organizations today, HR pros say

HR professionals and risk managers view ineffective leadership as the biggest people risk facing U.S. organizations in 2024, according to a May 23 report from Mercer and Marsh, Marsh McLennan companies.

HR and risk leaders also pointed to major people risks linked to improper rewards decision making, increasing health and benefit costs, a lack of cybersecurity knowledge and mismanagement of AI.

“The breadth and depth of intersecting risks organizations face today is staggering,” Susan Potter, Mercer’s region president for the U.S. and Canada, said in a statement. “People are an organization’s most important asset, but they can also expose organizations to risk without the right culture, policies and training.”

In a survey of more than 1,000 HR and risk professionals in the U.S., leaders noted several concerns related to ineffective leadership at their workplace. About a third said they’re concerned about significant dependence on key people and inadequate succession planning, and only around 30% said they have an effective workforce strategy to acquire, grow and deploy talent based on skills.

In addition, about 35% of respondents said they’re concerned that ineffective leadership will lead to a negative culture or work environment, tense team dynamics and mistrust.

“Leaders should encourage risk and HR professionals to work together to build a risk management culture,” Michelle Sartain, Marsh’s president for the U.S. and Canada, said in a statement. “Through collaboration they can better analyze and address the people risks inherent in the business environment.”

Ineffective leadership may be tied to other top people risks as well. For example, managers may influence employees’ mental health more than doctors or therapists — and about the same as a spouse or partner, according to a UKG Workplace Institute poll. Workers said the stress negatively affects their home life, well-being and relationships, and most said they’d take a pay cut for a job that better supports their mental health.

Unfortunately, about a quarter of employees say they’re working for the worst manager they’ve ever had, according to a Perceptyx report. Employees pointed to certain behaviors of a “bad boss,” such as being unresponsive, unsupportive and disrespectful, which were linked to a loss of engagement and productivity.

As part of an effective workforce strategy, a skills-based focus — as implied by the Mercer and Marsh study — can help with talent acquisition, growth and retention. However, employers aren’t adopting skills-based hiring quickly enough to meet demand, according to a report from General Assembly. To bridge the gap, companies can deploy in-house training, apprenticeships and other nontraditional approaches to train their employees.