Mercer Marsh Benefits

AI: A new frontier for benefits management

A growing number of organizations globally are using AI specifically for HR and benefits, looking for deeper insight on their employes to create more personalized benefit schemes and more effective communications, according to our recent survey.

A growing number of organizations globally are using AI specifically for HR and benefits.

It’s clear that AI is having a huge impact on the HR function. A growing number of organizations globally are using AI specifically for HR and benefits, looking for deeper insight on their employee population, to create more personalized benefit schemes and more effective communications, according to our recent pulse survey.

400+ HR professionals – in mostly regional and global roles from across 11 markets – took part in our survey to share the most significant trends impacting employee benefits and technology, in a follow-up to our 2023 employee benefits and technology report.

Our survey results show the continued importance of a digital approach to HR and benefits, with over half of HR budgets going towards technology. But the way in which organizations use technology is changing, with a noted rise in the use of AI – a direct correlation to the boom we’re seeing across all industries.

It’s clear that AI is having a huge impact on the HR function. From automating routine tasks to delivering data-rich insights for more objective decision-making, AI continues to enhance how companies attract, develop and retain talent, supporting a more consistent and cost-effective HR operating model – which 38% of CEOs and CFOs said was a top priority in 2023.

Although 66% of respondents to our Real Time Insights survey ‘feel their company is only somewhat or not prepared to succeed in the human-machine era’, HR leaders are recognizing the need to bridge the knowledge gap and prepare for change. When asked if they planned to use AI in relation to HR, specifically benefits, 85% of employers said they are either currently using AI or plan to do so within the next 12 months, with 52% saying that investment in AI was becoming a higher priority.

The opportunities our respondents see for using AI in HR and benefits include more targeted communications, personalized recommendations to improve benefit navigation and a reduction in the often-overwhelming administrative burden. However, the standout opportunity employers called out was using advanced and predictive analytics to make more informed decisions for employees.

Employers are looking to use AI to capture, manage and analyze data-driven insights about their employee base. By better understanding their people through hard data and measurable engagements, they can tailor and personalize employee benefits, communications and experience.

Benefits professionals at top employers waste considerable time combing through stacks of data to understand employee needs and personalize their offering to increase adoption– with it taking over a week to answer ‘How much have you spent on benefits this year?’ for 67% of employers, and over a week to answer ‘What’s our highest costing benefit?’ for 72%.

In the light of the current economic climate and pressure on budgets, this is a huge opportunity for organizations to get a better handle on benefits spend. Which is even more groundbreaking when you take into consideration that 55% of respondents continue to spend over 15% of payroll on benefits.

It makes sense that AI can lessen this burden by analyzing data in a fraction of the time to support more informed decision-making. When asked what results they had already gained from acting on employee insights from data analytics the majority of employers said they saw improved employee performance and engagement; showing a clear bottom-line retention and profitability impact.

While AI has immense potential to redefine the HR and benefits operating model, it does not come without risk. Our People Risk research suggests a potential blind spot around the level of risk that AI poses. In a list of 25 people-related risks facing businesses AI was ranked just 18th, despite 50% of senior leaders predicting this technology would fundamentally change their business models. As we look at the impact of AI on benefits management and Darwin in particular, we are taking a considered approach to innovation for our clients to ensure the balance of risk and reward is always tipped in the right direction.

Together, we can shape the future of Benefits Management, leveraging AI to drive innovation, efficiency and better outcomes for all. We can revolutionize how we manage benefits, enhance employee and client experiences, and create a brighter future.

Article

AI: A new frontier for benefits management

A growing number of organizations globally are using AI specifically for HR and benefits.

About the authors

Helen Sharpless-Willis

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AI: A new frontier for benefits management

A growing number of organizations globally are using AI specifically for HR and benefits.

Speak with a Mercer Marsh Benefits consultant

Employee benefits and technology trends report

About the authors

Helen Sharpless-Willis

Related insights

Driving efficiency and engagement: The power of consistency and consolidation

HR technology spend driven by centralization, AI, analytics

Tackling the cardiovascular and metabolic health crisis

Top health trends for 2025