Business Forum • 29 January, 2025 at 1:33 PM
Identifying how companies can turn their workforce into one of their strengths was the main area of analysis in the fifth edition of the global EY Work Reimagined study, which set out to uncover optimal models of collaboration between employees and employers.
Companies that say their employees are an asset to their business also report significantly better economic results in the EY study: 60% of them reported a significant improvement in productivity, compared to only 9% of organizations that do not believe they have an advantage in the workforce they have hired. Similarly, 58% of organizations "advantaged" by their workforce report that, despite changing market conditions, their business results are above expectations, compared to only 10% of organizations that do not believe they have a talent differentiator.
So how can this competitive advantage of a differentiating workforce be achieved? The EY study identified and analysed five dimensions that contribute to achieving this organizational advantage: the quality of the movement of the workforce, reward policy, the use of technology and artificial intelligence, training and development strategy and, last but not least, organizational culture.
By analyzing these in detail, we can understand how employers, through the HR function and related policies, will be able to achieve a competitive advantage through the workforce they employ.
1. Quality of movement of labor
The current talent landscape is marked by employees moving in short cycles from one employer to another in order to gain new experiences and thus upgrade their skills.
Noting this, the study's recommendation is that employers focus less on the reported length of an employee's retention in the company and more on the degree of engagement during and after the work experience.
Specifically, even if a consistent historical measure of organizational health has been the retention of employees for as long as possible, this measure does not actually reflect the true state of engagement within the organization and certainly does not create any intersection with the parallel movement of talent outside the organization.
Therefore, the proposed additional approach takes into account the ex-employee's voluntary assumption of the role of messenger in relation to talent outside the organization: how likely is it that he/she is likely to recommend his/her employer to friends and family, how much pride in organizational membership does he/she report, and in general, how much activism in promoting the company, regardless of the length of time the employee has spent in the organization. This is a similar indicator to the "net promoter score", but also incorporating external perspectives and that of employees who have left the organization.
This score, calculated in the current edition of the survey, identifies the overall average level for all sectors surveyed at 55%, with the government sector at the lowest - 43%, and the technology sector at the highest - 68%. For comparison, financial services reports 61%, the energy sector 56%, retail 50%, and FMGC 49%.
These levels show how much more likely current and former employees are to actively engage to get others to join the organization. It stands to reason that a higher referral rate will not only shorten the company's recruitment investment by producing a healthy influx of candidates, but also lead to improved productivity after new hires.
2. Total Reward Policy
Analyzing the reasons for their intention to change their employer, getting higher compensation is the top reason, reported by 39% of respondents.
Going into the details of choice, the first reward option mentioned by the employees surveyed is receiving higher bonuses and performance-based incentives (37%), while in second place, reported by 33% of respondents, are health, wellbeing and leisure benefits.
In addition to being aware of these values, the realization that employees are not a monolith and therefore cannot be treated as a unit, especially in the multi-generational context we are witnessing, is certainly more important.
Thus, even if there are similarities in certain preferences, employees still approach the issue of rewarding their efforts and engagement differently. A breakdown of the data by generation shows that younger, Generation Z employees want more vacation days (37%), health and wellbeing benefits (33%) and flexible working hours (30%).
Among Gen Xers, however, now in the majority in the workforce, the same volume of respondents (37%) instead want financial compensation in the form of bonuses and performance-based incentives.
3. Technology and artificial intelligence
The speed of adoption of artificial intelligence has brought to the fore important questions about investment in technology, alongside the development of skills to use it and the resulting organizational culture, including risk, to the fore.
In the previous edition of the survey, only 49% of employees said they are using or plan to use artificial intelligence in the next 12 months, whereas in the current edition 75% of employees said they are already using it.
Alongside understanding these metrics is the welcome qualitative perspective on its impact: employees have a net positive rating of 37% on the perceived impact of the technology on productivity and a similar (36%) on its ability to help them focus on higher value-added activities. Nota bene: employer ratings for these categories are almost twice as high!
At the same time, in relation to the first dimension analysed by the study - workforce movement, organizations that have adopted artificial intelligence at the relevant scale have higher organizational health scores: 67% compared to 50%, which shows that their employees are more likely to promote their organization. It is therefore notable the dual advantage given by the introduction of AI-type solutions in the business: operational results doubled by organizational health.
4. Training and development strategy
In a future that is increasingly reliant on new workplace technologies and artificial intelligence, training and the development of related skills are essential to creating any competitive advantage.
Of those employees who use artificial intelligence, 58% say their organization's training and development programs are above average. This value has relevance at the very obvious level: users of the most rapidly evolving technologies are the ones who need to continually upgrade to keep up with change, and will therefore be both the biggest supporters or critics of the learning agenda. Their complacency therefore bodes well for organizational progress at the moment.
On the other hand, the period of effective use of existing competences continues to shorten, and this requires organizations to rethink how they either keep old competences alive or develop complementary ones.
For both destinations, the recommendation emerging from the study is to go outward: either by creating a talent base in other geographies, using the opportunity of a global presence where appropriate, or by tapping into providers who specialize in growing niche competencies in the best ways.
5. Healthy organizational culture for working 'anywhere'
After the last few years of experimentation and innovation in flexible working, the current discussion about work from anywhere and the resulting organizational culture is no longer about "how" (what this work organization should look like), but about "why" - what is the desired outcome of it.
Thus, it is now no longer enough to allow remote or hybrid working, but to create a cohesive and positive culture for a workforce with increasingly diverse expectations, 'organized' in ever shorter workflows.
The good news from the survey is that both employees and employers say that this has improved over the past year by around 10% on all the criteria surveyed, compared to the previous year: 80% of employers and 57% of employees say this. In addition, 77% of employers believe that employees feel confident and inspired by the leaders of the companies where they work, compared with 57% of employees who agree.
It is therefore also natural that 83% of the companies surveyed in the study and 67% of employees believe that their productivity has improved in the past year.
On the other hand, a perception gap between employees and employers of around 20% is evident, a gap that should become central to the attention of HR analysts.
Understanding the five optimal measures for attracting and retaining talent within one's own organization is the first step for the HR department on the long road to implementation.
It is the speed of implementation, however, that will prove crucial: while at the time of the survey, just under 30% of organizations believe they have already achieved this decisive workforce advantage over direct competitors, the remaining organizations are well on their way to that destination.