New research by professional services network PwC, commissioned by LinkedIn, the world’s largest online professional network, today reveals that poor talent adaptability – the inability for people to retrain for new skills or switch industries – is costing the UK millions of pounds in lost productivity and leads to businesses wasting huge sums on avoidable recruitment costs. For the 11 markets analysed in the research, the total could be as much as £96 billion (US$150 billion).
The study, Adapt to Survive, for the first time analyses millions of interactions from LinkedIn’s network of 277 million professionals, of which 15 million are in the UK, and information on 2,600 employers from PwC’s Saratoga database, one of the world’s largest and most robust resources of people and performance metrics, to understand which countries are better at aligning talent with opportunity.
It examines five key talent behaviours within 11 markets and identifies two significant ‘costs’ which are based on the UK being as good at matching talent with the right opportunities as the Netherlands – the most adaptable market in the study.
When these costs are combined this could mean the UK is missing out on £1.2 billion:
- A lost opportunity for the UK to generate £930 million of additional productivity – the research found a strong correlation between the adaptability of the talent in a particular country and the performance of its companies. If the UK was better at matching talent with the right opportunities, this could unlock as much as £930 million (US$1.44 billion) of productivity. In the 11 markets studied this could be as much as £83.5 (US$130 billion, see table).
- Avoidable recruitment costs the UK £270 million – this lack of access to the right talent is driving up the cost of recruitment for employers today. The longer time taken to find the right candidates, and the increased likelihood for mismatched talent to leave sooner are costing companies in the UK £270 million (US$430 million). Across all 11 countries in the study this rises to £12.7bn (US$19.8bn) in avoidable recruitment costs.
The UK named 2nd most adaptable country by its Talent Adaptability Score
The research spans a wide spectrum of economies by development phase, size and industry types. Each market is assigned a Talent Adaptability Score based on five key behavioural factors, which include: the average number of times professionals in that market switch industries, the average number of different positions held in a professional’s career, the average number of internal promotions in that market, the average number of employers a professional has had in each market and the average number of open vacancies divided by the market’s population.
The Talent Adaptability Score is a powerful indicator of a market’s ability to respond to future shifts in demand, not a snapshot of current economic performance. Scores varied significantly by country (see table), with the UK ranking 2nd due in large part to the international nature of the UK market and the presence of a large number of global businesses combined with above average movement of talent between employment positions. The Netherlands’ multilingual workforce and international business base saw it placed first in the ranking. Emerging markets India and China have lower scores due to the existence of fewer mature sectors and their geographic size which limits talent mobility. Well-performing economies such as Germany rank lower than expected, in part because it is a specialised economy which works well whilst its sectors are buoyant and stable, as they are today. But it also makes the country less able to respond to structural changes.
Commenting on the findings, Michael Rendell, Partner, Global Head of HR Services practice at PwC, said:
Businesses’ growth strategies are changing and many UK CEOs recognise that they don’t currently have the right people with the right skills in the right places to achieve their aspirations. Instead of a skills gap hampering growth plans, organisations need to be better at matching talent to opportunities. This includes using analytics to identify skills that are central to the business strategy now and in the future, improving internal mobility and rewarding people who display new and adaptable skills. UK business is losing out on £930m of additional productivity as employers and employees are not adapting quickly enough to changing growth priorities and circumstances. Our research shows that a better talent fit between employer and employee could save UK business £270m in recruitment costs, increase productivity and begin to close the skills gap.
David Cohen, who leads LinkedIn’s Talent Solutions business in northern Europe, added:
At LinkedIn, we’re focused on connecting our members to make them more productive and successful. Our longer term vision is to create economic opportunity for every member of the global workforce by digitally mapping out the global economy. These insights into the link between workforce adaptability and economic growth reinforce that this is a critical issue for professionals, employers and governments.
To read the full report please go to: www.pwc.com/talentadaptability
Recommendations for professionals, employers, educators and governments:
The rise of social media and an increasingly connected global workforce means it’s never been easier for people to identify new opportunities, plan to develop the skills, and create a network that will allow them to transition into new roles. This could be as simple as staying up-to-speed with companies that might be hiring in your area, or identifying emerging sectors around the world that could present an opportunity for a dramatic career change.
Talent is the number one factor in competitive success for business, and businesses need to move faster to adapt to new market forces. An existing mismatch of talent in the wrong roles creates a window of opportunity for employers able to identify and attract the right talent to their organisation. Social media has made it possible to identify all the relevant candidates – both active and passive – many of whom may not be doing the jobs they want. Employers should use talent analytics to identify the hard and soft skills that are central to the business strategy today and in the future, allowing them to hire strategically.
Education never stops, and educators should be looking at what skills are in growing demand and which jobs are emerging in the global workforce. They should then adapt curricula so students are equipped with relevant skills when they leave formal education.
Governments should play an active role in shaping a national mind-set that values, nurtures and rewards adaptability. They need to use the levers at their disposal such as employment and immigration laws, as well as proactively shaping education and training systems.