Building a talent advantage in 2025

As we start the new year, organizations are facing a challenging environment with changing dynamics among different macro forces. Years of serial economic, geopolitical and labour evolution continue to disrupt what businesses need to excel and strive in the future.

So what differentiates successful organizations? When we investigate the different data and intelligence, they all point to one answer: talent.

Still, the concept is complex. For decades, leaders have cited people as their organization’s greatest asset. While that remains true, the focus now shouldn’t be on what talent represents, but rather, how it enables success.

Our 2024 Work Reimagined Survey of global employees and employers shows that the 32% of responding organizations that claim a “talent advantage” are:

• 7.8 times more likely to say their company has successfully navigated external pressures
• 6.5 times more likely to say productivity has improved significantly in the past two years
• 5.8 times more likely to say they are overperforming significantly in the current economic conditions

How do you know an organization has a talent advantage?

So what do we mean when we talk about talent advantage? In our research, we found that converting talent from a unique asset into a competitive advantage comes down to an organization’s ability to excel across five key dimensions:

• Talent health and flow: Talent flow is foundational, and turnover is no longer a measure of organizational health. Talent health is defined by the level of net promoters on the likelihood to recommend their employers to friends and families.
• Learning, skills and career pathways: The how and the why of career development are aligned, leading to greater talent mobility and valuable time spent on development.
• Total rewards priorities: Programs reflect employee priorities and meet talent segments’ diverse needs.
• Culture and workplaces: Untethered teams are the reality, highlighting need for humanization in the work experience.
• Work technology and generative AI: Agility in adopting gen AI for better employee experiences.

How do organizations with a talent advantage show up differently in the market?

Do we have a healthy talent pipeline? This question keeps executives up at night, as they worry talent gaps could hold back strategic initiatives and overall business success. Traditionally, leadership looks at metrics like tenure, likelihood of attrition and turnover rate to determine just how healthy the talent pipeline is. But are these metrics still telling the right story?

Changing business dynamics and an evolving labour market mean talent fluidity is now the norm, defining the talent landscape across industries and sectors. Employees are moving fluidly between geographies, sectors and employers to gain new experiences and develop their skills. Adapting to this new reality requires organizations to assess talent pipeline health in different ways, such as assessing an employee’s likeliness to recommend the employer to a friend or relative. 

Talent health and flow

In the EY 2024 Work Reimagined Survey, we identified 12 variables and then computed a talent health score based on the total score of each component, normalized from 0 to 100. The higher the score means a better talent health status.

Our survey revealed global talent health scores ranged from 29 to 75 out of 100, with an average score of 55.

Canada is below average at 48. While this doesn’t directly indicate that organizations in Canada are currently experiencing a talent shortage, it does point to the fact that employers may be underdelivering on employee expectations and failing to effectively respond to changes in the Canadian talent marketplace. Coupled with an 8% year-over-year increase in employees’ likelihood to quit, this is a critical time for Canadian organizations to take steps to improve talent pipeline health scores.

So how might they address this?

In the study, we ran multiple regression analyses for the 12 variables, which revealed three overarching groups: development, rewards and culture. These key criteria impact overall talent health and determine whether an organization has a talent advantage.

1. Development

Multiple EY studies have shown misalignment between employers and employees around the need for better development. Continuous learning, with upskilling and reskilling, is a common theme among both groups. However, when we look at whether the organization has provided effective continuous learning, it’s clear that employees tend to believe a different approach is needed.

By comparing employer and employee responses, we see a moderate employee deficit gap in Canada of 6% on the provision of learning, coupled with a 17% gap on sufficient time spent on learning. This indicates that while employers are generally providing the amount of learning employees expect, this effort has not been truly realized or capitalized because employees don’t feel they actually have the time to learn.

Looking beyond traditional types of development, the issue is even bigger, with a gap of 22% between employers’ and employees’ perceptions on internal mobility opportunities and a 29% gap on international exposure and opportunities. This reveals a considerable blind spot. Organizations will need to invest in elevating development to improve this dimension of the talent advantage.

2. Rewards

Employees want better rewards. But it’s not always easy — or feasible — to deliver on that demand. Our research shows that organizations with a talent advantage approach rewards a little differently to make progress and close gaps around employee expectations. Overall, these employers ask two key questions:

“Does giving more mean better?” Not necessarily. In the EY 2024 Work Reimagined Survey, we found employees in Canada aren’t overly concerned about the fairness and competitiveness of their compensation. They’re least satisfied with the fact their employers’ rewards programs reflect leading compensation features in the market, and whether the rewards align to individual and team performance. Providing rewards in the right ways is often more impactful than providing more rewards. It’s all about quality over quantity.

“Should rewards be a monolith?” The increasingly complex makeup of the workforce is generating more diverse rewards priorities among employees. We see that in Canada, where we have a 10% deficit in how employees perceive their rewards programs offer personal choices, and a 12% gap in how the programs meet their personal needs. When a rewards program is flexible enough for employees to personalize the mix, the program becomes more effective and impactful overall.

3. Culture

Culture has undeniable impacts on a company’s performance and talent health. In a strong culture, talent is united by values, beliefs and attitudes that support the business’s and the workforce’s success. But do employees recognize and appreciate the importance of culture?

Not always. We can see from the EY Work Reimagined Survey there is a 26% perception gap between Canadian employers and employees on whether the culture has improved in the past year. That concern has persisted from the previous survey.

What’s more, we see a consistent deficit in how employees perceive organizational culture. While there is still minor gap on operational aspects like balanced workload and feeling supported in their work, the key concerns are around the deeper experience aspects. We found there was a 26% gap between employees and employers on the perception of the organization’s ability to innovate, a 24% disparity on whether leaders care about employees as people, and an 18% difference between employers’ and employees’ perceptions around autonomy and control over work.

This shows a clear disparity in how organizational culture has been established in Canada: employers are distinguishing themselves with an elevated focus on cultural elements around the broader and deeper intrinsic experience. By truly putting human@centre when developing the organization’s culture, it resonates with the employees in a much more effective manner that can help drive the overall talent agenda. 

Unlocking the upsides of work technology and gen AI

Synching with the evolving world around us also counts. That’s especially true in terms of tech. Employees and employers continue to have perception gaps in terms of how gen AI is — and isn’t — improving life at work. That said, there’s a clear trend in the uptake of the use of gen AI among both groups. In Canada, more than 75% of employers and employees alike say companies must undergo changes now to enable tech and tools in the future.

This will continue to play into the talent advantage — and talent pipeline health overall — going forward. Employers that are more enthusiastically and strategically embracing gen AI for people are not only achieving greater competitiveness in work productivity, but also creating a differentiating experience for their people on their development, rewards and culture, which drive better talent health and lead to a talent advantage.