Will the future of talent be shaped by the flow of an untethered workforce?

A new measure of talent health accounts for how well an organization does with the coming and going of employees, skillsets and cultural shifts. It links to factors influencing an employee’s likelihood to recommend their employer to friends and family. There is no correlation between a high talent health score and a lower likelihood of employee attrition because health and flow are independent of each other.

Today’s talent landscape is marked by individuals moving fluidly between employers to gain new experiences, different skills and flexible working practices: all employers need to pivot their strategies toward this talent market defined by superfluidity. Talent leads need to focus less on how long an employee stays with them and more on the quality of their contribution while there.

The interplay of talent health and flow is seen in where employees prefer to go and why.

Among employees planning to leave their employer in the next 12 months, equal numbers are seeking opportunities in the same sector (26%) as those looking in a new sector (25%). The opportunity for increased total pay (39%) is the main factor attracting them to another job, followed by better job or career advancement opportunities (35%) and better overall wellbeing programs (34%). 

Organizations looking to channel the talent flow their way then need to focus on responding to employee needs in the key areas of culture, total rewards and skills development. Depending on how well this is done, employees are more or less likely to recommend organizations to friends and family. Viewing this effect on a sector level is instructive, as some sectors are more successful than others.

The average overall talent health score across sectors is 55, with the government and public sector scoring lowest at 43 and technology scoring highest with 68. This score does not indicate whether talent is flowing from these sectors – it definitely is – but a higher score tells us how likely it is that employees will actively engage others to join them, thus creating a healthy inflow of talent and improved productivity while employed.

For example, while the technology sector shows high health, it also evidences a certain magnetism in connecting with employees and attracting new ones. Talent flow may mean employees are leaving organizations more often, but high sector health indicates employees are more likely to gravitate to some sectors more than others. This sector magnetism may indicate a closer connection between employee expectations and employer responsiveness.

After years of experience and innovation in working flexibility, the conversation has moved farther from one about “how” to being firmly rooted in “why.” It’s not enough to enable remote or hybrid working for knowledge workers, but a future Talent Advantage depends on an organization’s ability to create a cohesive, positive culture for a diverse and dispersed workforce.

Of an organization’s health score, 40% is related to culture, with 66% of talent-advantaged organizations saying culture has significantly improved in the last 12 months, compared to just 4% of talent-disadvantaged organizations. Culture is found through the number of respondents who say employees feel trusted and empowered by leaders; who say employees trust their employer and feel supported by them; and who feel leadership cares about employees as people.

Overall, employees and employers agree culture has been improving, but employers remain much more optimistic than employees. For example, 77% of employers believe employees feel trusted and empowered by leaders, compared to just 57% of employees. Similar gaps exist for the other culture questions.

The drastically more optimistic view of employers might be explained by increased comfort with the productivity possible with hybrid and remote work. The largest number of knowledge workers (40%) – professionals who typically use specialized knowledge or expertise – wants to work three or four days remote per week, whereas 48% of employers choose the same. The number of employees preferring full-time remote work for knowledge workers is 28% (vs. 14% of employers with this preference).

As more knowledge workers remain in hybrid and remote working arrangements, there is some loss of the old trappings of physical connection to a particular workplace. For example, just 28% report having assigned seating or a place for personal items, minimizing their physical connection and felt ownership of office space.

But these untethered workers still see the office as a cultural touchpoint. Knowledge workers cite social connection and separating work and home spaces as the top reasons to go to the office, followed by collaborating with colleagues. 

These generational disparities bolster the case for employers to find the most influential rewards enhancements that cut across workforce demographics, putting focus on areas like expanded work flexibility. Recent years have seen mobility functions respond to this flexibility by expanding their scope beyond traditional areas like business travel and relocations. The function is also now supporting new kinds of tax, legal and regulatory risks associated with hybrid and remote working. Employees working in multiple tax jurisdictions — even in the same country, province, state or city — can create complications for organizations, requiring better coordination. The EY 2024 Mobility Reimagined Survey showed distinctly better talent and business outcomes related to mobility functions better integrated with workforce strategy. If employers evolve their mobility offerings in a holistic way, linked to total rewards, there could be opportunities not yet realized.

Though the much higher employer emphasis of training and skills building may be disconnected from employee rewards preferences, an emphasis on skills is not entirely misplaced. Skills building and development are crucial for creating a Talent Advantage in a future that is increasingly reliant on new work technologies and GenAI.

The speed of adoption of GenAI has brought important workforce questions to the fore, related to technology and skills investments, capability, organizational culture and risk. Last year just 49% of employees said they were using or planned to use GenAI in the following 12 months. A year later, we see 75% of employees using GenAI.

But perhaps more important than the increase of GenAI use is the assessment of its impact. Employees have a 37% net positive rating of the technology’s perceived impact on productivity, a 34% net positive view on how work is done in their sector and a 36% net positive view on its ability to help them focus on higher-value work. Employer assessments for those categories are nearly twice as positive.

Segmenting employees by level of GenAI usage shows an even more nuanced picture. Extensive employee users of GenAI are four times more likely to say their organization has above average technology experience compared to limited GenAI users. Extensive GenAI users are also more likely to leave their job in the next 12 months, as they seek new opportunities opened by expanded GenAI knowledge and use. 

But returning to the idea of foundational talent flow, this isn’t necessarily a negative. Organizations that are more enthusiastically embracing GenAI also show higher-than-average talent health scores (67 vs. 60 of moderate users and 50 of limited users), meaning their employees are more likely to help promote the organization to others.

GenAI use is also correlated with perception of an organization’s ability to build skills. Of employees who use GenAI, 58% say their organization’s development and training programs are above average or excellent.  This makes sense when viewed in terms of a shrinking half-life of skills: the users of the fastest evolving technologies are the ones needing to continuously learn and improve to keep up with changes. 

Maintaining a focus on skills-building alongside fast-moving technology advancements and fast-moving talent flow will require new approaches to maintain a future Talent Advantage. Although employers are more comfortable keeping learning and development programs in-house, employees appear more open to tying their upskilling to a total rewards offering that extends beyond the workplace. For organizations, the necessary step may also include sourcing talent from other geographies altogether, adding a different layer of complexity.

As organizations look to create a Talent Advantage, they need to find ways to channel the workforce flow. Here are five things to keep in mind:

1. Talent flow and health

The interplay of foundational flow of talent and organizational talent health is defining the future race for talent. To channel the talent flow their way, organizations should focus on culture, total rewards and learning and development. Even as tenures are shorter and the workforce is more readily jumping to new companies to find what they value most, organizations have an opportunity to create an environment in which employees thrive while there and promote the organization to others. In addition, leaders should develop robust workforce planning, hiring and talent management tools to integrate market data for hiring and retention strategy.

2. Total compensation means more

Pay remains a concern of employees, but employee concerns are more nuanced and comprehensive, meaning employers need a more holistic and personalized view of rewards programs. Catering rewards offerings to the particular needs of employees by their stage of life, personal circumstances, or general preference, will improve the employee value proposition. Ultimately, an individual is grading compensation on the big picture: cash salaries in addition to rewards programs that recognize performance and address personal needs.

3. Work is untethered, but human connection holds organizations together

Offices and desks have moved from second personal spaces to social hubs. Employees may not have assigned seating and now look at the office as a shared space for teaming. More dispersed teams require the purpose of real estate to meet purpose of organization and people. Employers should evaluate their mix of work sites, utilization and space design to rationalize their footprint and maximize culture and location investments. They should also create a thoughtful approach leveraging mobility teams to enable work location flexibility with an exceptional experience, while being mindful of tax, legal and compliance considerations.

4. GenAI and work technology

The accelerated rate of GenAI adoption has shown general positivity around new technology influencing productivity. The employers that have been most willing to adopt GenAI are also seeing generally healthier talent flow. It’s important that organizations meet employees where they are with use of work technologies including and beyond GenAI, while working to personalize technology adoption for each role, recognizing the potential of productivity gains at all levels of the organization. 

5. Skills needs are shifting, requiring new sources and strategies

The half-life of skills is shortening, requiring organizations to rethink ways to fill them. While employers might prefer internal learning and development programs, they should also consider external upskilling opportunities for employees who are more comfortable with third-party accreditation. Employers may also want to seek or create a pipeline to talent pools in other geographies, understanding the particular opportunities and risks that may create. Ultimately, organizations need to find the right constellation of internal and external ways to channel the right skills toward them.