Talent location is a key driver for company growth, according to Right people, wrong place?, an EY report in collaboration with LinkedIn.
The report analysed 659 organisations of various sizes across 11 sectors, and concluded that businesses can make major performance and productivity improvements by taking a more strategic approach to where they place their people, termed as 'talent to market alignment'.
The report revealed that those with the highest talent to market alignment see the highest profits and productivity. Those that poorly match their workforce to global sub-sector growth markets are potentially losing out on hundreds of millions of dollars, it stated.
Organisations that increase their talent to market alignment over time were found to be likely to grow faster. For example, organisations in the top quartile for improving talent to market alignment between 2013 and 2016 achieved profit growth that was on average 7.8 percentage points higher than those in the lowest quartile.
In the pharmaceutical sector for example, a typical organisation increasing its talent to market alignment by 10% could increase its yearly profit by $77 million based on a sample of 71 pharmaceutical sector firms. Moving from a median talent to market alignment to best-in-class has the potential to be worth more than $690 million in increased annual profits.
The proportion of directors and above in the same sector were found to be disproportionately positioned in mature markets such as the US, Spain, France, Switzerland and the UK. Locating these individuals in countries where greater revenue and faster growth opportunities may exist is highly advantageous in some circumstances, the report said.
Dennis Layton, EY global deputy leader, people advisory services (PAS), said that quantifying this opportunity provides important insight. "It helps cement the notion that organisations that better connect their global workforce strategy to their global market opportunity, in terms of an end-to-end talent management and mobility approach, can drive huge benefits in terms of both productivity and profitability," he said.
"This talent to market alignment helps organisations that are currently running behind the pack see a clear opportunity to capture growth by focusing their efforts on more strategic workforce and talent planning.
"Those organisations that focus on growth-shoring to ensure that the right executive, marketing and sales, product development, research and other talent categories are better matched to global market opportunities will do a better job of capturing a share in those markets.”
