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April 9 --According to new research from PwC and LinkedIn, poor “talent adaptability”--the ability for people to retrain for new skills or switch industries--is costing the global economy billions of dollars in lost productivity, and leads to businesses wasting large sums on avoidable recruitment costs.
“The better employers and employees are at adapting to changing circumstances and aligning their skills with the available opportunities, the more productive organizations will become,” Michael Rendell, partner and global head of PwC's HR Services practice, said in a release.
The study, “Adapt to Survive,” analyzed interactions from LinkedIn's network of professionals, and information on 2,600 employers from PwC's Saratoga database, to understand which countries are better at aligning talent with opportunity.
According to PwC, a strong correlation exists between the adaptability of the talent in a particular country and the performance of its companies. If markets were better at matching talent with the right opportunities, this could unlock as much as $130 billion of productivity in the 11 markets studied.
In addition, this lack of access to the right talent is driving up the cost of recruitment for employers today, PwC said. The longer time taken to find the right candidates and the increased likelihood for mismatched talent to leave sooner is costing companies in those countries $19.8 billion in avoidable recruitment costs, the study found.
The research covered a wide spectrum of global economies by development phase, size and industry types.
Each country's job market was assigned a Talent Adaptability Score based on five key behavioral factors: 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.
According to PwC, the Talent Adaptability Score is an indicator of a market's ability to respond to future shifts in workforce demand.
For example, emerging markets India and China have lower scores due to the existence of fewer mature sectors and their geographic size, which limits talent mobility. Moreover, well-performing economies such as Germany ranked lower than expected, in part because it is a specialized economy that works well while its sectors are buoyant and stable, as they are today, according to PwC.
“The more willing employees are to change roles and sectors and the more willing employers are to train them in the skills they need to do so, the narrower the skills gap will become,” Joseph Roualdes, senior manager of corporate communications for LinkedIn Talent Solutions, told Bloomberg BNA via e-mail April 11.
The study recommended that employers focus on talent, as it is the number one factor in competitive success for business, and businesses need to move faster to adapt to new market forces.
According to Roualdes, it is key that employers use talent analytics to identify their workforce's existing skills, and the ones the company will need to garner a few years down the road to be successful. Then they should hire candidates with highly transferable skills (like communication, problem solving and collaboration skills), establish programs that teach employees new skills and recalibrate their pay and performance management process to reward employees who increase their adaptability.
Additionally, employers should leverage connections to social media, as those networks have made it possible to identify all the relevant candidates--both active and passive--many of whom may not be doing the jobs they want.
According to Roualdes, when employers hire the wrong person for the wrong job, they are more likely to resign within their first 12 months on the job, which ultimately increases recruitment costs and decreases productivity because recruiters have to hire a replacement and get them up-to-speed.
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The study results are available at http://www.pwc.com/talentadaptability.
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