- LinkedIn and EY research suggests talent location is a key driver for productivity
- Countries with highest talent to market alignment see greatest profit and growth
Companies that closely align the location of their talent with market opportunities are more productive and profitable, according to a new report from the world’s largest professional network, LinkedIn, and professional services firm Ernst & Young (EY). Right people, wrong place?, which analysed 659 companies from 11 sectors across the world, has found that there is considerable opportunity for many companies to improve their performance by taking a more strategic approach to where they place their talent.
The research suggests that businesses who place talent in mature markets, rather than locations with faster growth opportunities, are potentially leaving large sums of money on the table. For example, in the pharmaceutical sector, a company increasing their talent-to-market alignment by 10% corresponds to an increase in profit of $77 million, while the same company moving to best in class alignment could bring increased profits of $691 million.
Meanwhile, companies making improvements to their talent-to-market alignment are already reaping the rewards with increased profits. The insurance sector was found to be particularly strong in this aspect, showing the highest improvements between 2013 and 2016 in talent-to-market alignment, and therefore achieving a profit growth that was, on average, 18% higher than those with the lowest improvement.
The report also reveals important insights into how companies who closely match their geographical talent footprint and market opportunities have higher productivity. Across the sample, the businesses in the top quartile of talent-to-market alignment typically achieved productivity levels more than 50% higher than those in the bottom quartile. What’s more, it has been proven that national economies whose businesses have higher talent-to-market alignment are also more productive, suggesting that policymakers should support companies’ efforts to globalise to increase economic output.
Finally, the research suggests that a key problem for many companies is that they misalign the location of their senior team members, placing them in mature markets rather than countries with greater opportunity growth and profit. Data for the consumer products and retail sector, for example, demonstrates that the proportion of directors and above in the sector are disproportionately positioned in mature markets including the UK, US, Spain, France and Switzerland.
Jon Addison, Head of Talent Solution at LinkedIn UK, commented: “At LinkedIn, we know that every great business is built on its talent, and this new research is an important reminder of how true that really is. Businesses have huge opportunities to improve both productivity and profit if they take necessary measures to identify the right talent in the right location, and at the right time. It is vital that businesses align their talent strategies with the best market opportunities. Companies who have geographically mapped out their talent will be the ones who succeed in the future. At LinkedIn we call this - talent intelligence - combining insights with the right instincts to deliver the winning talent strategy.”