Report: Workforce location linked to increased productivity and profits
New research from a collaboration between LinkedIn and EY has found that companies can make major performance and productivity improvements by taking a more strategic approach to where they place their people.
The report, Right people, wrong place?, ties into a key shift we’re seeing in the industry — a focus on Talent intelligence, which is a new way to use data and insights to improve every step of the recruitment process.
Here’s a look at the findings:
Companies are putting people in the wrong places. Most companies tend to concentrate talent in their headquarter country or in legacy locations, rather than building a presence in countries with current and future revenue opportunities. For example, consumer products and retail (CPR) firms are overrepresented in the U.S. relative to the market size.
Companies that more closely match their people with business opportunity have better financial outcomes. Research found that when a company’s workforce is located in areas of greatest market opportunity, financial outcomes improve. In the pharmaceutical sector, for example, a typical company that increases its talent-to-market alignment by 10 percent could realize a $77 million increase in profit (EBITDA). The research also found that companies that increase talent-to-market alignment over time tend to grow faster.
Economies where more companies match people to opportunity are more productive. U.S. companies tend to have the closest match between the location of their workforce and market opportunity in that sector. However, there’s room for firms headquartered in Europe and Asia to improve the match between their workforce and future prosperous markets.
The full report is available here.
Methodology
The research in Right People, Wrong Place? is based on combined analysis of 659 companies across 11 sectors. A five step core methodology was followed using unique datasets on market size and company performance by industry sector developed by EY and also using aggregate profile data provided by LinkedIn on company workforce locations and distribution by self-reported seniority and function.