How talent health and GenAI are reshaping work and the workforce

Organisations can make themselves magnets for an increasingly mobile workforce by improving each element of their talent health score.

In brief

• Employers need to rethink talent strategies to accommodate a workforce seeking varied experiences, skill growth, and flexibility.
• With workforce GenAI usage surging to 75%, organisations that upskill employees to use this technology are likely to be more attractive to the new generation of mobile talent.
• Employers need to tailor rewards packages to meet the differing needs and circumstances of employees at various life stages.

The EY 2024 Work Reimagined Survey of global employees and employers points to a profound shift in employees’ attitudes towards their careers. While the concept of the “three-year career” has been with us for some time, the global workforce has never been more mobile.

Almost four in 10 (38%) employees who responded to the survey say they are likely to quit their job in the next 12 months. The opportunity for increased total pay (39%) is the main driving factor for considering another job, better career advancement opportunities was cited by 35%, while superior wellbeing programmes was the key reason for 34% of those planning to quit.

This significant employee turnover rate should be a key consideration when developing workforce strategies. However, it is important to understand that the flow of talent out of organisations is neither good nor bad, rather, it’s the new normal and can be channelled to employers’ advantage.

As the distance grows between historic thinking around work and careers, and recent flexibility of how, where and why employees work, organisations success in the medium-to-long term will rely largely on their ability to excel across 5 key dimensions: workplace technology and generative AI (GenAI); total rewards policies; learning, skills and career pathways; and culture and workplaces. EY calls this shift the “Talent Advantage.”

Our research notes that while Talent Advantage is critical, nearly 70% of organisations have not achieved it. Just 32% of employers have the strategic people capabilities to build a Talent Advantage connected to better productivity and business outcomes.

The evolving nature of the workforce, with a significant proportion of hybrid and remote workers, requires workplaces to be reimagined to maximise human connection. Organisations also need to be agile and responsive to other changes, particularly to the rapid adoption of GenAI and other technologies.

Assessing talent health

Old strategies to win the war for talent aren’t coping with today’s talent flows. Employees have more options in a buoyant jobs market and are less willing to stay put.

In the past, talent health was assessed by attraction and retention. But they don’t always effectively reflect an organisation’s relationship with its employees, regardless of their tenure. A new measure of talent health accounts for how well an organisation deals with the coming and going of employees. Organisations that score well on talent health tend to excel in the areas of reward, learning and development, career pathways, technology adoption, and culture.

The talent health score links to factors influencing the likelihood of an employee to recommend their employer to friends and family as a good place to work.

Talent flow is not monodirectional. It goes in as well as out. In a talent market defined by superfluidity, as individuals move between employers to gain new experiences and skills, organisations should focus less on employee tenure and more on the quality of the employee’s contribution. Organisations with a high talent score are likely to act as magnets for talent and effectively replace employees who choose to move on.

Culture is a critical factor

As noted earlier, culture is a key determinant of an organisation’s talent health score. Culture in the survey was determined by the number of respondents who say employees feel trusted and empowered by leaders; trust their employer and feel supported by them; and feel they are cared about as people.

Overall, employee and employer survey respondents agree culture has been improving, but employers are markedly more optimistic. More than three-quarters (77%) of employers believe employees feel trusted and empowered by leaders, compared to 57% of employees. This more optimistic view of employers might be explained by the positive experience of productivity increases enabled by hybrid and remote work.

As we are now several years into a largely hybrid marketplace, the conversation is less about the “how” work is done and more about “why.” A competitive Talent Advantage depends on an organisation’s ability to create a cohesive, positive culture for a diverse and dispersed workforce.

For employees, there is some loss of the physical and emotional connection to the workplace. For example, only 28% have assigned seating or a place for personal items in the workplace. Nevertheless, they still see the office as a cultural touchpoint. Many knowledge workers cite social connection and separating work and home as the main reasons to go to the office, followed by collaborating with colleagues.

What are the top employee reward priorities?

At a practical level, employers are now addressing the tax, legal and regulatory implications of hybrid and remote working arrangements. Employees working in multiple tax jurisdictions can create complications for organisations, and themselves. By dealing with those complications, employers can make themselves more attractive to talent on the move.

When it comes to top rewards priorities, while pay features prominently amidst cost-of-living concerns, employees are starting to think differently when it comes to compensation. 37% of knowledge workers say they want more bonus and incentive options that acknowledge their performance and contributions. A third want health and wellbeing benefits, along with paid time-off and compensation that more accurately mirrors the cost of living.

These priorities differ from those of employers in some important respects. 39% of employers are planning health and wellness benefits investments in the next year; 38% are looking to improve performance-based bonuses and incentives.

It’s important not to consider that all employees are the same, however, especially as the workforce is increasingly multigenerational. The data shows significantly different priorities across generations. Generation Z, for example, name paid time-off and performance-based incentives as their top two priorities, followed by health and wellbeing benefits and flexible schedules. 46% of the Baby Boomer generation, by contrast, want total compensation to reflect the cost of living, followed by 41% citing performance-based incentives. Health and wellbeing benefits are a distant third on 32%.

Employers and employees are aligned on total reward priorities, but generational data shows markedly different employee priorities

Employer planned enhancements to total rewards and employee preferred enhancements

Strengthening link between GenAI and talent health

The speed of adoption of GenAI has brought the issue of technology and skills investments to the fore. In the 2023 Work Reimagined Survey, just 49% of employees said they were using or planned to use GenAI over the next 12 months. A year later, GenAI usage has surged to 75% among employees. The conversation about GenAI has moved beyond adoption and now ties to talent health and skills development. AI is creating new value for organisations across the globe and it’s time for action.

In general, while employees have a net positive view of the technology’s perceived impact on productivity and its ability to help them focus on higher-value work, employer views are nearly twice as positive.

Employees who extensively use GenAI are four times more likely to say their organisation has an above average technology experience compared to more limited users. Extensive GenAI users also report that they are more likely to leave their job in the next 12 months, as they seek new opportunities opened up by their increased GenAI knowledge and experience.

This shouldn’t necessarily be seen as a negative. Organisations that more enthusiastically embrace GenAI also show higher-than-average talent health scores, meaning their employees are more likely to promote the organisation to others and they are more likely to be able to quickly replace those who leave.

GenAI use is also correlated with perception of an organisation’s ability to build skills. Of employees who use GenAI, 58% say their organisation’s development and training programmes are above average or excellent.

However, given the rapid pace of development of GenAI and other technologies, it is likely that employers will need to change their approach to skills building. While employers tend to be more comfortable keeping learning and development programmes in-house, many employees appear to find independently accredited externally provided programmes more valuable.

Five things to keep in mind for building talent advantage