Key findings

#1 Most organizations’ talent strategies are ineffective—and that’s hurting business.

In the current competitive employment market, the cost of failing to invest in and develop an effective talent strategy is becoming clear. Almost half of executives (47%) say they are missing business opportunities due to a lack of access to the right talent.

Our surveys highlight the existential risks to businesses caused by inadequate talent strategies. Many employers are taking steps to improve talent management and to meet (or reshape) employees’ expectations, but progress is patchy. This is damaging the prospects of many businesses; more than half of executives (54%) say poor workforce planning is holding back business growth.

Employees agree that their current employers are failing to unlock their potential. A lack of skills development and career-progression opportunities are talent’s biggest frustrations. Women, in particular, say their career opportunities are lacking, and are more likely to leave their current roles than men (34% vs. 20%).

Encouragingly, executives seem better attuned to employee mindsets than a year ago and many say they are seeking to make training more agile.

Yet more action is needed—only one in four organizations offer face-to-face or online training.

Better development opportunities are not the only demand. As talent’s expectations change, organizations need to respond. It’s clear that many are making a real effort, but the impact to date is limited. Just over half of employees report improved productivity (52%) over the last 12 months, with slightly fewer saying that happiness and mental wellbeing (44%) and job satisfaction (43%) have improved. While this is encouraging, clearly, organizations can do more. To emphasize that, about three in 10 employees say these aspects of working life have worsened for them.

Employees are particularly frustrated with a lack of autonomy and flexibility, yet executives do not see these as major priorities. Seemingly in defiance of employees’ wishes, almost half (48%) report that their business has now mandated weekly on-site working days.

Nevertheless, organizations are working on ways out of the talent crisis. The answer lies in talent strategies that are responsive to employees’ needs, while delivering on organizations’ priorities in a fast-changing, competitive environment.

Yet more action is needed—only one in four organizations offer face-to-face or online training.

#2 AI is disrupting the workforce, but employees are unprepared.

As AI adoption accelerates, organizations are energized by its potential to reshape how they operate. Such a shift can have a highly disruptive effect on the workforce. Employers must do more to bring talent with them as they implement new systems.

Naturally, executives have high ambitions for AI: 64% plan to use AI and automation in the next 12 months, while 55% say AI will be critical to strengthening workforce capabilities. But are they implementing digital tools effectively? One in five admits their digital strategies to strengthen the workforce -- for example, by implementing workforce planning tools or productivity monitoring tools -- are ineffective.

Executives say their focus for AI will be on automating repetitive tasks and on enabling employees to perform more effectively. In addition, they are using it to measure key workforce metrics, such as productivity and engagement. For 62%, AI will have a key role in helping to identify talent gaps.

AI is already impacting some roles significantly—and its effects will only grow as it is deployed across businesses. Most employees recognize that change is coming: 73% expect AI to impact their roles.

However, many employees remain unconvinced of the benefits of AI. Only one-third (36%) feel positive about AI, recognizing that it could boost performance and job satisfaction. Yet 63% have negative or mixed feelings: 19% fear it will reduce job satisfaction or put their roles at risk, while 44% are wary of its implications for the future.

These sentiments could be the result of reality failing to match corporate rhetoric. Talent say their leaders have been clear in explaining how AI will affect their roles, but only 39% of employees say they have received AI-related training. That gap provides space in which employees’ concerns can grow.

Senior leaders need to provide a clear vision of how AI will be deployed and need to train employees to use it effectively. Only then will the workforce feel prepared to face the future.

It is unsurprising then that our talent survey finds underrepresented groups are less likely to agree that their senior leaders model inclusive behaviors, or that their organization is removing barriers to their career progression. Workers from underrepresented groups are also more likely to have experienced non-inclusive behaviors. Understandably, therefore, these workers are much more likely to consider changing jobs in the next 12 months. Those from minority groups are almost twice as likely to say they may leave their current employer in the next year—47% compared with 24%.

Organizations must double down on their commitment to inclusion, listening carefully to those who feel their organizations have yet to fulfill the promise of a fairer workplace for all. A critical element of any DEI strategy must be fostering belonging – employees’ perception of acceptance within the organization. True inclusion cannot exist if individuals feel that they do not belong.

#3 DEI efforts are failing, and underrepresented workers are quitting as a result.

In some organizations, “DEI fatigue” is emerging. Backsliding on the DEI agenda could be disastrous for talent attraction, engagement, and retention.

In recent years, diversity, equity, and inclusion (DEI) efforts have been front and center in conversations about talent and the future of work. But this year’s surveys suggest that many organizations are falling short of their DEI goals. Underrepresented workers feel progress has stalled and are prepared to walk away.

Executives’ own assessment is damning: 53%—unchanged from two years ago—admit that their organization’s leaders and senior managers are failing to create an inclusive culture. Half say that few of their organization’s senior leaders are from underrepresented groups. Nearly half (49%) also say that their DEI strategy only pays lip service to supporting talent from underrepresented groups.

One of the reasons for this failure may be that senior leaders doubt the beneficial impact of DEI. Only 34% of executives say diversity directly supports business performance, falling to 29% among C-suite executives. Almost one-quarter (24%) say DEI is less important than a couple of years ago.

The Workforce Resilience Index

In our last Re:work report, published in 2023, we used the data from our global executive survey to identify what we called the Resilience Leaders: a cohort of companies defined by their actions across the three pillars of workforce resilience, as well as by their outstanding business performance.

This year, we’ve refined the analysis to create a Workforce Resilience Index. The Index allows us to draw out even more robust insights into the market leaders, as well as the organizations we’re calling “Laggards.”

Moreover, it provides a baseline for tracking the evolution of workforce resilience over time.

Our analysis highlights differences between the Resilience Leaders, who score 70 or more out of 100 on the Index; the Mid-market Performers; and the Laggards, who score 30 or less. Plus, for the first time, we dig into the differences between the best and the rest within each pillar.

Moreover, it provides a baseline for tracking the evolution of workforce resilience over time.

The Workforce
Resilience Index

^{RESILIENCE LEADERS:}

score 70 or more – 109 executives

^{MID-MARKET PERFORMERS:}

score 31‒69 – 1,278 executives

^LAGGARDS:

score 30 or less – 113 executives

Global leaders

The Resilience Leaders are concentrated in Norway, Sweden, and Germany. The US ranks seventh out of 13 countries surveyed. Australia ranks last.

The Three Pillars of Workforce Resilience:

#1 Workforce agility:

The ability to scale and align the workforce in response to business change, for example by rapidly recruiting specific skills or reassigning employees to where they are most needed.

#2 Workforce capability:

Having the right mix of talent, equipped with the right digital and automation strategies, to achieve the organization's current and future strategic goals.

#3 Diversity, equity and inclusion (DEI):

Building a culture where all employees are respected, valued, and able to reach their full potential, regardless of factors such as race, gender, sexual orientation, age, disability or neuro-diversity.

Resilience Leaders build agile, capable, and inclusive teams

The Resilience Leaders (7% of companies surveyed) show that talent strategies focused on increasing workforce agility, capability, and inclusion support business performance, profitability, and an enhanced employee experience.

These organizations report above-average performance across a range of core business metrics and key people indicators, including an improved ability to recruit talent.

Resilience Leaders significantly outperform others across all business metrics

The survey identifies four best practices Resilience Leaders have in place:

#1 Partnering with workforce solutions providers builds more agile and capable teams. 71% of Resilience Leaders work with third parties to develop their talent strategies, compared to 35% of Laggards.

#2 Leveraging new technologies offers better visibility into talent demands. 64% of Resilience Leaders have a clear strategy for how they deploy AI to support human work, compared to 22% of Laggards. 69% use technology to improve workforce analytics, monitor productivity, and support hybrid work.

#3 Tapping into diverse perspectives and providing flexible work arrangements empowers employees to contribute. 77% of Resilience Leaders say a C-suite leader has DEI responsibilities, compared to only 5% of Laggards. 53% of Resilience Leaders offer flexible and hybrid work arrangements for employees at all levels, compared to only 19% of Laggards.

#4 Being proactive about wellbeing and mental health improves performance. 54% of Resilience Leaders offer mental health resources, compared to 28% of Laggards.