In This Study by The Predictive Index, 600 Executives—including 200 CEOs—Reveal the Talent Optimization Practices that Drive Superior Business Results.

BOSTON – January 22, 2020 – Talent strategy is the No. 1 priority executives will focus on in 2020. This is substantiated when one considers the business value of designing and executing an optimized talent strategy. The 2020 State of Talent Optimization report—published today by The Predictive Index—found a strong correlation between talent optimization and company performance. In fact, 600 executives across 20 industries revealed that companies with aligned talent and business strategies are more likely to outperform other companies, retain top talent, see higher employee performance, and achieve strategic success rates of nearly 90%.

“While most organizations have a business strategy and a financial plan to support it, The State of Talent Optimization report finds only 36% have a talent strategy—and a mere 12% align their talent and business strategies,” said Mike Zani, CEO of The Predictive Index. “However, those that do have talent strategies designed to hire, manage, and engage their people in a way that aligns with business objectives significantly outperform other companies. The essence of leadership is aligning employees with the business strategy to achieve maximum success.”

Key findings from the report:

• People are a company’s biggest expense and most valuable asset: Executives say 64% of costs are labor costs, and also attribute 72% of their company’s value to employees.
• Having no talent strategy is the norm: Only 36% of companies have a talent strategy, and a mere 12% align their talent strategy with their business strategy.
• Talent optimized companies outperform other companies: When companies implement specific talent optimization practices, their strategic success rate rises to 89%.
• Talent optimization increases retention: Companies that optimize talent are 30% more likely to keep their top performers.
• Talent optimization boosts performance: Organizations that practice talent optimization have 34% higher employee performance. 
• Talent optimization improves efficiency: Talent optimized companies spend 31% less time on people problems.

In addition to uncovering the business value of talent optimization, The 2020 State of Talent Optimization report also provides data and insights into how hiring, management, and employee engagement practices impact business outcomes, including:

• Bad hires are prevalent: Executives say only 49% of last year’s hires were good hires.
• Talent keeps execs up at night: Executives’ No.1 concern is employee performance and productivity.
• When it comes to engagement, execs are in the dark: Only 22% of companies know what’s driving employee disengagement.

What’s more, the following subject matter experts provided valuable insights throughout the report: Kirk Arnold, Executive in Residence at General Catalyst; Yuchun Lee, CEO and Co-Founder of Allego; Dena Upton, VP of People at Drift; Marilynn Duker, CEO of Brightview Senior Living; Tracie Sponenberg, Chief People Officer of The Granite Group; and Meghan Joyce, COO of Oscar Health.

“From my own experience, CXOs’ talent strategies are not being translated downward effectively,” said Yuchun Lee, CEO of Allego. “The answer is a shift in business strategy toward an ‘employee-centricity’ model where highly engaged and effective employees lead to satisfied and loyal customers, in turn leading to stronger company fundamentals. The next step is the adoption of technology to help scale the type of training and development needed.” 

A full copy of the 2020 State of Talent Optimization Report is available here.