The Talent Equation: Flexible working could unlock billions in productivity gains
More flexible ways of working could unlock billions of dollars in productivity gains by helping businesses attract and retain talent and protect critical knowledge, according to new economic modelling from Arup and International Workplace Group (IWG), the world’s largest platform for work with brands including Spaces and Regus.
As businesses compete for critical skills and seek to improve productivity, attracting and retaining the right people has become an increasingly important boardroom priority. The new analysis shows that hybrid working can turn that challenge into tangible economic value, with improved employee retention alone worth around $204.7bn in the US and £10.8bn in the UK over five years.
IWG research also found that 81% of CHROs say hybrid working is critical to retaining top talent, while 86% identify flexible working as the most in-demand benefit among prospective employees. Meanwhile, more than a third of US workers now cite remote work as the leading factor when choosing a new job, ahead of salary.
Flexibility becomes the deciding factor for talent
Nearly three quarters (72%) of business leaders say offering hybrid or flexible working is key to attracting younger leaders who recognise that work can be done just as productively – if not more so – without the need for a long daily commute. They also say that hybrid working is now the most common strategy being used to compete for the best tech talent (37%), ahead of competitive pay (35%). More than three quarters (78%) believe organisations offering hybrid or flexible working have a clear advantage over those that do not.
By offering greater flexibility and removing geographical barriers, hybrid models allow employers to access a broader recruitment pool and build more efficient operating models. This is central to the “new talent equation”, in which flexibility, technology and wider access to skilled people combine to create measurable productivity value.
Retention is the largest productivity opportunity
Improved talent retention is the largest single driver of productivity gains in both markets, accounting for a potential gain of around $204.7bn in the US, and £10.8bn in the UK over five years.
Reducing staff turnover could also help companies avoid significant losses – up to $40.9bn in lost gross value added (GVA) each year in the US and £2.2bn in the UK – because when people leave, businesses lose momentum, experience and output, as well as the individual themselves.
There is also a crucial upside to keeping experienced people; it protects institutional knowledge. The modelling attributes $65.5bn in US productivity gains and £5.7bn in UK gains to reducing knowledge-related disruption, underlining the operational value of preventing expertise from walking out of the door.
Stronger talent attraction also plays a major role, adding a further $98.3bn in the US and £6.5bn in the UK over five years, while recruitment and onboarding efficiencies contribute approximately $9.4bn and £0.6bn respectively.
Together, these gains show that workplace flexibility is not merely an employee benefit, but a strategic lever for growth, resilience, and productivity.
AI amplifies the advantage
AI could further amplify these benefits. Four in five CEOs (80%) say AI boosts productivity when combined with hybrid working, while around 60% of US workers and 68% of UK workers say AI is already improving their experience of hybrid work.
Christan Schmitz, CEO of International Workplace Group, said: “For every business, having the right people is fundamental to performance. This research quantifies something many leaders already understand: retaining experienced people, attracting talent from a wider pool and giving them the flexibility to do their best work can have a significant impact on productivity.
“Technology is making that opportunity even greater. AI is changing how and where work gets done, while more flexible ways of working give businesses access to people wherever they are. Together, they can help companies build more agile, productive organisations.”