More flexible ways of working could unlock billions of rands 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).
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 billions to businesses over the next 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, many professional 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. Reducing staff turnover could also help companies avoid significant losses – 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 productivity gains are significant to reduce knowledge-related disruption, underlining the operational value of preventing expertise from walking out the door.
Stronger talent attraction can generate further productivity gains over five years with more efficient recruitment and onboarding adding significant value.
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 amplify these benefits further.
Four in five CEOs (80%) say combining AI with hybrid working increases productivity, while an average of 60% of workers report that AI is already improving their hybrid work experience.
“For every business, having the right people is fundamental to performance,” says Christan Schmitz, CEO of IWG. “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,” Schmitz adds. “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.”