Study: People Management Translates into Superior Business Performance

by CFO Innovation Asia Staff, 03 August 2012

0 comments

Facebook

Digg

Twitter

topics:
Human Capital Management Management

tags:
Human Capital Management The Boston consulting Group

Companies that are highly skilled in core human resource practices experience up to 3.5 times the revenue growth and as much as 2.1 times the profit margins of less capable companies, according to new research by The Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA).

The correlation between economic performance and capability in 22 key HR areas was especially striking in six contexts: recruiting, onboarding of new hires and employee retention, talent management, employer branding, performance management and rewards, and leadership development.

In three pivotal areas—leadership development, talent management, and performance management and rewards—the high-performing companies differentiated themselves dramatically. In each one, these companies engaged in more activities and provided more options, did so more often, and were generally more effective.

“Overall, what these findings reveal is that ‘people’ companies are far more proactive and more strategic about ensuring they have the talent they need—today and in the future," says Rainer Strack, a senior partner at BCG and a coauthor of the report. "They fully understand the connection between talent and sustainable performance.”

Adds Horacio Quiros, president of the WFPMA and another coauthor, “We’ve always believed that companies that have good people-management practices perform better. But we now have uncontestable evidence of this correlation.”

In leadership development, high-performing companies rely more on leadership models that clarify leaders’ expected contributions and behavior. They also make people development a central element of leaders’ job requirements, using incentives such as compensation and career advancement.

In talent management, high-performing companies know that the talent pipeline must extend beyond the successors to top management. Consequently, they offer more development programs for a broader range of talent. They also try to attract more international talent. These companies are proactive with talent reviews and create ample career-advancement opportunities—including horizontal as well as vertical ones. They also do more to nurture employees’ individual growth and keep them fulfilled professionally.

In performance management, high-performing companies treat and track performance with transparency. They recognize the value of fair and transparent measurement and rewards systems in promoting a culture of meritocracy. They more often align and motivate their people with clear norms, expectations, and global standards. They reward behavior, not just results, to a greater degree than low-performing companies.

Comment on this article

Your name: *

E-mail: *

The content of this field is kept private and will not be shown publicly.

Homepage:

Comment: *

Web page addresses and e-mail addresses turn into links automatically.
Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <a> <p> <span> <div> <h1> <h2> <h3> <h4> <h5> <h6> <img> <img /> <map> <area> <hr> <br> <br /> <ul> <ol> <li> <dl> <dt> <dd> <table> <tr> <td> <em> <b> <u> <i> <strong> <font> <del> <ins> <sub> <sup> <quote> <blockquote> <pre> <address> <code> <cite> <embed> <object> <strike> <caption>
Lines and paragraphs break automatically.
Use  to create page breaks.

More information about formatting options

Verification Code

This question is for testing whether you are a human visitor and to prevent automated spam submissions.

What is the fifth word in the phrase "mupa irosiba uhatu polerej eca"?: *

Accounting and Regulations

CFO innovation Asia Accounting and Regulation the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Accounting Regulation, IFRS, US GAAP, Tax, investor relations, corporate governance, Corporate Law, Financial Regulators, Internal Audit, Audit, Corporate Law.

Auditing, Investor Relations, Law and Compliance, Tax

Finance and Banking

CFO innovation Asia, Finance and Banking the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Corporate Finance, trade finance, treasury and risk management, capital expenditure, Banking, mergers and acquisitions

Cash and Liquidity Management, Corporate Finance, Insurance, Treasury Management

Management

CFO innovation Asia the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Management, Corporate Governance, Human Resource Management, Compensation and Benefits, Mergers and Acquisitions, Professional Development, Corporate Real Estate, Risk Management, Budgeting and Forecasting, Business Process Management, Business Process Reengineering, Outsourcing.

Budgeting and Planning, Business Expense Management, Human Capital Management, Outsourcing and Shared Services, Risk Management

Metrics

Corporates, Financial Services

Technology

CFO innovation Asia Technology the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Systems, Business Intelligence, EPR, Accounting software, CRM, Cloud Computing, Telecommunications, Business Process Outsourcing, Business Process Management Software.

Business Intelligence, Enterprise Software and Systems, Financial Systems, Security