Good human resources will boost your company profits, research proves
A definitive link between effective human resources and its impact on boosting business profits has been proven following a major research project into the subject.
Twenty years on from the first issue of Personnel Today, which carried research showing an overwhelming majority of bosses believed the calibre of HR directly affected the bottom line, an independent study has conclusively settled the debate.
People and the Bottom Line, an in-depth two-year study by the Work Foundation and the Institute for Employment Studies, tested a range of people management practices with almost 3,000 employers to assess their impact on organisational performance.
It found that businesses with good HR practices - from resourcing to employee engagement and skills development, enjoyed higher profit margins and productivity than those without. The study concluded that if an organisation increased its investment in HR by just 10% it would boost gross profits by £1,500 per employee per year.
Penny Tamkin, associate director of the Work Foundation and lead researcher on the project, told Personnel Today: "The report found that it was the intensity of the HR practice that makes a difference - for example, not just whether companies do employee engagement, but how much and how often."
Tamkin stressed there was no one-size-fits-all approach to investment in people management. However, she said the key to success was HR departments working closely with managers to achieve results.
"There is a growing partnership between HR and managers. It's not just about writing policies, but working to embed them," she said. "HR also needs to play a more active role in making sure an individual's job allows them the correct amount of autonomy."
Simon Jones, acting chief executive at Investors in People, which supported the research, said: "People management must be woven into the DNA of any organisation that wants to maximise its performance."
Post your views on the past 20 years of HR.
Profit-boosting HR
-
Succession planning
-
Personal and career development planning
-
Employees qualified to degree level
-
Profit-related pay
-
Regular appraisals
-
Frequency of one-to-one meetings
-
Who decides pace of work (managers or workers)
-
Task allocation (managers or workers)
-
Testing applicants before appointment
-
Person specification for new appointees
-
Management turnover
Source: People and the Bottom Line
RELATED ARTICLES
- Pay and engagement: a totally rewarding relationship
- Skills and temp rights are main cause for concern so far in 2008
- HR chastened by bosses’ poor perception of profession
- HR professionals resent partners’ lack of earning power
- 20 years of Personnel Today
- Will HR be about strategic partnership or operational support in 2028?
COMMENTS
Your headline ‘100% proof: good HR will boost your company profits’ (26 February) should sound like a ringing endorsement of HR; so why does it come across as such a sad act of sheer desperation?
The sponsors of this research by the IES/Work Foundation are a group of organisations with a vested interest in trying to ‘prove’ their worth’, including Investors in People (still trying to justify itself after 17 years), the Sector Skills Development Agency (still throwing money at skills training despite no evidence that it boosts the economy) the CIPD (more desperate than anyone else to gain some business kudos) and the Department for Education & Skills (who buried research by Professor David Storey of Warwick University many years ago that showed a negative correlation between training spend and business performance). So much for independent research from a totally impartial perspective.
So what about the claim of 100% proof? The study itself asks whether meaningful correlations be drawn knowing full well that correlations are never proof. It also asks ‘what methodology should be adopted to assess a causal link in the future?’ thereby openly acknowledging that their research cannot show any causality.
In the absence of a robust methodology though they retreat, as all social science researchers do, back to their arcane world of ‘regression techniques’ which are, in simple terms, a statistician’s way of trying to cheat by making correlations look like causal factors (i.e. successful companies might have ‘engaged employees’ but that doesn’t prove that engaged employees caused the companies’ success).
Any intelligent HR person knows the difference between damn lies and meaningful statistics. Those of us who know what works in HR and are entirely confident about its significant contribution do not need this sort of pseudo-academic claptrap or the PR hype beloved by Government agencies, quangos and ineffectual professional bodies.
It does nothing to enhance the image of the profession at large and seriously dents any reputation that the IES and the Work Foundation might once have had.
Yours,
Paul Kearns
Director, PWL and author “The Bottom Line HR Function”
Paul Kearns
ALERTS
 | Alert me when new articles are added which relate to these specialism areas |
General HR management Strategy | |
RELATED PERSONNEL TODAY PRODUCTS AND SERVICES
More...More...More...More...