Progressive people tactics send productivity soaring

Organisations employing progressive people management practices benefit from
significantly higher business performances, new research finds.

The study of 688 UK aerospace companies shows the use of practices such as profit
sharing, high levels of training, performance-related pay and effective
internal communications, result in more added value per employee.

The research by the Society of British Aerospace Companies (SBAC) finds that
firms with these high performance work practices in 1999 benefited from £68,000
value added per employee in 2002, compared with £42,000 for firms that had not
adopted progressive people management policies.

Marc Thompson, who conducted the five-year study, said the research also
reveals that the gap between organisations that have reaped the benefits of
investing in effective people management and those that have not, is actually
widening.

"Companies making the most intensive use of high performance work
practices are devoting 2.6 times more of their total wage bill to training than
those not using these practices, and this is clearly paying off in terms of
productivity," he said.

"The gap in training investment between firms making high or low use of
high performance practices widened from 48 per cent in 1997 to 159 per cent in
2002."

John Rivers, HR director at Rolls-Royce and chairman of the SBAC management
board, believes this gap must be closed if the UK is to make significant
productivity gains.

"There is a risk that the consolidation and rationalisation we have
seen in the UK industry is leading to a two-tier aerospace structure, where
some firms are able to invest in human capital and others are unable or
unwilling to do so," he said.

"We must tackle these human capital issues by working with trade unions
and the Government to ensure workplace innovations are introduced. Our futures
depend on building a world-class, high performance aerospace industry."

By Ben Willmott

www.sbac.co.uk

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