Companies which have an HR director on the board have doubled their profits
compared with other FTSE 100 firms, exclusive research for Personnel Today
reveals.
A groundbreaking study by Andersen Human Capital UK shows that the average
increase in earnings per share of FTSE 100 companies with HR represented in the
boardroom was 88 per cent between 1996 and 2000.
This is twice the 44 per cent increase for all FTSE 100 companies during
those four years. The findings are based on company performance figures on 31
August 2001.
Ian Taylor, HR and organisation director and board member of consultancy
giant CMG, believes the research helps prove the important relationship between
profitability and people issues.
He said, "There is unquestionably a link. The best performing
businesses are where people are thriving, where everybody is motivated and they
take pride in their company."
The findings confirm that HR has to be represented at board level, claimed
Brett Walsh, head of Andersen Human Capital UK. He said, "This shows that
people management is a strategic issue which when considered seriously on the
boardroom agenda makes companies more profitable. Enlightened organisations are
clearly reaping the benefits of this."
But only a quarter of the 60 companies which have been in the FTSE 100 since
1996 have HR represented on the executive board – the level at which the most
important strategic decisions are taken.
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George Battersby, HR director and board member of biotechnology company
Amersham, said, "It is a growing trend and will probably continue but it
depends on the HR role being seen to add value at that level."
