Businesses that have people policies clearly linked to a documented HR
strategy are more profitable, concludes new research by PricewaterhouseCoopers.
Senior HR professionals from more than 1,000 organisations in 47 countries
were surveyed to investigate the relationship between business performance, HR
policy and strategy, and financial measures such as profit margins and revenue
per employee.
The research reveals that companies with documented HR strategies typically
benefit from 35 per cent higher revenue per employee compared to organisations
without such formal people management policies.
Kevin Delany, partner at PwC Human Resource Consulting said: "The link
between the existence of a documented HR strategy and employee productivity is
particularly interesting," he said. "It is reasonable to assume that
the discipline of identifying the implications of the business strategy on
people makes planning more realistic and achievable."
A documented strategy is also associated with more effective reward systems,
better performance management and reduced absenteeism.
"These findings should make interesting reading for the 42 per cent of
respondents currently without a documented strategy – and for their chief
executives," said Delany.
"Our research clearly demonstrates that effective people management
adds value to organis-ations by putting the right policy and practices in place
to create a good employment environment. This, in turn, has a positive effect
on a range of issues, from reducing absenteeism to improving profitability.
The research also revealed clear and positive links between the ‘feelgood’
factor of HR people being satisfied with their contribution to the business and
profit margins.
In organisations where HR people are very satisfied with their department’s
influence on business strategy, profit margins are 46 per cent higher than for
those who are not satisfied with their contribution.
By Ben Willmott
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