A leading HR guru is to set up a consultancy promising a quantified improvement to business performance.
Rhiannon Chapman, former HR director of the Stock Exchange and a former chief executive of The Industrial Society, will offer employers at least a 16 per cent improvement in business performance at a charge of 0.5 per cent of the pay bill.
It will the first time a HR consultant has dared make such a promise, and builds on a growing body of evidence that good people management has a dramatic effect on the bottom line.
Chapman said that in many companies people account for up to 80 per cent of the business's costs. "If it were anything else taking up that kind of cost the board would watch it like hawks every day for what could be done to improve on it."
The service will divide personnel activity into seven areas, such as training, recruitment and diversity, and will assess where improvement would make most difference to performance. Recommendations for change will be concentrated in those areas.
She defended the cost, which would be £250,000 for an organisation with a pay bill of £50m. The sum of consultancy programmes in each of the areas covered by the new service could come to more, she said.
The link between management of people and business performance is particularly strong where customer service is important. "Customers are more loyal to organisations that have high staff retention; and repeat business is six to eight times more profitable than new business," she said.
But she complained that personnel managers still fail to sell their ideas because they do not understand general business issues. Many do not even know the high proportion of costs taken up by employees.
Chapman, with business partner Hilary Condy, has sponsorship from a major software provider of personnel systems. A formal launch is expected in the next few weeks.