B&Q has increased its training budget by 60 per cent after the value of staff development was proved by measuring human capital.
Mike Cutt, personnel director at B&Q, told delegates at Richmond Events' HR Forum on board the luxury liner Aurora, that measuring people policies can help businesses save millions of pounds a year.
Another benefit of measuring human capital, according to Cutt, is that it enables HR to reposition itself both within the business and the boardroom.
As a result of showing the statistics to the business, B&Q's HR function secured its biggest ever budget increase.
The company's training budget has been boosted by 60 per cent over two years.
Cutt described how analysis of the links between recruitment, staff engagement, customer satisfaction and corporate profitability enabled B&Q to quantify the value of employee engagement to the business.
By bringing all B&Q stores up to the same levels as the best performing ones, the company predicts savings and performance improvements in five areas:
- Absence cost saving - £3.15m a year
- Turnover cost saving - £2.45m a year
- Shrinkage (theft by staff and customers) cost saving - £10.16m a year
- Additional sales - £76m
- Additional profit - £24m
Cutt said the most important effect of measuring human capital has been to highlight the need for HR and the board to focus on the recruitment, retention, training and development of quality managers.
He said it is no coincidence that as the business comes to understand human capital, it is making spending decisions based on HR.
Keith Astill, head of corporate personnel at Nationwide Building Society, told delegates measuring human capital was not "happy clappy stuff" - the real importance was on the bottom line.
He reported that by analysing people policies, the company had experienced a fall in absence levels and staff turnover, while sales and customer numbers and satisfaction increased.
By Martin Couzins