Friday, April 21

The REAL value of smart HR 

Just found this gem - more relevant today than ever. I'm planning on integrating this research into my May 9 speech at Philadelphia SHRM. I hope you'll join me. Event details here.
From www.watsonwyatt.com

WASHINGTON, D.C., January 30, 2003 - Companies with superior human capital practices can create more than double the shareholder value than companies with average human capital practices, according to Watson Wyatt's Human Capital Index® (HCI) studies in Europe, Asia-Pacific and North America. The findings provide the first-ever documentation that the strong link between human capital practices and shareholder value creation stretches across several continents.

The HCI studies of companies in Europe, Asia-Pacific and North America report on the impact of human capital practices on business performance. Their combined database includes more than 2,000 major companies globally and tracks shareholder performance from 1994 to 2002.

"While each regional study carries some cultural differences, the results demonstrate that great HR practices can be a true competitive advantage," said J.P. Orbeta, global director of Watson Wyatt's Human Capital practice. "Now we have seen that superior human capital practices prevail, regardless of economic conditions or geographic location."

The Watson Wyatt HCI "Global Truths"
The studies report that companies have better total returns to shareholders (TRS) or growth in shareholder value if they have the following superior human capital practices:

Clear Rewards and Accountability - a 16.5 to 21.5 percent increase is associated with practices such as broad-based stock ownership, paying above the market and effective performance management.

Excellence in Recruitment and Retention - a 5.4 to 14.6 percent increase is associated with practices such as an effective recruiting process, a positive employer brand and focus on key skills retention.

A Collegial, Flexible Workplace - a 9.0 to 21.5 percent increase is associated with practices such as employee input into how the work gets done, higher trust in senior management and a lack of workplace hierarchy.

Communications Integrity - a 2.6 to 7.1 percent increase is associated with practices such as effective use of employee surveys, sharing of strategy and financial data with employees and employee input into decision-making.

"Though the actual results vary by location, the three HCI reports show precisely which HR practices impact the bottom line," said Orbeta. "Great people management travels well. And it is a true source of competitive advantage."

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