HUMAN RESOURCE MANAGEMENT
People management pays
A new report from Investors in People has delivered further compelling evidence of the link between effective people management and business success.
The two-year study, which was undertaken by Work Foundation and the Institute for Employment Studies, suggests that organisations with a comprehensive approach to people management perform better than those without, indicated by higher profits per employee, higher profit margins and higher productivity.
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It also identifies 12 core measures that any organisation can track to assess the impact of their people management practices on business performance.
Methodology
The research involved developing and testing a framework of people management practices with nearly 2,900 employers to assess their impact on organisational performance.
The researchers collected data from each organisation and assessed performance across the framework of measures. Their analysis suggests that organisations which adopt a range of people management practices - from resourcing to employee engagement, skills development to job design – can achieve substantially stronger performance than employers that invest in just one area.
Indeed, the results suggest that if a business increases its investment across a number of people management practices by around 10%, it could secure an increase in gross profits per employee of over £1,500 per annum.
Other key findings
Younger firms tend to score better against the key indicators than longer established organisations.
There is no “levelling off” in terms of the business benefits that good people management can deliver – even where companies are investing in their workforce, there is evidence of the benefits of doing more.
Companies that score highly tend to be strongly geared towards creating a good working environment for their employees and being innovation led.
Core measures
In terms of practical application, the report also identifies the 12 core measures that are most effective in helping employers track the impact of their people management practices on business performance:
Proportion of new appointees tested on recruitment
Proportion of new appointments for which there was a person specification
Proportion of employees covered by a succession plan
Proportion of workforce that have a current personal development plan
Proportion of workforce that have a career development plan
Proportion of employees qualified to degree level
Proportion of managers that left voluntarily over the last 12 months
Proportion of staff that receive profit-related pay
Proportion of staff that have a regular appraisal
Frequency with which staff have one-to-ones
Who decides on the pace of work (1 = exclusively managers; 5 = exclusively workers)
Who decides on task allocation (1 = exclusively managers; 5 = exclusively workers).
The report says this framework provides clear guidance for employers, who can adopt its measures to assess their own people management practices and identify opportunities for improving their performance. It concludes: “This means the report not only provides a compelling business case for good people management but also a route map for maximising and measuring its effectiveness on an ongoing basis.”
A final word
“This is a ground-breaking study. It delivers compelling evidence of the role that a proactive approach to people management and skills development can play in business success. It shows that people management must be woven into the DNA of any organisation that wants to maximise its performance – it cannot be piecemeal or tokenistic. This is a very important report for employers of all types and sizes and it’s vital they sit up and take notice.
The good news for employers that want to check the effectiveness of their HR practices and identify opportunities for improvement is that the report also offers a practical framework for doing so.” - Simon Jones, Acting Chief Executive at Investors in People (UK).
Want to know more?
Title: People and the Bottom Line, Investors in People.
Availability: You can download the full report in PDF format, free of charge, from the IiP web site at www.investorsinpeople.co.uk.
The Investors in People Standard provides a practical framework for improving business performance and competitiveness through good practice in human resource development. For more information on Investors in People, visit www.investorsinpeople.co.uk.