Speaker Pieter Haen

Data proves link between HR performance and the financial performance of a company, new BCG/WFPMA study reveals.

 New Research Identifies Common Themes Among Leading HR Departments; A Report by The Boston Consulting Group and the World Federation of People Management Associations Gives Clear Insights for How Stronger HR Can Improve Business Performance.

High performing Human Resources departments help to drive the financial performance of companies, reveals new data released by The Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA). The results of an in-depth study are detailed in a report titled: Creating People Advantage 2014/2015: How to Set Up Great HR Functions, which is the eighth in an annual series that explores emerging trends in HR.

The report’s author team looked at the 10-year stock performance for the public companies in Fortune magazine’s “100 Best Companies to Work For” rankings in 2014, and compared that to the S&P 500 index. The 100 best companies—i.e., those with the strongest HR performance—outperformed the index by nearly 100 percentage points. However, the report notes that this is only the case if HR leaders are equipped to function as a critical partner to business leaders

This year’s research also drew survey responses from more than 3,500 executives across a broad range of industries in more than 100 countries. The author team supplemented those findings by conducting in-depth interviews with 64 HR and non-HR leaders.

HR Leaders Need to Connect with Internal Stakeholders

The report also underscores the importance of a clear link between HR and business leaders, which the survey data indicates may be missing at some organizations. “Non-HR respondents described their company’s people-management capabilities as significantly lower than HR respondents did,” said Pieter Haen, president of the WFPMA and member of the author team. Among the 27 HR areas the paper explores, non-HR respondents ranked 40 percent in the “red zone,” indicating a significant need for action, including critical topics like leadership, talent management, and strategic workforce planning. By contrast, HR respondents did not rank any HR areas in the red zone.

In addition, the report segmented the best and worst performing companies among the respondents, and identified common themes among each group. The most notable finding was that HR departments at winning companies were better able to identify clear priorities where they needed to get better, and better able to target their investments and future efforts accordingly.

KPIs and Analytics are Crucial

Given the growing availability of analytics and other data-driven approaches to management, the findings also indicate a strong correlation between the use of HR KPIs and analytics and a more strategic role for HR overall. The message for HR leaders is clear: those that want a ‘seat at the table’ during strategic deliberations with C-level executives must be able to assess—and communicate—the performance of the workforce. This entails going beyond rudimentary metrics that look at things like personnel cost and headcount, and toward more sophisticated output indicators that can gauge employee productivity and other critical data.

Date: 20/01/2015
Time: 11:30 - 13:30
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