New research has highlighted that companies who are equipped and skilled in key HR Management Practices are performing up to 3.5 times the revenue growth of less capable companies and almost 2.1 times the profit margins.
The report was undertaken by the Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA), based on 4200 HR and non-HR managers in more than 100 countries worldwide. It measured companies in relation to 22 HR areas and then went on to compare to the firms economic performance.
The report found a direct relationship between economic performance and HR capability in areas such as recruiting, employee retention, talent management, employer branding, performance reward and leadership development. Of these, the three most fundamental areas were leadership development, talent management and performance management/reward.
“Overall, what these findings reveal is that ‘people’ companies are far more proactive and more strategic about ensuring they have the talent they need—today and in the future,” said Rainer Strack, BCG “They fully understand the connection between talent and sustainable performance.”
“These findings should be a wake-up call for executives and HR people everywhere,” said Pieter Haen, WFPMA “As the talent crisis worsens, those who don't make a commitment to attracting, developing, and retaining talent put their future performance at risk.”