Research Library Article


HR’s Impact on Business Results

D. Earle

A review of multiple studies that have tracked the correlations between advanced HR practices and superior business performance.

The evidence is mounting that progressive HR practices correlate strongly with business success. For example, one study finds that companies scoring highest in global talent management earn almost 30% more than those scoring lowest. Another study finds that having a HCM reporting and analytics solution in place correlates with an 11% increase in profits and a 6% gain in revenue per employee.

The impact of progressive HR on business performance should be more widely understood. The report notes a Mercer finding that while CFOs say 36 percent of their costs are people related, only one in six has more than a moderate understanding of the return on that investment.

Linking human capital management to business results makes many staffing issues more complicated. A local software technology upgrade cannot succeed without addressing larger enterprise data management issues. Making performance evaluations more accurate and predictive leads directly into the thicket of the kinds of things being measured and which ones actually drive growth and profits.  

As problems become more complex, their solutions become more time-consuming and expensive. This, in turn, requires more thorough budgeting, risk analysis and ROI measurements. Smaller investments become larger, which increases board scrutiny and competition for resources.

In well run companies, investments are ranked according to the required resources, the payoff, the timetable and the odds of success. The special advantage staffing has in competing for resources is scope and leverage. Staffing initiatives can be targeted, with measurable success, at any metric—costs, profits, growth, customer service, R & D— that’s important to the business.

Understanding and controlling costs
Forecasting—and Closing—the Gap in Supply and Demand for Talent
Identifying and Developing New Leaders
Building a Strong Strategy for Attracting and Retaining Employees
People are the New Bottom Line

“To deliver truly exceptional change, HR needs to provide business leaders with workforce intelligence in the natural course of business. Analytics should be available on their tablet devices and be deeply embedded throughout business processes such as staffing changes, compensation review, performance review, talent assessment and workforce planning.”

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Research Info

Author Harvard Business Review Analytics Services
Date Published 2013
Pages 12
Sample size Multiple studies
Industries All
Geography Global
Cost Free
URL Link
Keywords ( library) Change management-innovation, communication-collaboration, metrics-analysis, metrics-business intelligence,metrics-data management, strategy-risk management, strategy-workforce planning, trends-leadership