Good HR Practices Boost Profits
A recent report (Feb 2008) by the Work Foundation and the Institute for Employment Studies (IES) found that businesses with good HR practices - from resourcing to employee engagement and skills development, enjoyed higher profit margins and productivity than those without. The study concluded that if an organisation increased its investment in HR by just 10% it would boost gross profits by £1,500 per employee per year.
The research involved nearly 3,000 employers and the analysis of the data suggests that organisations that adopt a range of people management practices can achieve substantially stronger performance than employers investing in just one area.
Simon Jones, Acting Chief Executive at Investors in People (UK), said that the study provided, “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.”
Helen Astill of Cherington HR welcomed the findings. “For businesses to succeed, it is important for business owners and managers to have a good partnership relationship with their HR manager or HR consultant. It is all down to the way in which people management processes are applied.”
There are several areas in which HR can play a key role including:
* Succession planning;
* Personal and career development planning;
* Profit-related pay;
* Regular appraisals;
* Testing applicants before appointment against person specifications for the job roles.
The next few articles will focus on learning and development as being one of the key areas to improving business productivity.
Posted on 19 Nov 2016