April 5, 2016
HR Best Practices linked to improvements in business performance 0
As we outlined last week, when the positive role played by Human Resources is applied throughout an organisation – levels of motivation, retention and engagement do indeed rise. Now a new report from Top Employers Institute and HR Certification Institute® (HRCI®) reveals that better business performance – measured by higher stock prices, faster revenue growth and more favourable perception of an employer brand – is the direct result of best practice performance by HR professionals. The paper also shows that this effect has the biggest impact on business performance when it is embraced company-wide, starting at the top, and adapted smartly and sensitively by expert professionals. The paper, “Emerging Evidence: Business Performance and the Validation of HR Best Practices”, shows recent research that suggests there is evidence for HR practices driving financial results, including increased revenue growth and a rise in the value of stock prices.
“The findings are compiled by independent international data analysts and build on previous research to deliver the clear message that exceptional human resource management can demonstrably and positively contribute to the bottom line,” said Top Employers Institute CEO David Plink.
“New data analysis shows companies with a certification from the Top Employers Institute are significantly outperforming industry averages on key metrics, and individuals with HR Certification Institute certification demonstrate not only mastery of the competencies tied to best practices but also the sound judgement and strategic mindset to adapt best practices to their unique organisational challenges.”
The research was conducted by the Top Employers Institute, an independent global organisation that certifies both excellence in HR practices and the environment employers have in place for employees to advance their development, and HR Certification Institute, the leading professional credentialing organisation for HR professionals worldwide.
Together, they found:
- Stock prices during 2011-2015 of companies certified by Top Employers outperformed the stock indices in their respective countries by an average of 51% over the same five-year period.
- Compounded revenue growth rates of companies certified by Top Employers outperformed relevant industry average compounded growth rates by 14% when comparing 2010-2014 revenues.
- Stock prices of companies with more than five HRCI-certified professionals increased an average of 95% during 2011-2015, while the relevant indices (NYSE, NASDAQ) increased an average of 38% over the same five-year period. Therefore, companies with more than five HRCI certificants outperformed relevant stock indices by 57% over the five-year period.
- Compounded revenue growth rates of companies with more than five HRCI-certified professionals increased 33% during 2010-2014, while the compounded revenue growth rate of relevant industries increased 8% over the same period. Therefore, companies with more than five HRCI certificants outperformed relevant industry average compounded growth rates by 25% over the five-year period.
“There is widespread agreement that people are an organisation’s most valuable asset,” said Plink. “But what has been missing is a way to more systematically manage and optimise the effectiveness of that asset. With rigorous validation of HR practices at the company-wide and individual HR professional level, which comprises a systematic way to apply, evaluate, adapt and measure the impact of HR best practices, we are showing a way forward.”