HR’s boost for business in spotlight

by 02 Sep 2008

A SMALL but growing number of companies are demonstrating the impact HR policies can have in meeting business goals, according to a recent US report.

It found that organisations such as Hewlett-Packard, Capital One and HarvardUniversity are using evidence-based approaches to HR to show how company-aligned HR practices help them achieve business performance goals.

The report, conducted by The Conference Board, a global business research firm, found that human capital is a vital, yet often overlooked, means of establishing competitive advantage.

But despite constant pressure to attract and retain talent, companies have only recently begun to empirically demonstrate its impact on business outcomes.

The report, which examines evidence-based HR, found that the process begins with the notion that talent drives performance. Starting with the financial and organisational performance measures,HR professionals then identify human capital strategies that empirically drive the desired outcomes.

“It also is changing the way they gather, process, and, most importantly,evaluate information,” said John Gibbons, a senior advisor at The Conference Board and co-author of the report.

“These developments hold the promise of helping the profession move beyond chasing fads, to getting to the real work of helping their organisations improve business results through more effective management of people.”

In 2002, for example, Hewlett-Packard launched a new initiative to build and maintain a “customer-centric” culture. The HP leadership team realised that in order to better understand the complex relationships between employees, customers and financial performance, the new strategy would need to include ideas and talent from across many functions.

Cross-divisional teams created a “business performance chain” and collected empirical evidence to support each link – starting with key business outcomes and working backwards to employee experience.

Since 2004, HP has been measuring behaviour and performance of its customer support operations teams. Correlations between lower-level operational measures and key customer experience measures were made – allowing HP to diagnose a decline in operational level measures before it affects the bottom line.

At Capital One, every business aspect is informed by an analytic approach. Based on the premise that analysing data for opportunities to improve service offerings can provide a sustainable competitive advantage, empirical analysis is an integral part of the company’s make-up.

The HR function is complemented by a workforce analytics function. While the HR department provides traditional personnel and benefits-related services, the workforce analytics team contributes analyses for other business functions, creating a tangible, proven link between HR practices and company performance.

The team was able to empirically demonstrate the impact of the company’s executive coaching program and establish links between teller attrition, customer satisfaction, and revenues per account at retail branches.

HarvardUniversity’s goal was to transition HR from its existing support function to on a more strategic role in supporting its commitment to excellence in teaching and research. Typical drivers such as talent management and employee retention, and outcome measures such as shareholder value, or the return on investments of HR practices,had not received as much consideration at Harvard as in the for-profit sector.

Further complicating the issue is the fact that the HR function is highly decentralised across schools. A gap analysis based on surveys and focus groups identified staffing, employee development and performance management as key HR issues.

Based on key research findings, Harvard redesigned its employment/recruitment process and implemented a skills assessment tool for HR employees.

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