Report: Best HR departments help boost finances
High-performing human resources departments help drive the financial performance of companies, according to a new report released Monday by The Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA).
The results of an in-depth study, detailed in a report, looked at the 10-year stock performances of the public companies in Fortune magazine's "Best Companies to Work For" rankings in 2014, and compared them with the S&P 500 Index. The 100 best companies - those with the strongest HR performance - outperformed the index by nearly 100 percentage points. But the report notes that this applies only if HR leaders are equipped to work with business leaders.
"HR functions need to connect by partnering with stakeholders both inside and, increasingly, outside of the company to improve operational and financial performance," said Jean-Michel Caye, a senior partner at Boston-based BCG and a co-author of the report.
The report was derived from survey responses from more than 3,500 executives across a broad range of industries in more than 100 countries. The authors also conducted in-depth interviews with 64 HR and non-HR leaders.
The report underscores the importance of a clear link between HR and business leaders, which the survey data indicated may be significantly missing at some organizations.
"Non-HR respondents rated their company's people-management capabilities as significantly lower than HR respondents ranked their own performance," said Jorge Jauregui, president of the WFPMA, in a statement from BCG. Of the 27 HR areas that the report explores, non-HR respondents ranked 40 percent in the "red zone," indicating a significant need for action. These areas include critical topics such as leadership, talent management, and strategic workforce planning. By contrast, HR respondents did not rank any HR areas in the red zone.
A copy of the report can be downloaded at www.bcgperspectives.com or at www.wfpma.org.
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