Recognize This! – Companies that do people processes better also have better financial returns.

I’ve posted fairly often on research showing the connection between employee engagement or employee enablement and the bottom line. Thanks to a post on OnlineHumanResources.net, I now know about research making the connection between people processes of all kinds and the bottom line impact.

The Boston Consulting Group and the World Federation of People Management Associations published “From Capability to Profitability: Realizing the Value of People Management” in July. Key take-aways:

Significant Bottom-Line Impact from Getting People Processes Right

“Companies that are highly capable in 22 key HR topics consistently enjoyed better economic performance than those less capable. In several topics, this correlation was striking – up to 3.5 times the revenue growth and as much as 2.1 times the average profit margin. The high performers differentiated themselves dramatically in three of the most important topics: leadership development, talent management, and performance management and rewards… And unlike their less-successful peers, they clearly define performance norms and standards and adopt them enterprisewide.”

Leadership Differentiators

Linking performance and expectations to your core values makes better leaders. And those better leaders are promoted into positions of leadership based on how well they live the values. Doing so makes your company more profitable.

[High performing companies] are 1.5 times more likely to have in place a leadership model that describes expected contributions and behaviour that is grounded in company values. Such models go beyond clichés, offering actionable guidelines that inspire leaders – and that leaders aspire to – daily. Their leadership model guides talent selection and promotion decisions – 1.7 times as often as low-performing companies.”

Performance Management Differentiators

People clearly understand what is expected of them, daily. And these are standard across the globe for one-company focus on acceptable behaviours and outcomes.

“High-performing companies understand the importance of a well-constructed, balanced performance-management system in motivating and developing employees… They have clear norms that drive performance – 2.6 times as often as low-performing companies. Employees understand clearly what constitutes superior performance and, just as clearly, what is unacceptable… High-performing companies have global performance management standards in place 2.2 times as often as low-performing ones.”

Recognise the “How,” not Just the “What”

This is a central best practice for truly strategic, social employee recognition based on core values. It doesn’t matter what you accomplish if you do so in a way that violates core values.

“In all the activities we studied, high performing companies reward behaviour, not just results, to a greater degree than low-performing companies.”

Where would you score on “people practices?”  Are you driving as much value to the bottom line as you should?

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