Study Identifies HR Contributions to Shareholder Value
Human resources can significantly contribute to shareholder value when companies design and implement programs in a formalized way.
April 25, 2006
Study Identifies HR Contributions to Shareholder Value
Performance management, rewards, succession planning, recruiting,
communications, HR technology and the overall HR function can significantly
contribute to shareholder value if companies design and implement their programs
in a formalized way, according to a new study by Watson Wyatt and the Human
Resource Planning Society. The recently completed study was introduced at the
2006 Human Resource Planning Society Annual Global Conference, taking place
April 23-26 in Tucson, Arizona.
Watson and HRPS surveyed 50 companies in the Fortune 1,000 that
averaged $3.5 billion in annual revenue and employed more than 6,000 people. In
each area, the study identified practices that were linked to high employee
engagement, financial performance and effectiveness.
For instance, rewards programs that add the most to a company’s market
premium are targeted at high-potential employees, aligned with business goals
and integrated with talent management. Value is added in performance management
by avoiding a pre-set distribution of performance ratings. In recruiting,
employee engagement and effectiveness is enhanced, and the bottom line
bolstered, when companies explain to a new employee why he or she was hired.
Doing so serves to reinforce values and expectations.
The study highlights "the need to be pretty deliberate about how you spend
your time and money on program design and implementation," says Ilene Gochman,
national practice leader in organization effectiveness for Watson Wyatt and the
study’s author. "They do make a difference."
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